Housing Development Planning: Water Companies

Helen Morgan Excerpts

Wednesday 12th March 2025 Westminster Hall

[Helen Morgan (North Shropshire) (LD)]

I beg to move,

That this House has considered the role of water companies in new housing development planning.

It is a pleasure to serve under your chairship, Mrs Lewell-Buck. It is something of a cliché for a Liberal Democrat to be talking about sewage, but today I am breaking the mould and talking not about sewage in seas, lakes and rivers but about sewage in people’s homes and gardens. Buying a home in the UK is not easy. People spend years and years saving penny after penny, and when they finally sign on the dotted line and complete the purchase, they are relieved and delighted. They are not expecting to be forced to become an expert in complex regulations relating to drainage and the planning process. Most of all, they are not expecting raw sewage to start backing up through the manhole covers in their garden, the drains or, in the worst-case scenario, their downstairs loo, but unfortunately, that is what some of my constituents have had to deal with when buying or living near newly built houses in North Shropshire. I think the whole House should be asking itself how any water company, developer, conveyancer or local authority could think that this situation is acceptable.

During my time as MP for North Shropshire, there have been multiple incidents in which constituents have been put in this troubling position by the sewerage network failing, and I am quite angry about the lack of progress in dealing with the issue. Just two weeks ago, I attended a meeting with residents of a village in my constituency that has seen a relatively large amount of development in recent years; their village is low-lying and on a gentle slope. Severn Trent, the water company, has adopted the drainage system from the new developments, so this is not a case of a dodgy developer failing to build suitable infrastructure, but it is an old, medieval village and unfortunately the existing combined sewer infrastructure is inadequate to deal with prolonged rainfall and the additional homes connected to it.

[Sarah Dyke (Glastonbury and Somerton) (LD)]

I thank my hon. Friend for securing this really important debate. Speaking of medieval villages, I met residents of a little village called Mudford in my constituency last week. Two new housing applications have recently been approved for up to 1,000 homes just upstream on the River Yeo. Mudford already suffers from extreme flooding and relies on inadequate and fragile sewerage systems that already overflow regularly during heavy rain. Worryingly, the developers plan to use the same system despite clear environmental risks. Does my hon. Friend agree with me that water companies must be fully involved in the planning system, to ensure that water infrastructure can handle the demand and prevent future flooding and spills of sewage?

[Helen Morgan]

My hon. Friend describes a situation that I think we are all familiar with. I agree with her about the role of water companies and will go on to talk about that point at some length in my speech, so I thank her for that intervention.

When there is heavy rain, the residents I met struggle with surface water flooding and, unfortunately, with sewage backing up into homes and gardens, which we all agree is pretty horrible. Further homes in the area are in the planning process, so the residents are extremely concerned. Each year, their situation gets worse. An elderly resident told me that sometimes, when it has been raining heavily, she has to ask her neighbours not to use their bathroom, because sewage will flood into her garden if they do. That is not a position that any homeowner should be put in, so we need to ask ourselves how we have allowed this to happen in the first place.

We are acutely aware of the need to build more homes, and we support the Government in their mission to build more homes, but it is essential that the infrastructure for both new and existing residents keeps pace with development. Astonishingly, water companies are not statutory consultees when a housing development goes through the planning process. That means that there is no statutory safeguard for home buyers that the company responsible for dealing with their foul waste has ensured or confirmed that its existing sewers will cope; nor is there any statutory safeguard for existing residents against a new development bringing some unpleasant surprises.

[Helen Maguire (Epsom and Ewell) (LD)]

I thank my hon. Friend for securing this very important debate. River Mole River Watch, a local citizen scientists’ charity, has found that smaller pumping stations near new housing developments are seeing a sharp rise in storm overflows. More homes mean more sewage, as she has eloquently explained, and if the infrastructure cannot cope, raw sewage ends up in the River Mole. Does she agree that water companies must be statutory consultees in the planning process, so that sewage infrastructure is upgraded at the same time as building takes place? Otherwise, the problem will only get worse.

[Helen Morgan]

My hon. Friend is exactly right. Water companies have certain powers to object to developments that exacerbate existing capacity problems, but they are very much constrained by duties under the Water Industry Act 1991, which obliges them to accept domestic flows from new developments. Moreover, developers have an automatic right to connect to the existing network for domestic flows, which limits the ability of the water companies to object solely on the basis of network capacity. They can apply for Grampian conditions—planning conditions attached to a decision notice that prevent the start of the development until off-site works have been completed on land not controlled by the applicant. Developers can do that through the planning authority, but only if there is already a scheme promoted and a date for the improvements to be delivered has been set, so Grampian conditions are rarely used.

My hon. Friend the Member for Westmorland and Lonsdale (Tim Farron) tabled an amendment in Committee to the Water (Special Measures) Bill, which would have provided some of those safeguards by making water companies statutory consultees and ensuring that water infrastructure requirements were considered.

[Tim Farron (Westmorland and Lonsdale) (LD)]

I congratulate my hon. Friend on securing this important debate. She mentions the amendment we pushed in the Bill Committee, which was not accepted by the Government. It is indeed vital that water companies are statutory consultees throughout the process, but we should bear in mind that there is an incentive for water companies to say that there is no problem: the additional buildings mean more water bills and more income for the water company. If the company concedes that there is a problem, it may have to respond by making improvements to the infrastructure, costing it money. Do we not need better regulation? Ofwat and the Environment Agency need to be put together into a single, new clean water authority, so that we enforce clean water standards on the water companies that are currently running rings around our regulators.

[Helen Morgan]

I thank my hon. Friend for his intervention. He has campaigned endlessly and consistently on that point and I entirely agree with him. I was concerned when both the Government and the Conservatives voted against his amendment in Committee. Perhaps in their winding-up speeches, they will explain the rationale to my constituents, who are faced with the reality of putting cling film over their toilet every time there is a big storm.

The current requirements, all of which allow consultation, have been inadequate in the example I have given, and indeed in many others. The local plan process requires local authorities to consult the water companies on infrastructure requirements. That should be a positive step; it is how future infrastructure should be determined, with plans made by both the local authority and the water company. However, many councils fail to develop local plans. Shropshire’s Conservative council has just had to withdraw an inadequate plan, having failed to satisfy the requirements of the planning inspectors, leaving the county open to a planning free-for-all in which it is unnecessary to consult water companies. I therefore urge the Minister to ensure that in the review announced at the beginning of this week, water companies are added to the list of statutory consultees. I urge him also to tighten up the rules to prevent such a fiasco from emerging again, when after years of work and of taxpayers’ money being spent on a local plan, it is not fit for purpose and the whole process has to be started again. That is unacceptable for my residents, who are paying their council tax.

Another development 10 miles to the north has had similar issues, but in that case, in addition to concerns about the capacity of the pumping station and existing surface water flooding problems, Severn Trent has refused to adopt the drainage network, citing as its reason that the sewers were not built to the standard agreed under the section 104 arrangement in place. The developer, which I should say disputed that there were defects in the system, requested that Severn Trent return its section 104 bond, and it did. All of that was done without the residents’ knowledge. They only found out nearly three years later, following repeated complaints to the water company, which is tanking sewage away from the village on a weekly basis.

[Alison Bennett (Mid Sussex) (LD)]

On the section 106 moneys being returned to the developer, this week I had a meeting with Southern Water and then a meeting with a significant regional house builder in the south-east. A very similar situation was presented to me, wherein Southern Water had not actually managed to carry out the £2 million of improvements to the sewerage network that were required as part of the section 106 agreement. Does she agree that in such a situation it is incredibly hard for politicians and councils to make the case to residents that development is justified, when time and again they are let down by the development system?

[Helen Morgan]

I thank my hon. Friend for her intervention. Residents are genuinely concerned about the impact on their village or town when the rules clearly are not allowing for additional infrastructure to be built. It is reasonable for them to expect that infrastructure to be built. We would see far less nimbyism if people had confidence that the infrastructure will be there when new houses are built.

The point I am trying to make is that the section 104 process is not fit for purpose. It is ridiculous to require a financial bond. The point of that bond is to deal with exactly the situation where the sewerage network has been inadequately built and needs to be adopted. The bond is there to ensure that the water company brings that sewerage system up to standard, so that it can be adopted.

[Mike Martin (Tunbridge Wells) (LD)]

My hon. Friend has just said that a lot of sewerage is unadopted. Say it was built in the 1800s by public subscription and nobody has adopted it since. That allows water companies to shrug and say, “Search me, guv’” when there is a problem. Does she think that the Government should by statute or law require that all of these unadopted watercourses be adopted by a water company or the Environment Agency, so that when there is a problem there is someone we can point to and say, “This is your problem to solve”?

[Helen Morgan]

The problem of historical sewers is particularly difficult, because there is no immediate developer to put on the hook. We certainly need a mechanism for dealing with historical sewers. It is a complicated problem, because we certainly do not want sewage from inadequate systems to start going into the main system, and it is difficult to say the taxpayer should to have to pay for something that happened a long time ago. Nevertheless, we need a mechanism to deal with historical sewers; there is no doubt about that.

The homeowners in The Pines in Higher Heath are in a situation where the developer has refused to rectify the issues and Severn Trent has washed its hands of the matter by returning the bond. They have nowhere else to go. One resident told me:

“The whole system has failed us, from start to finish…we have layers upon layers of Water, Building, Planning, Council Regulations, Controlling Authorities and processes and procedures, all designed to protect the public and the environment. Yet, a pre-existing local drainage problem, a planning process and building supervision and approval all failed to pick up and address it, and then allowed ‘defective’ drains to be built, then a Developer and a Utility company agree among themselves to terminate the S104 and totally wash their hands of us/the people who pay the taxes that fund the system that is supposed to protect us/the people.”

We see there the root of the problem. People who rely on the regulatory system to protect them in their homes are being hopelessly let down by a system that provides no protection when the worst happens and push comes to shove. Clearly, the section 104 process is not fit for purpose. The conveyancing process, when solicitors are involved, never seems to detect this type of situation either. I have sympathy for the people affected. When the section 104 agreement and bond have been put in place, and people have found that through their search, they should be able to have reasonable confidence that the sewerage network will be completed as planned.

I have raised many times the situation of people living in The Brambles in Whitchurch, so I will not go into all the details again. People bought houses in that development, but the developer was a rogue developer, who collapsed the company as soon as the final house was occupied. The sewage pumping system was inadequate, and another property was illegally connected to it. Fourteen households had to spend £1 million between them to fix that situation. Those householders were the people left holding the management company when everything crashed down around them, and they were liable to fix that situation. That was totally unacceptable, as well.

[Richard Fuller (North Bedfordshire) (Con)]

I congratulate the hon. Lady on securing this important debate. I have a couple of questions. In North Bedfordshire, the pace of housing growth is about two and a half to three times what it is nationally, and we also have two major watercourses—the River Ouse and the River Ivel. The issue with the way that section 106 moneys go with new housing developments is that it is always about the incremental impact on the network, but the problem is that the overall structure needs financial support. The hon. Lady has been thinking about making water companies statutory consultees. Does she think that that could help with a more comprehensive understanding of the impact across a network of any major development? Secondly, does she think that it could change the system to have greater demand for an escrow of funds by developers for the long-term issues she mentioned, rather than leaving those to individual householders?

[Helen Morgan]

The hon. Gentleman makes a good point, particularly about holding funds in escrow, which is a sensible suggestion. I am reluctant to let water companies off the hook, because they have made enormous profits, and they have been able to predict the growth in housing and changes in the weather, but they have done nothing to invest in the existing infrastructure. Let us not feel too sorry for them, but there clearly needs to be a long-term plan in place for overall infrastructure in an area. I agree that that needs to be taken into consideration in the planning process.

Local planning authorities have discretionary powers to try to prevent the situations I have described. They could stop occupation of the final properties on the development until the defective sewerage has been remediated. There are various conditions they could put in place up front to prevent these situations, but in practice that is not happening.

[Ben Maguire (North Cornwall) (LD)]

In my constituency, South West Water promised residents in the Chapelfields development in the village of St Mabyn that sewage treatment would be put in place, only for families to move in and find raw sewage being collected in tankers, with no proper connections and frequent sewage back-ups, which is similar to what my hon. Friend has described. Does she agree that water companies must be held properly accountable to ensure that infrastructure is in place before homes are built, not years later when the damage is already done?

--- Later in debate ---

[Helen Morgan]

My hon. Friend makes a good point. That is where we are going with having them as statutory consultees in the process. It is no good the water companies saying, “You cannot build those houses.” They need to be able to say, “We have this plan to improve the infrastructure. You can build those houses when we have done it.” It is probably also quite critical that they are able to say, “We are doing it fairly quickly.”

I will come back to section 104 for a second. One problem is that council planning departments are hollowed out. They have neither the human nor financial resources to get involved in expensive planning enforcement action, or to ensure that every person has been thought about and invited to consult on a planning application. They need to be required to do that, because the idea that cash-strapped councils will go above and beyond is currently unlikely; many are desperately just trying to stave off a section 104 situation.

We have planning legislation coming, which is welcome. I implore the Government to address section 104 agreements and the bonds that secure them, because at the moment they are not the iron-clad guarantees they should be. We need to ensure that drainage systems are built to an appropriate standard and adopted, so that people can have confidence that, when they buy a home, they will not have to deal with a raw sewage problem for years and be unable to sell their house in many instances.

[Adrian Ramsay (Waveney Valley) (Green)]

The hon. Lady makes an eloquent and moving case about the impact of inadequate sewerage systems on residents moving into new properties. Does she agree that there is also a need for a stronger regulatory system for the supply of fresh water? In my constituency we have a water management zone, which prevents new businesses, such as a brewer I spoke to recently, from expanding. At some times of the year, there is too much water, and at other times, there is too little. Does the hon. Lady agree that more effort needs to be put into strategies to manage the supply of fresh water, as well as the issues she raises?

[Helen Morgan]

The hon. Gentleman makes a good point. Shropshire is quite wet, so we do not often find ourselves talking about a lack of water; it would have to be an extreme summer before we found ourselves in that situation. He makes a good point that the country increasingly sees very dry periods and then extreme rainfall in winter. We need a water system fit for the future to deal with that and with localised capacity issues in the freshwater network.

Finally, I call on the Government to implement the recommendations of the report published by the Department for Environment, Food and Rural Affairs in 2023 on schedule 3 to the Flood and Water Management Act 2010. The schedule would provide a framework for the approval and adoption of drainage systems; a sustainable urban drainage systems approving body, or a SAB; and national standards on the design, construction, operation and maintenance of sustainable urban drainage systems, which also have a lovely acronym—SUDS. Critically, it makes the right to connect surface water run-off to public sewers conditional on the drainage system being approved before any construction work can start. Currently, that is not a statutory requirement, but those things are often built as part of the planning process. That means that when a development happens in an area that has previously been, say, fields, the water must drain off at the same rate as it would have done had the area still been a field. That is a clever way of managing surface water, and it seems odd that the previous Government, and indeed the current Government, have not yet adopted schedule 3. That would be an important start in protecting new and existing residents from the nightmare of both surface water and foul water flooding.

In conclusion, the current planning-led approach is clearly not fit for purpose. Numerous colleagues have turned up today to tell similar stories of residents dealing with raw sewage in their homes, which is just not acceptable. The planning process is failing to protect residents of both new and existing homes, opening the risk of surface water and foul water flooding. Most of us cannot imagine how awful untreated sewage in the home must be, but a failed planning system is making it a reality for far too many people. I urge the Minister to make water companies a statutory consultee in planning, to implement schedule 3 to the Flood and Water Management Act and to tighten the rules around section 104 so that rogue developers cannot get away with building illegal connections to the sewers.

[Mrs Emma Lewell-Buck (in the Chair)]

I remind Members that if they wish to be called to speak, they should bob. I ask Members to try to keep their contributions to around four minutes so that everybody who has put in to speak can get in.

--- Later in debate ---

[Helen Morgan]

I thank everyone who contributed to the debate. It was good to see cross-party agreement on some of the issues that our residents face, such as the lack of capacity in local drainage systems when houses are built and the lack of appropriate planning conditions in some of these localised incidents.

I also thank the shadow Minister, the hon. Member for Hamble Valley (Paul Holmes), the Minister and the Lib Dem spokesperson, my hon. Friend the Member for Taunton and Wellington (Gideon Amos), for their thoughtful contributions. They were all excellent. I particularly thank the Minister for not ruling out the adoption of schedule 3 to the Flood and Water Management Act.

I understand the Minister’s point that water companies being statutory consultees would pose a risk to getting planning applications through the process, but I ask him to consider the fact that the local planning system does not work either. Many councils do not have a local plan. They do not have the planning officers, and cannot afford them, to develop good local plans. We have to find a way to address that problem.

Finally, I will write to the Minister on the specific issues that I have had in relation to section 104 agreements. I would be grateful for a meeting with him to go through them in detail.

Question put and agreed to.

Resolved,

That this House has considered the role of water companies in new housing development planning.

Planning Committees: Reform

Helen Morgan Excerpts

Monday 9th December 2024 Commons Chamber

[Matthew Pennycook]

My hon. Friend is absolutely right. As I say, we inherited an acute and entrenched housing crisis, with 1.3 million people languishing on social housing waiting lists and a generation locked out of home ownership. To their shame, the Conservative Government passed on a situation where 150,000 homeless children are in temporary accommodation as we speak. We have to build the homes that our people need, and we are determined to do so.

[Helen Morgan (North Shropshire) (LD)]

As the chair of the all-party parliamentary group on flooding and flooded communities, and the MP for a constituency that suffers from surface water flooding as well as river flooding, I am concerned that the proposals will divert decision making away from those with the greatest local knowledge. When a flooding area is drained, the water has to go somewhere else, and where it goes is critical to the people living in the surrounding area. Can the Minister reassure me that the proposals will not dilute the importance of local knowledge in making critical decisions about draining and flooding when we build?

[Matthew Pennycook]

I can reassure the hon. Lady on that point. The proposals will operate within the context of a national planning policy framework that has very clear requirements in relation to flooding. We are in no way removing local expertise and knowledge from the system; either experienced and trained local planning officers or locally elected authority members should make the decisions, but we have to ensure that they are making the right ones, and that their energy is focused in the right way, to streamline the decisions that we need. We heard the statistics on how planning applications are not progressing through the system at a timely pace. We need to turn things around.

Deputy Prime Minister

Helen Morgan Excerpts

Thursday 21st November 2024 Written Corrections

The following extract is from Prime Minister’s questions on 23 October 2024.

[Helen Morgan]

Shropshire’s farmers have been suffering from flooding following 18 months of incredibly wet weather, topped off last Wednesday by a month’s worth of rain in 24 hours. They were not eligible for the farming recovery fund, and a freedom of information request by Farmers Weekly found that only £2.1 million of that £50 million has been handed out to farmers. Will the Government consider extending the eligibility of that scheme so that we can keep farmers going when they are deluged by floodwater?

[The Deputy Prime Minister]

I am really sorry to hear the plight of Shropshire farmers. We inherited the flood defence programme in disrepair, and thanks to 14 years of mismanagement and failure, communities are unprotected and families and businesses are forced to pay the price. We launched a flood defence taskforce to turbocharge the delivery and co-ordination of flood defences, and we are investing £1.5 billion this year to scale up flooding national resilience. I will ensure that the hon. Lady gets a meeting with the Minister.

[Official Report, 23 October 2024; Vol. 755, c. 276.]

Written correction submitted by the Deputy Prime Minister, the right hon. Member for Ashton-under-Lyne (Angela Rayner):

Exempt Supported Accommodation

Helen Morgan Excerpts

Tuesday 10th September 2024 Westminster Hall

[Helen Morgan (North Shropshire) (LD)]

It is a pleasure to serve with you in the Chair, Sir Mark.

I congratulate the hon. Member for Birmingham Edgbaston (Preet Kaur Gill) on securing this debate and on her excellent speech, in which she highlighted all the difficulties that we knew existed in this sector. She also provided some real colour about what those difficulties mean for residents of exempt supported accommodation units, for local residents who are impacted by some of the bad-faith actors, and for local communities. I do not want to go back over some of the ground that has already been covered, because she covered it so well, but I am afraid that I will have to. Before I go any further, however, I should declare that I am a vice-president of the Local Government Association.

In 2022, I served on the Public Bill Committee for the Supported Housing (Regulatory Oversight) Act 2023, which was introduced by the hon. Member for Harrow East (Bob Blackman) as a private Member’s Bill. It was an important step forward that had cross-party support from the then Conservative Government, the Labour Benches and the Liberal Democrat Benches, because the issue had become so severe.

The system of exempt accommodation was well described in the October 2022 report by the Levelling Up, Housing and Communities Committee as:

“a complete mess. There are many good providers, but in the worst instances the system involves the exploitation of vulnerable people who should be receiving support, while unscrupulous providers make excessive profits by capitalising on loopholes. This gold-rush is all paid for by taxpayers through housing benefit.”

That is a sorry state of affairs.

The then Government supported the Bill introduced by the hon. Member for Harrow East, because it was seen as a good way to deal with the situation that was described by the Select Committee and by the hon. Member for Birmingham Edgbaston today. In response to the Select Committee’s report, in early 2023 the Conservative Government said that the Supported Housing (Regulatory Oversight) Act 2023 would address most of the concerns that had been raised in the report, because it would introduce national standards for support and give local authorities the powers they need to set up licensing schemes to tackle poor-quality supported housing in their area.

The Act provided for local authority supported housing strategies to review the situation in their area and the availability of and need for supported housing, and those strategies were to be renewed every five years. It also required the Secretary of State to set up a supported housing advisory panel to provide information and advice about supported housing; it allowed for the Secretary of State to set standards for the support provided in supported housing; and it allowed for regulations to be made to establish licensing schemes, which would include consideration of the condition of the property, the adequacy of the care and support provided, interactions with other licensing schemes, the costs, the financial penalties and all the things that needed to go with a properly functioning licensing scheme

The Act also required the Ministry of Housing, Communities and Local Government, as it is now called again, to formally consult on elements contained within it, including the licensing regime, standards and any additional measures for securing compliance with the standards. As we have heard, however, much of that has not yet happened, despite the Act going through Parliament in 2023.

The Act provided for better planning regulations; it said that somebody would not be treated as intentionally homeless if they left supported accommodation; and it provided for information management and sharing powers for those involved in the provision of supported housing. All in all, it seems to have been a pretty good piece of legislation, and the problem that we are experiencing now, as the hon. Member for Birmingham Edgbaston described in great detail, is that those provisions have not been enacted quickly enough. Today’s debate is about urging the Minister to bring forward the actions that are needed now to make sure that we improve the sector.

The LGA is supportive of that legislation and has been a main stakeholder working with the Ministry to ensure that the Act works for councils, providers, and most importantly, residents in supported accommodation. But the LGA has raised significant concerns about the time taken to implement the Act and about the fact that councils have limited means to challenge poor providers, other than through housing benefit claims, which is problematic. We heard from the hon. Member that Birmingham city council has actually been able to challenge providers, so it would be interesting to find out from the Minister whether that is likely to be a model in future or whether better mechanisms will be put in place.

As the hon. Member said, the delayed implementation of the Act is a problem for councils that have used the SHIP payments to improve supported housing in their area. The gap in funding between the SHIP payments and the new burden spending that comes with implementation of the Act means that councils will potentially have to let go of their skilled workforce and people with good experience of dealing with the problems and social implications of poor housing.

It seems that in every debate at the moment, we must talk about the funding crisis for all councils. They need long-term funding arrangements with ringfenced support for housing, because the increased pressure on council budgets from that sector means that not only are we letting people down who have an acute housing need, but we are letting down everyone else whose services are impacted by the exorbitant cost of providing housing across the whole of England, particularly in communities where the sector is out of control, as the hon. Member alluded to.

The calls of the LGA are, as always, very sensible. We need to review the current funding regime for supported housing. We also need to recognise the savings to the public purse that will come from not giving those unscrupulous providers limitless amounts of public money for a very poor service that will not realise any of the benefits that supported housing should realise for its inhabitants and wider society by providing the support they need.

We need to ensure that the SHIP funding is there in the interregnum between now and the new burden spending, so that councils can continue the work that they are already doing, and crucially, can retain the skilled officers who are experienced in dealing with this situation. We also need to acknowledge that a licensing scheme and its enforcement, with improved standards for supported housing, will require proper funding. Otherwise, councils will be unable to deliver on the statutory requirement that we are about to place on them.

The funding is so important. I know that the Government are dealing with a financial crisis, that they have extremely difficult choices to make, and that almost all Members will standing up in every debate to ask for more money—it is a difficult position to be in—but I urge the Minister to consider that, as taxpayers’ money is wasted so flagrantly on these unscrupulous providers, it would be a good use of public money to establish a proper licensing scheme. That would mean that we were not wasting taxpayers’ money and were instead putting it into support for the individuals who have had a crisis, hopefully turning their lives around, and costing the taxpayer less in future. That would be a wise investment of taxpayers’ money.

On the important issue of resource, many councils are having to let staff go because of funding pressures. We cannot enforce and practise a licensing scheme without the right people in officer roles in councils, so the recruitment and retention of those critical staff is also extremely important. I honestly do not think that I have added much to the hon. Member’s excellent speech, but I hope that I have added my voice to her cause on regulating the sector properly.

Oral Answers to Questions

Helen Morgan Excerpts

Monday 2nd September 2024 Commons Chamber

[Mr Speaker]

I call the Liberal Democrat spokesperson.

[Helen Morgan (North Shropshire) (LD)]

Recent freedom of information requests by the Liberal Democrats found that four out of five councils that responded had someone on their social housing waiting list for more than a decade, and this shocking statistic comes all while the stocks of social housing have been reducing. Will the Minister consider reforming the land conservation Act, so that local councils can buy land at current value rather than hope value and get on with delivering the social housing that we so desperately need?

[Matthew Pennycook]

I thank the hon. Lady for drawing attention to the appalling record of the previous Government on affordable housing, in particular social rented housing. Over the past 10 years, the number of social rented homes owned by registered providers fell by over 205,000. We have to take action to better protect our stock and build new social rented homes, but she is absolutely right that further reform is needed of compulsory purchase orders, how they are drawn and the powers available to councils. We first need to enact the changes that were introduced by the previous Government though the Levelling-up and Regeneration Act 2023, but we intend to go further, and will consult on that in due course.

--- Later in debate ---

[Mr Speaker]

I call the Lib Dem spokesperson.

[Helen Morgan (North Shropshire) (LD)]

Residents in rural areas such as my constituency are seeing drastic cuts to local services despite their council tax having gone up this year. That is because councils are struggling to balance budgets. When the fair funding review takes place, will the Secretary of State commit to considering the cost of delivering services in vast rural areas, which is in excess of the same cost in urban areas?

[Jim McMahon]

We will absolutely ensure that the true cost of public service delivery is accounted for in different parts of the country and in different local authorities—that will be part of it. However, I say gently that although the Conservatives were the architects of austerity, the Liberal Democrats were definitely there sharpening the pencil.

Funding for Local Councils

Helen Morgan Excerpts

Wednesday 22nd May 2024 Commons Chamber

[Helen Morgan (North Shropshire) (LD)]

I declare an interest as a vice-president of the Local Government Association.

I thank the Minister for attending this evening and for his response. I appreciate that it has been a bit of an unusual day, so I will not be imploring him to make all sorts of commitments from the Dispatch Box, given the unusual circumstances in which we find ourselves. I would like to raise some important matters. If I am lucky or privileged enough to be returned to this place by the constituents of North Shropshire, I will continue to campaign on these issues on their behalf.

Many hon. Members across the House have raised the issue of the crisis in local government funding in recent months. I wish to highlight some of the specific challenges faced by rural councils, and in particular by my own council of Shropshire, which deals with the area of North Shropshire.

Most people’s experience of government is local, as we know. They drive on the roads every day, so they experience the potholes and the conditions of the roads. They use the waste disposal services, whether that is having their bins collected or taking them to a recycling centre. They might use a swimming pool. They might have a friend, relative or loved one in need of social care, or they might need it themselves. They might have a child in a local authority-maintained school. Therefore, local government is most people’s experience of government, and it is the backbone of our communities.

Since 2016, councils have seen a £5.25 billion real-terms cut in the funding they receive from central Government, and that is driving deep inequality in our communities and impacting on people’s perception of the value they receive from the tax they pay. Shropshire Council had to find £50 million of cuts in the financial year that just ended, and it is saying that it will need to make a further £60 million of cuts in the coming year. That is an enormous cut and it will affect everyone in North Shropshire, but it will affect vulnerable people the most, and that is my area of concern.

Now why is this? It is very tempting to stand here and say that Shropshire is Conservative-run, which is why it is in so much trouble, but although I believe that Liberal Democrats would do a better job, the reality is that the council spends around 85% of its budget on social care. That is more than the average of councils across the country, which spend about two thirds of their budget trying to meet adult and child social care costs. It means that, in Shropshire, for every pound that we give to the council for services, only 15p is spent on other things, whether statutory provisions such as libraries, or other big-ticket items, such as highways, and it really is not enough money.

The problem is that the quality of social care is being affected as well. Earlier last year, I met an elderly couple in Ellesmere, who have loved and cared for their disabled daughter all of her lives. When she became ill and went into hospital, they were unable to continue that level of care when she was discharged because of their own health problems, so they needed a more supportive arrangement. The council found a sheltered flat for their daughter. They paid for new carpets and were excited about her having that new arrangement. But just two weeks before she was due to move in, the flat was withdrawn because it was considered to be too expensive, causing a huge amount of trauma and concern about the money that they had invested in the flat. We were able to reverse that decision in that case, but they are far from the only family in that situation. In fact, half a million people in England are desperate for social care.

The reality is that Shropshire Council cannot outrun the growing demand for social care. It might make the £60 million of cuts this year and avoid a section 114 notice this time around, but will it—or indeed any other administration—be able to do that in future? Given the increasing level of demand, I think that any administration will struggle to achieve that.

Every single person in Shropshire has seen, and will see, an increase in their council tax, and what they are getting in return is reduced services. All the while, adult social care need is not being met, as the Public Accounts Committee recently confirmed. I strongly suspect that is because we are trying to fund social care through council tax, which is a regressive, broken tax that goes nowhere near matching the cost of the service that we are trying to deliver with a sensible revenue stream to fund it. I do not think that we will fix the problem unless we totally revisit how we fund social care, and indeed how we collect council tax.

It is not just people receiving social care who are feeling the brunt of the cuts; it is all the services that we expect to receive. Last month, our council announced the closure of two of the five recycling centres in Shropshire, two of which are in my constituency. If either of those close, some of my constituents will have a 45-minute drive to a recycling centre. I am sure that they will make that drive. We are all dependent on our cars—we do not have great bus services—and I am sure that law-abiding citizens will do their best to get their refuse to a tip that is further away, but North Shropshire is a beautiful rural constituency with miles and miles of remote isolated roads, and it is at high risk from fly-tippers. People are genuinely concerned that the beautiful countryside will be ruined by that criminal activity, and it will cost the council even more to clean it up. We seem to be taking with one hand and spending huge amounts of money with the other, which might not have the desired outcome.

There is a similar story on special educational needs and disability. Local authorities obviously have to pay for transport for SEND pupils, and the rationing of that transport is becoming a huge problem for some of my constituents. I was contacted by Shane and Brad, the foster parents of Toby, an 18-year-old with special educational needs. He moved from Norfolk to Shropshire five months ago on a special guardianship arrangement, with the understanding that his education, health and care plan would be transferred and the provision would continue. Not only can they not afford to transport him around to wherever specialist place might be available; but because he is over 16, they have not been able to find a specialist place, so poor old Toby has not been to school since he moved to Shropshire five months ago.

The council do not have the resources to solve this problem. There are not enough specialist teachers or educational psychologists, or enough specialist places in state schools. As a result, young people face a postcode lottery when it comes to funding to support their EHCP. In rural areas, transport for children with special needs is particularly problematic because they have to be transported over larger distances at greater cost. Again, the council is not depriving those people through malice or a lack of care; it simply does not have the funding to meet the demand.

Perhaps less seriously—although this still has a huge impact—there is a problem with leisure facilities. Whitchurch in my constituency has recently lost not only the town’s only performance space but its registry office, driving test centre and library, as well as rooms that community groups can hire out for regular use, because the civic centre has reinforced autoclaved aerated concrete in its roof. We would think that the council would be able to fix the problem, and find some money to repair the roof, but that is not the case. The council cannot afford the interest payments and has said that the cost is prohibitive. It is now trying to find alternatives, which will ultimately lead to a lesser space. That is a problem for residents who enjoy the use of those facilities, but it also has a huge economic impact on the town centre, with businesses already reporting to me that they have reduced footfall. That is of great concern.

There is a real problem with libraries. A third of libraries have closed in the past 10 years, despite libraries being a statutory service. Because the comprehensive and efficient library service that is required is not defined, lots of councils are cutting libraries and their availability. Again, that is driving deep inequality. The National Literacy Trust has found that children who read at their expected age level are twice as likely to be library users as not to be. If we want to level up, it is really important that we give children from all backgrounds the opportunity to read, access a library, and make the most of their education.

I will move on to public transport, which I have talked about a lot in this place. Shropshire has a particularly poor public transport network and has lost the most miles of bus services anywhere in England since 2015, with 63% fewer miles being completed by bus than in 2015. That is a drastic decrease, especially compared with places such as Milton Keynes, where bus miles have increased. There is definitely a way of doing it if we have the funding right.

Poor public transport is a problem for the economy because we cannot transport workers around, which gives us a labour supply issue. It is a problem for young people trying to access college courses because they do not know whether their bus service will be there next year, and it is a problem for older people who may be trying to access the hospital because to get there by taxi is unaffordable.

Again, given that we are about to embark on a general election, this is possibly not the right moment to implore the Minister to allow the franchising of bus services, but I put on record that if councils could fund those services, it would have a huge economic regenerative impact. It would be great to see buses be a priority for all the parties in the general election, because they have such a good impact on increasing labour supply and on enabling people of all ages and all income levels to live, work and get about the community.

In conclusion, I want to make the point that rural areas are struggling perhaps more than urban areas, despite the fact that we sometimes assess urban deprivation as worse than rural deprivation. It is certainly more visible, but the central Government funding for local councils has lost touch with reality on the cost of delivering those services, and indeed to some extent on the level of need. When we look at the impact on people, whether it is social care or special educational needs provision, swimming pools or libraries or recycling centres, all those things are suffering and they all cost more to deliver in a rural area.

I want to state this case again to all political parties, because we do not know who will be sitting in the Minister’s seat after the general election: sorting out the fair funding formula is very important. Delivering in rural areas is essential to regenerating the economy in those areas. One fifth of the population live in rural areas. They are underperforming economically and we need to ensure that local councils have the funding they need to provide regeneration and quality of life for those well-deserving people who live in those beautiful parts of Britain.

Oral Answers to Questions

Helen Morgan Excerpts

Monday 22nd April 2024 Commons Chamber

[Jacob Young]

I think that is quite poor, Mr Speaker. The hon. Gentleman’s constituency has itself benefited from £11.1 million of UK shared prosperity funding and £13.4 million from the levelling up fund. Next to him I see the hon. Member for Oldham West and Royton (Jim McMahon), whose constituency has benefited from £24.4 million from the towns fund. Oldham is also the recipient of £10.8 million from the future high streets fund. We are levelling up right across the country, including in the hon. Gentleman’s constituency.

[Helen Morgan (North Shropshire) (LD)]

8. What assessment he has made of the adequacy of the level of Government funding allocated to local authorities.

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Simon Hoare)]

In answer to the hon. Lady’s question, we make continuous assessment with regard to the adequacy of funding. In this financial year we have made £64.7 billion available to local government in England, an above-inflation increase for local authorities as their real-terms increase in core spending power is now up to £4.5 billion or 7.5% in cash terms. That includes the additional measures for local authorities, worth £600 million, that we announced on 25 January, having listened to the views of local government, to her views when she engaged in the consultation and to the views of hon. and right hon. Friends across Shropshire.

[Helen Morgan]

I thank the Minister for his answer, but we have seen Shropshire Council make £50 million of cuts this year, and we are told that there will be £60 million of cuts next year to avoid a section 144 notice. Local residents are particularly concerned about the potential closure of recycling centres and a likely increase in fly-tipping across our beautiful countryside. Does the Minister agree that rural councils are in danger of delivering nothing more than statutory services if things continue? Will he consider adjusting the way that funding is allocated so that rural councils are given an amount that reflects the cost of delivering services in their area?

[Simon Hoare]

The hon. Lady is right to point to the need to review the formula, which is a commitment for the next Parliament. She will probably be aware—I hope she is—of the £8.9 million extra that Shropshire Council received this year through the rural services delivery grant in order to deliver those sorts of services. Do I think rural councils have to reduce to statutory services alone? No. All my engagement with the sector points to a vibrancy and a commitment to innovation, shaping places and improving the lives of people up and down the country, including in Shropshire.

Leasehold and Freehold Reform Bill

Helen Morgan Excerpts

Report stage
Tuesday 27th February 2024 Commons Chamber

[Nickie Aiken (Cities of London and Westminster) (Con)]

I fully support the Government’s wish to overhaul the antiquated and feudal leasehold system in this country and address the imbalance of power between freeholders and leaseholders. I thank the Minister for his ongoing discussions with me about a number of issues I have with the Bill, and for attending the leasehold roundtable that I held recently with my constituents.

I would like the Government to abolish the system completely, but I understand that that will not happen with this Bill. I have therefore tabled an amendment and three new clauses that would improve the Bill further. New clause 12 would reduce the participation threshold required to claim the right to manage from 50% to 35%. That is a massive issue in Cities of London and Westminster. More than 1,300 properties in the City of London and an eye-watering 12,100 in Westminster have owners living abroad or are owned by companies using central London’s golden postcodes as a place to park their cash. That reduces the ability of leaseholders in those blocks to secure the 50% of signatures required to achieve the right to manage, as it is incredibly difficult to contact those overseas leaseholders for a meaningful discussion.

Let me give an example of that type of dilemma in my constituency. Residents in The Quadrangle in the Hyde Park Estate say that leaseholders in their block will struggle to meet the 50% participation threshold. They estimate that at least 40% of leaseholders in their block do not live in the building and are uncontactable. Accepting new clause 12 and lowering the threshold to 35% would give many more leaseholders living in similar blocks the chance to manage their buildings.

I commend the work that has been done on the Bill to support blocks that have shared commercial and residential usage. The Bill proposes to increase the proportion of commercial or non-residential space permitted in an individual block for a right to manage application from 25% to 50%, but I believe we can go even further. I have heard from many residents whose blocks will fail to qualify even after the threshold rises to 50%. For example, residents of 8 Artillery Row in Victoria believe that increasing the threshold to 50% does not go far enough, as the residential element of their block is lower than 50%. That is why amendment 17 is needed, as it would allow residents in a block with up to 75% commercial premises to apply for the right to manage.

New clause 14 is similarly designed to allow more leaseholders to strive for the right to manage, especially those in mixed-use buildings. Simply sharing a broom cupboard with a commercial property can disqualify them from claiming the right to manage. At Cambridge Court in Marylebone, for example, leaseholders striving to manage their block would benefit from the Government’s proposals to increase the non-residential threshold allowed in a building, but they are concerned that their ability to qualify for the right to manage would be undermined by the existence of a single shared car parking space in their building. My new clause 14 would amend the Commonhold and Leasehold Reform Act 2002 by adopting recommendation 5 from the Law Commission’s “Right to Manage” report, which is to allow leaseholders in mixed-use buildings with shared services or underground car parks to exercise the right to manage.

Finally, my new clause 15 would correct the unintended consequences of the Building Safety Act 2022. That Act has interfered with the long-standing section 24 regime, which was a vital right for leaseholders. It introduced an accountable person mechanism that expressly banned section 24 managers from being the accountable person. Consequently, specially trained and vetted professional property managers willing to take on difficult sites have been barred from being the accountable person. That makes absolutely no sense, and it stripped leaseholders of an existing right. That could not have been the Government’s intention when they introduced the 2022 Act, which was intended to provide leaseholders with additional statutory protections. So many leaseholders in my constituency and across the country would benefit from applying for a section 24 manager, but they cannot risk it if they are in blocks of 18 metres or higher because of the accountable person regime issue arising from the Building Safety Act. It is imperative that our buildings are safe, that leaseholders are safe, and that the burden does not fall heavily on leaseholders.

I will not press my amendments to a vote, but I hope that the Government will consider what I have spoken about and work with me to introduce the measures in the other place. This is a watershed moment for the Government to prove that they understand the terrible treatment that leaseholders have faced and continue to face by incompetent freeholders, and to address the imbalance between freeholder and leaseholder. I hope that the Bill will deliver real change.

[Helen Morgan (North Shropshire) (LD)]

I rise to speak to new clause 1, which was tabled in my name, and in support of a number of new clauses and amendments tabled by right hon. and hon. Members from both sides of the House.

I tabled new clause 1 because, as was said by the hon. Member for Harborough (Neil O’Brien), who is no longer in his place, fleecehold is a scam. It attempts to deal with the issue whereby a freeholder is trapped in a situation where they pay estate management charges for the areas around their development, be they roads, play areas or open spaces. Critically, the new clause also deals with the shared assets that might be in use to service their homes, such as ground source heat pumps, septic tanks or sewage pumps. I am sure that there are many instances in which the management company does a great job and charges reasonable fees for its work, but my inbox—like those of many hon. Members—contains horrifying examples of the management company, which is usually directly owned by or related to the developer in North Shropshire, failing to do a good job, or to do any sort of job at all.

There is a freeholder in my constituency, for example, who must obtain an information pack from their estate management company in order to sell their house. Despite repeated requests, my constituent has not received that information pack, so their sale has been significantly delayed and is at risk of falling through altogether. The management company is apparently just a shell—it does not respond to correspondence, hold annual general meetings or provide accounts—so the affected residents are powerless and cannot take control of the company and appoint a reliable professional to provide the services that they so desperately need. New clause 1 would allow them, where the management company has gone AWOL and will not respond to anything that they request of it, to take control of the company and do those things themselves.

The new clause also extends to assets, which may be more of a rural problem when it comes to shared estate charges. In one example in my constituency, a developer installed a ground source heat pump to provide all the heating and hot water for a barn conversion development that involved several houses in the same set of barns.

That developer has two separate companies: one is the management company through which he charges the owners of those houses for their electricity bill, and another, totally separate company that was nothing to do with the sale process, which is where he placed the heat pump. As such, he is able to cream off all the renewable heat incentive income for himself; he provides accounts to residents through the management company, but does not provide them with any information about the fundamental asset that is servicing their home. Those residents are unable to benefit from the renewable heat incentive that accrues from that asset, and do not know whether it is being properly maintained and serviced. They are unable to do so themselves—they have no rights in relation to that heat pump.

--- Later in debate ---

[Sir Peter Bottomley]

I draw to the hon. Lady’s attention and that of the Minister the article by Patrick Hosking in The Times today, which deals with estate management companies and estate management charges. I hope that the Government will read what he has written and see what they can do to make things better.

[Helen Morgan]

I thank the hon. Gentleman very much for his intervention.

I will conclude by saying that I support the amendments that would require professionalisation of the industry— that would be very sensible and consistent with other legislation that the House has passed. I also support new clause 5 and amendments 4 and 8, tabled by the shadow Minister, the hon. Member for Greenwich and Woolwich (Matthew Pennycook); new clause 39, tabled by the Chair of the Select Committee, the hon. Member for Sheffield South East (Mr Betts); and new clause 25, tabled by the Father of the House, the hon. Member for Worthing West (Sir Peter Bottomley). The Bill goes some way towards providing the protection that we need, but it needs to go much further to protect freeholders from rogue developers and estate management companies. I urge the Government to take that away and do more.

[Mr Deputy Speaker (Mr Nigel Evans)]

To protect the last six speakers and protect ministerial time as well, there is now a five-minute limit on speeches, which will give the Front Benchers sufficient time to respond.

Local Government Finance

Helen Morgan Excerpts

Wednesday 7th February 2024 Commons Chamber

[Helen Morgan (North Shropshire) (LD)]

In common with many Members of the House, including 40 Members of the Government Benches who signed a County Councils Network letter a couple of weeks ago, I can report that my local council—Shropshire Council—is cutting services because it is chronically underfunded. I declare my interest as a vice-president of the Local Government Association.

It is disappointing to try to score political points about an issue that is so important and directly affects the lives of so many people. Shropshire Council is run by the Conservatives and, while undoubtedly the Liberal Democrats would make different political choices about how money is spent, there is no getting away from the fact that the issue affects councils of all types, under all parties, because there is a chronic structural funding issue that we need to address. Most people in Shropshire are paying more for less because of our social care costs, which amount to 85% of the budget. No political party will be able to solve that issue without additional help from central Government. There must be recognition of the social care crisis that is overwhelming councils such as mine.

It is worth reflecting on the amount of central Government funding that has been awarded to councils since 2016-17. According to the House of Commons Library, there has been a £5.75 billion decrease in real-terms funding—in Shropshire, that is about £37.3 million—and compared to 2015-16 there is 51.3% less funding per person in Shropshire from central Government. How are we going to stop people paying more for less? I do not have the answer, and I know the leader of Shropshire Council does not have the answer either.

What does that mean for people across the country? Providing fewer services drives inequality of all types. Let us think about the example of swimming pools. The Government have said 276 local authority pools have been closed since 2015, including the Whitchurch swimming pool in my constituency, although we are lucky because that pool is being rebuilt. Many places are not so lucky; people in my constituency may be without a swimming pool for years, but in some places it will be forever. If they cannot get to a neighbouring town, have access to a car or pay to go to a nice private swimming pool, their children will not learn to swim. That fundamental and deep inequality, which we should avoid, is a direct consequence of poor council funding.

Another example in my constituency is that the civic centre in Whitchurch has had to close recently because of issues with reinforced autoclaved aerated concrete and asbestos. The council cannot afford to either rectify or rebuild that civic centre because of the interest on the money they would have to borrow. The amount to be borrowed would be about £7 million, so the interest would be about £750,000 a year. The council should not be in a situation where it cannot provide cultural enrichment or generate economic benefit by bringing people into the town centre because it cannot afford that relatively small amount of additional borrowing for something so basic.

As I mentioned, Shropshire Council is Conservative-run. I have had some constructive meetings with its leader, who has been very open and said that the social care requirements will overwhelm the whole budget in future years unless something urgent is done. No amount of paperclip savings will get the council to the point where it will be able to afford our social care budget in the future. Not only do we have an ageing population and an elderly demographic, but we are also a very rural area. The cost of delivering social care is much higher in such areas—a point to which other Members have alluded—as carers have to travel long distances between each person they are caring for and so pay high fuel costs. It is much more expensive to deliver that social care.

We need to look urgently at the issue of fair funding, taking into account the cost of service delivery. While the £15 million increase in the rural services delivery grant is welcome, the total budget of £120 million will not touch the sides of the social care issues that councils in rural areas face. We urgently need the Minister to work with his colleagues in the Department for Health and Social Care to fundamentally reform how we fund and deliver social care. Until we grasp that nettle, we will not solve the issue of local authority funding with the odd extra bit of money here and there. Someone could end up in crisis just so that fewer councils have to issue section 114 notices.

I wish to touch on children’s social care and special educational needs and disabilities. I had an interesting conversation with a school recently about its budget. I realise that this is not a topic for this Department, but, while the money the school gets to support a child on an education, health and care plan is woefully inadequate—it makes a loss on each child that it is trying to support—the £6,000 cost is crippling the council budget. We need to look at that, but, again I urge the Minister to consider what that means for the lives of individual people. I have a case of a young man who has just turned 16. He has a life-limiting illness and severe disability. The council had to save money and made a policy decision not to fund transport for young people over 16 with special educational needs and disabilities, so his transport funding was cut. Thankfully, we have resolved the situation for that one individual, but there will be thousands of other individuals in the same position across the country, and the impact on the family is devastating. Those young people need to go to a special place during the day for additional care or schooling, and their parents need to go to work. If the transport is not there, it has a fundamental and detrimental impact on the life of that family. We need to acknowledge that and find a way to solve the issue.

The Levelling Up, Housing and Communities Committee report, which has already been referred to by the hon. Member for Sheffield South East (Mr Betts), has said that SEND support is an issue that will lead councils to a cliff-edge of section 144 notices, so we need to address that matter properly.

I also wish to touch on the issue of housing, which affects those district and unitary councils that have to deal with the problem of temporary housing. A couple of weeks ago, Eastbourne District Council organised an event in Westminster; they invited council leaders of all parties and from all parts of the country to discuss the issue of temporary housing and its impact on their budgets. It was a well-attended event, with a good deal of cross-party agreement. However, I was a little disappointed not to see a Minister there to talk to those council leaders.

Eastbourne is spending 48% of its budget on temporary housing. That is not sustainable. Even in Shropshire, which cannot be counted as one of the councils with the most critical issue of temporary housing, we have seen the numbers of those in temporary housing double since 2018. It is important that the Government grasp this issue of social housing—housing for social rent—because people are living in temporary accommodation that is often unsuitable, inadequate, and not anywhere that any of us would be satisfied to live in. The problem could be solved by investing in social housing. We have a plan to deliver 150,000 social houses a year by the end of the next Parliament. To put that into context, it would save, according to the House of Commons Library, £11 billion a year in housing benefit, which currently ends up in the hands of private landlords. Therefore, it makes economic sense to solve this problem, and I urge the Minister to consider that.

I am aware that I have repeated some of the points that other Members have made. Rural councils are struggling to meet the needs of an ageing population and the increased costs of delivering those services. They are struggling to plan not only with this single-year settlement, but with the fact that there is no certainty about what happens after next year. Shropshire Council is trying to save £50 million this year. That means £1 million of cuts every week to services that people have paid more for, and the council does not know what it will cut next year. That is the reality. Dipping into reserves, using some of its capital budget for revenue, or selling off some of its assets are one-stop solutions and do not solve the ongoing structural deficit into the years ahead. Therefore, once a council has sold the library and spent that money on adult social care, what does it do the following year? There is no library left to sell. It is so important that we do not plug these gaps with short-term fixes. We must address the structural problem affecting our councils.

In my meeting with the council leader, I was told that even after a 30% increase in council tax in Shropshire to plug the gap, people would still see a cut in services. Clearly, that is unsustainable and unacceptable.

Let me return to this point about the difference between rural and urban councils. The Rural Services Network has said that urban councils get 38% more than rural ones. However, we should not be having an argument about robbing Peter to pay Paul, because those urban councils are in crisis as well. We need to look at the overall cost of delivering services, and find a solution to deal with the fundamental drivers of increased costs.

I know that the Minister has been a councillor, as have many Members. Regardless of their political party, no councillor has got themselves elected and put themselves on the frontline in order to charge their own residents more and deliver less. We should be considerate of individuals in that situation, and address the fundamental drivers of the crisis affecting councils led by all parties and in all parts of the country. To reiterate, the issues are social care, children with special educational needs and disabilities, and housing. I urge the Minister to work with his colleagues in the relevant Departments to come up with long-term fundamental reform in those areas to solve this crisis.

--- Later in debate ---

[Chris Loder]

I thank the hon. Lady for giving way. I appreciate the point she makes and agree with much of what she says. I just wanted to briefly say—

[Helen Morgan]

On a point of order, Mr Deputy Speaker. I believe my hon. Friend had finished her speech. She was not accepting an intervention.

[Mr Deputy Speaker (Sir Roger Gale)]

Are we saying that the hon. Lady had sat down?

Leasehold and Freehold Reform Bill

Helen Morgan Excerpts

2nd reading
Monday 11th December 2023 Commons Chamber

[Helen Morgan (North Shropshire) (LD)]

I have mentioned before that Liberals have been campaigning to end leasehold since the days of Lloyd George, so I am pleased to see this piece of legislation finally being debated in the dying days of this Parliament. I hope that there is the time left to pass it and see meaningful change for the many leaseholders—leaseholds comprise 20% of the housing stock in England—who are boxed in by exorbitant management charges and uncapped ground rents.

The content of the Bill is welcome, and the Liberal Democrats will not oppose it on Second Reading, but, like other Members, we have significant concerns about the omissions from it. First, the Bill does not actually ban leasehold. Perhaps more importantly, it does not ban the creation of new leasehold flats. I do not grasp the logic of arguing that leasehold is outdated and unsuitable for the modern housing market, while allowing 70%—the vast majority—of leasehold arrangements to go ahead.

The Liberal Democrats support the comments made recently in The Guardian by the shadow Minister, the hon. Member for Greenwich and Woolwich (Matthew Pennycook), that

“commonhold should be the new default tenure”

for all flats, and that it should be easier for leaseholders to collectively purchase their freehold should they wish. I also agree with several other Members that giving leaseholders first refusal when the freehold is sold is a good idea. It seems to me that without those more radical measures, the Bill is less leasehold reform and more leasehold tinkering.

I think that we all agree with the Secretary of State that this is a feudal system that needs radical overhaul, and I am not sure why the Bill does not go further to achieve that. I have been lobbied, and I have some sympathy for the argument that there is a need to ensure that there is a clear line of responsibility, and indeed liability, for building maintenance and safety in large blocks of flats, but most other countries—in fact, all countries other than Australia—have managed to achieve that without reliance on the leasehold model. Indeed, our recent experience regarding the safety of large blocks of flats, with the cladding scandal, suggests that in many instances the leasehold model has demonstrably failed to provide it. We probably all agree on that point.

I am also confused about why the Bill omits to introduce professionalisation in the management of leasehold buildings. The British Property Federation has said that

“the lack of any provision to introduce competency standards or regulation to our sector is a missed opportunity.”

Given the experience of many leaseholders over the cladding scandal, and the welcome professionalisation of the social housing sector, I hope that the Government recognise the importance of ensuring that management is professionalised and will seek to introduce such measures in Committee. I wonder whether the Minister would commit to that in his closing remarks.

In my North Shropshire constituency we do not have a large number of flats, but we have been plagued to some extent by new housing developments in which the housing is freehold but shared areas, services and essential infrastructure are managed by the original developer. As we all know, those are referred to as fleeceholds, and since being elected I have told a number of horror stories regarding such arrangements, both in this Chamber and in Westminster Hall. The provisions in the Bill that allow the right to challenge charges, provide for greater transparency of information, and relate to the quality of work and an associated system of civil penalties, are a welcome step in the right direction, but I wonder whether I could push the Government to go further in that area.

The tenants of such developments pay both their council tax and an estate management charge, yet they often receive a far worse service than those who live in adopted developments and are subject only to council tax. The hon. Member for Dartford (Gareth Johnson) laid out some of the issues in his excellent speech, so I will not go into too much detail, but I urge the Minister to consider ending the practice of shared ownership of public spaces for the vast majority of new developments. They have the commercial substance of a leasehold, and I would like to see a presumption that the shared areas around new developments are almost always adopted by the local authority where the development is standard in nature. Where there is no good reason for that not to happen, homeowners on those developments should have their rights clearly set out so that the matter can be settled quickly in court.

I ask the Minister to consider further the specific circumstances where assets such as sewage pumping equipment or a ground source heat pump are shared by everyone on the estate. I am grateful to him for listening to my concerns prior to the debate. Freeholders using such equipment are dependent on its being installed and maintained to a high standard, but the experience of my constituents is that conveyancing solicitors do not alert buyers to the risks involved in this type of structure, and that the ownership structure can be opaque and almost impossible to challenge. I have one development in which the developer retained the ground source heat pump to be used by the rest of the houses in a separate company. He charges the full cost of running that pump to the residents but keeps the renewable heat incentive payments to himself, making a huge profit in the process. The freeholders’ only route of redress is through the courts. Because of the opaque management structure, it is not clear that they will win, and they do not really have the resources to commit to those legal proceedings.

It is not uncommon in rural places such as North Shropshire for a new development to use a shared septic tank rather than be connected to the mains sewer. If the tank has been installed to a poor standard, the costs of rectification are charged to the freeholders once they move in. Those are costs that they would not have anticipated when they bought the property. I would welcome greater clarity over who is responsible for ensuring that such shared assets are fit for purpose before the freehold houses are sold for habitation. Currently, such assets and services are outside the building control regime. That means that if someone gets a completion certificate on their house, which might have been properly constructed, but their sewage system is not fit for purpose, they will still have a valid building control certificate, and will be none the wiser when they buy the property.

I ask the Minister to consider whether further protections can be put in place, such as ensuring that inspections of those assets are included as part of the building control sign-off, ensuring that reserve funds are being collected and appropriately ringfenced through reasonable service charges throughout the life of such assets, and allowing freeholders to take joint ownership of the assets for a nominal fee if they wish to do so. A right to manage would be so welcome for residents trapped in such situations.

Will the Minister also expand on the issue of enforcement? The additional rights afforded to leaseholders and those paying estate management charges will be effective only if there is an affordable way for leaseholders and fleeceholders to ensure that they can be enforced. We all have experience of freeholders simply failing to respond to correspondence, or requiring their tenants to take them to court in a highly unaffordable process, often charging the costs of that court process to leaseholders. Enforcement is therefore not really achievable at the moment, but it is so important to ensure that those revenue streams are effectively squeezed for freeholders.

The Bill is a small step in the right direction, but so much more could be done to end this outdated form of tenure. It was 1909 when Lloyd George described leasehold as “not business, but blackmail”. It is high time that we grasped the nettle and ended it.