Social Housing (Nottingham)

Robert Neill Excerpts

Tuesday 7th December 2010 Westminster Hall

[The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)]

As ever, it is a pleasure to see you in the chair, Mr Gale. I am grateful to the hon. Member for Nottingham South (Lilian Greenwood) for raising these matters and I congratulate her on securing the debate. She raises a number of understandable concerns, which reflect, I suspect, the inevitable difficulties that result from our predecessors breaking the bank. Unfortunately, the consequence is that the current Government have to pick up the tab, and that involves some very tough decisions; I do not pretend otherwise.

I take on board the specific points that the hon. Lady has made in relation to particular concerns of her constituents and the situation in Nottingham. I know from personal experience in my constituency of Bromley and Chislehurst of the importance of a well-funded and well-managed social housing sector. I understand why the hon. Lady is disappointed that funding for the Meadows estate private finance initiative scheme will not now be available; I do not complain at all that she has raised it as a concern. However, I make no apology for repeating what Ministers have consistently said to the House. Since coming to office, our most urgent priority has been to tackle this country’s record deficit. Our clear message is that we need to restore confidence in our economy and support the recovery. Failure to do so will prejudice investment in housing of all kinds in the longer term.

We are living in difficult times and we need to take difficult decisions about how we reduce our national debt; I am afraid that that cannot be shrugged off. We need to be honest with people about the hard choices that we face. We must live within our means and deliver value for money for the taxpayer in all our investments. Simply put, my Department does not have the resources available to fund every private finance initiative scheme. It was quite clear when the previous Government were in office that there would have to be considerable cuts; the previous Chancellor indicated that there would have to be cuts. Cuts in regeneration funding worth some £300 million were announced before the general election. There was no guarantee that any scheme would continue whichever party came to power.

Given that we were not able to support every PFI scheme, my right hon. Friend the Minister for Housing and Local Government and fellow Ministers concluded that our priority had to be to support projects that were in procurement. Those projects were more advanced; some had got to the contractual stage and others had undergone considerable preparation work. That means that we cannot support projects which, although undoubtedly worthwhile, are only in the pipeline and have not progressed to the procurement phase. Such projects include the Meadows in Nottingham. Councils, including Nottingham, were notified that funding would not be available on 22 November.

None the less, it would not be right to assume that that means there is no commitment on the part of the Government to fund housing, including social housing, and improvements in housing. That may not help in the hon. Lady’s case, but it is important to set this decision in a broader context. Over the same period of the spending round, my Department will make available £721 million for PFI projects that were in contract. We are making available a further £372 million for other projects that were more advanced in the procurement stage. Therefore, it is the procurement and the contract that have the priority. That demonstrates very clearly that we are by no means washing our hands of this issue. We have a clear commitment to continue funding social housing and decent homes, but when the money runs out and one inherits an empty set of coffers, a line has to be drawn somewhere. As well as funding housing PFI, we will assist fire PFIs if they are in contract and procurement as well.

I know that that is a disappointment for Nottingham. It is a thriving city—I have visited it in the past, but not since the general election—but like any city, it faces challenges. However, I am confident that Nottingham and its social housing sector can weather the current financial storm and build a sustainable and prosperous future. Let me highlight a good example of an organisation in the city that has turned its fortunes around. Nottingham City Homes is the arm’s length management organisation that manages the council housing stock on behalf of the city council. A couple of years ago, it faced some real challenges, but it is now delivering a successful decent homes investment programme. That large capital programme has already invested £74 million to upgrade the housing stock in the city, which is helping to make homes safer, more secure and more fuel efficient. The sadness is that our economic inheritance constrains our ability to help everyone in the same way.

[Lilian Greenwood]

Recognising that Nottingham City Homes works incredibly hard to achieve its two-star rating, and so has been able to access central Government funding for decent homes money, is it fair that it should now be told that it has to rebid for that money and that it may not get the full funding that is required to bring all Nottingham homes up to standard? How can that be reasonable and fair, and how can Nottingham City Homes respond to that when it will be short by a significant measure of the funds that it needs to carry on with work that it has already set in train?

[Robert Neill]

Because fairness requires that we have to recognise that we must cut our cloth according to the cloth that is now available to us. Unfortunately, because of the economic policies that were pursued previously, there is less money available, so we must say to organisations, including good organisations—and Nottingham City Homes is not unique in that regard—that they have to rebid. That is at least keeping a door open, given the limited pot that we have available.

In relation to PFI projects that we cannot fund, such as the Meadows, it is worth saying that the Homes and Communities Agency is in discussion with all the authorities in that situation to see if there are some parts of those projects—not the whole, but some parts—that it might be possible to advance through some other means. I cannot hold out promises; I would not seek to do so. However, those discussions are taking place and I am sure that the hon. Lady and her city council will be in touch with the HCA swiftly about that matter, if they are not already in touch with it; I suspect that they already are.

Work is therefore being done and there is investment going in. The ALMO in Nottingham—Nottingham City Homes—is engaged with wider agendas, to which the hon. Lady fairly referred, such as community empowerment and tenant engagement. It is also working with partners to tackle joblessness and welfare dependency. We are committed, too, to continuing funding for the decent homes programme. The coalition Government are committed to reducing the £3.2 billion capital investment backlog in council housing that we inherited from the previous Administration. This year alone, we are investing about £1 billion in decent homes funding to improve the social housing stock, despite the difficult financial envelope that we have to live with. I think that, again, that clearly demonstrates our continued commitment to invest in communities and support neighbourhoods, including those inhabited by some of the most vulnerable people.

In the spending round, we fought hard to secure a good settlement for the decent homes programme. At the time, there were people who said that the Government might abandon the programme altogether, but that has proved not to be the case, thanks to the work of my right hon. Friend the Minister for Housing and Local Government, and his colleagues. In fact, we have secured more than £2 billion of capital funding during the next four years, which is sufficient to halve the remaining capital investment backlog. That means that about £1.6 billion will be available for local authority housing, which could deliver more than 150,000 refurbished council homes by 2014-15.

Furthermore, we have not stood still on the allocation of future decent homes funding. On 11 November, together with the HCA, we published proposals for allocating funding, on which local authorities will be consulted. In future, decent homes funding will be available for all local authorities, including Nottingham city council, that have a significant investment backlog. We expect bids for funding shortly from such authorities, and I am sure that Nottingham city council will be among them. We are also moving to tackle some issues underlying the way in which our council housing finance system is organised, because it has been recognised for too long that it is unduly complex and overcomplicated. We are therefore using the localism Bill, which we hope to introduce in the House very shortly—I think that that is the appropriate phrase—as a vehicle to provide much-needed reform of social and council housing finance.

Under the proposed arrangements, which I hope will gain broad cross-party support, councils would keep their rental incomes under a much fairer and decentralised system. That is relevant to Nottingham, as the reforms will provide new opportunities and incentives for all councils to plan for the longer term, and to put in place effective asset management strategies. Nottingham, like many of our substantial cities, has considerable assets that fall within that category.

We have also indicated that we intend to press ahead with tenure reform. On 22 November, we published a paper that set out our intention to reform the way in which social housing is used, because we have to look at getting the best use out of the existing social housing stock. I think that the case for reform in that sector is strong and it is one that I have heard articulated by Members from all parts of the House, because it is an issue that is often raised in their constituency surgeries. It is not right that some people—I am sure that there are some in Nottingham—spend years on housing lists but never seem to get anywhere near an allocation. Ensuring that there is enough housing for those in real need is an important part of the housing mix too.

We also want to look at creating more flexible tenancies, which has been referred to by my right hon. Friend the Minister for Housing and Local Government. We are looking at flexible tenancies for a minimum of two years, but I emphasise that we will protect existing tenants, such as those on the Meadows estate; they will not see their situation change. This issue is about tenancies for the future, which may be appropriate for some of the new build that I hope in due course it will be possible to bring forward.

Finally, it is worth remembering that the new homes bonus will apply to social housing as much as to private housing. That bonus is a powerful, simple, transparent and permanent incentive for local authorities and communities to increase their aspirations for housing growth. At the moment, there is not much of an incentive for local authorities to welcome the creation of new homes. Beginning in April 2011, the new homes bonus will match-fund the additional council tax raised for new homes and properties that are brought back into use with an additional amount for affordable housing, so there is positive additional support for social affordable housing for the following six years. My Department has set aside nearly £1 billion during the comprehensive spending review period for that scheme, including nearly £200 million in the first year. We have made it clear that funding beyond those levels will be continued via the formula grant. That should mean that, by the sixth year of the scheme, about £1.2 billion will be made available as an incentive for councils that wish to build homes.

Against that background, despite the disappointment that I am sure the hon. Lady and her constituents feel, along with others who are in a similar position, I think that it is fair to say that the coalition Government have demonstrated a commitment to social housing. We want to see a flourishing social housing sector; we want to encourage talent working in that sector, and we want to encourage tenants and occupiers of social housing to become much more proactively involved in the management and improvement of their estates and homes. That is why we are decentralising power directly to local authorities such as Nottingham, so that they can decide how best to deliver their services. As I have said, against that background I am sure that councils such as Nottingham, which had PFI schemes in the pipeline, are already considering other options about how to deliver the outcomes that the PFI funding would have supported. As I have also said, the HCA will liaise with them and advise them on that issue.

We are determined to ensure that social housing continues to be relevant and available in a changing world. The underpinning rationale of the Government’s approach is clear and consistent: future investment is very tightly focused; it must deliver value for money; and we seek to provide access and provision to those in greatest need. Of course, we must do all of that in the context of our economic inheritance.

Although I accept that the hon. Lady will not be happy about the outcome in the case of her constituency, I have been honest with her about the position, and the Government’s overall commitment to social housing remains very firm despite the awkwardness of the economic inheritance that we have to live with.