Local Authority Housing
The next item of business is a debate on motion S1M-1626, in the name of Tommy Sheridan, on local authority housing capital debt, and two amendments to the motion. Will members wishing to contribute to this brief debate please press their request to speak buttons.
The issue of capital receipt set-aside rules should be deeply embarrassing for new Labour members in the chamber, particularly the former Labour councillors and MPs who so roundly and rightly condemned Michael Forsyth when he introduced them in Scotland in 1996. The Scottish Socialist Party is opposed to council house sales, but many Labour councils could at least justify their sale of stock, on the basis that the receipts that they gained would be used to improve their dilapidated existing stock.
Until 1997, capital receipts were an important part of local councils' housing investment programmes. However, one month before new Labour came to power, a new instruction was given to local authorities in Scotland; not a law, but an instruction, which could be changed without legislation merely by sending a letter. The instruction was to set aside 75 per cent of their council house sales receipts to pay off capital housing debts.
This is not the sexiest topic in the world, but it deserves to be highlighted because of the consequences of the set-aside. By refusing to change the Tory instruction from May 1997, and by sticking with that rule throughout the past four years, new Labour in Westminster and the new Labour-Liberal Executive in Scotland have denied Scotland's council tenants a potential investment, but not of £641 million as I say in my motion, because I underestimated the figure. I received a letter from Jackie Baillie yesterday, which gave me an updated figure of £642,981,000. Just less than £643 million of potential investment has been denied to Scotland's council tenants because of Labour's refusal to change a Tory regulation.
That amount of money could have improved the living environments of at least 250,000 council tenants in the past four years—not the next four years, but the past four years—by paying for central heating, double glazing and re-roofing projects. That is why it is vital that the loss of £643 millions worth of investment and the loss of the 10,000 jobs that could have been created by that investment is raised in Parliament today. I hope that there is support for the motion, which calls for the immediate rescinding of the set-aside rules, and the release of £161 million immediately for local authorities in Scotland during this financial year, and another £160 million in the next financial year.
I move,
That the Parliament notes the introduction of capital receipt set aside rules by the previous Tory government in April 1996, diverting significant resources from council expenditure across Scotland; further notes the universal opposition of Labour MPs, councillors and CoSLA to these set aside rules when they were introduced; also notes that since financial year 1997-98 a total of £641 million has been diverted from investment in council housing stock and from 1999-2000 to 2000-01 a total of £315,536,000 has been lost from council housing budgets; finally notes that the sum lost from council housing budgets since 1999 could have delivered 126,214 households with whole-house central heating and insulation and/or double-glazed window units, and therefore agrees to rescind the capital receipt set aside rules with immediate effect, thus releasing in excess of £150 million in the current year and a similar amount in financial year 2001-02.
I thank Tommy Sheridan for bringing this matter to the Parliament's attention. I am always more than happy to bring to the attention of Parliament our strong commitment to investment in housing. Of course, this is a strange debate, and I am not entirely sure why Tommy Sheridan has organised it in this way, although my mind suggests one or two ideas that I will not mention. We will barely manage a whistle-stop tour of the issues, but let us have a go.
Let us address the fundamental premise of the debate. We all know that we must tackle underinvestment in Scottish housing, and we know the scale of need. We have rehearsed these issues many times in the Parliament, and they are all too evident in our constituencies.
I am glad that Tommy Sheridan recognises that Labour councillors and MPs have been at the forefront of pressing the Government to recognise the need to invest and to tackle the deep-seated problems that have accumulated in Scottish housing. It is good to hear Tommy at last give Labour councillors credit, because they know that there is a stranglehold at the centre of the housing problem in Scotland. The current council house debt stands at around £3.6 billion. In Glasgow, the debt burden is reaching unsustainable heights of about 50 per cent of tenants' rents. Many informed voices say that the debt is the underlying problem. It is in that context that the capital set-aside rules must be considered.
The Scottish Executive has not been persuaded to pursue what is, in my view and given the context, a partial and short-term approach. In the absence of the capital set-aside rules, what would Tommy Sheridan have us do, but merely increase the debt burden. If debt is not repaid when houses are sold under the right to buy, an increased debt burden will fall on remaining tenants, which will lead inevitably to increased rents over time.
Since the introduction of the capital set-aside rules, the debt burden has been reduced from £4.1 billion in 1995-96 to £3.6 billion in 2000-01. That is a reduction from £7,400 per house to £6,500 per house—more than £930 per house. Tommy Sheridan would have us not worry about the increasing debt problem; in his economic analysis, we do not have to worry about such things.
We have answered what he has asked of us. We are creating investment and jobs, but we are also tackling the debt. The Scottish Executive has offered—once and for all—a radical, fundamental and progressive solution to the problems. We will deal strategically with the burden of debt in a striking act of redistribution. We will have a step-change in investment and we will put tenants at the heart of decision making about investment priorities and housing management. I ask members to reject Tommy Sheridan's motion, because it is short-term and backward-looking. The Scottish Executive will take us forward.
I move amendment S1M-1626.2, to leave out from first "notes" to end and insert:
"recognises the need to provide innovative solutions to tackling the high levels of local authority housing debt; notes that the use of capital receipts contributes to the management of that debt burden; welcomes the Executive's community ownership initiative as a means of lifting the debt burden from tenants, securing a step change in investment and putting tenants at the heart of rebuilding communities, and also welcomes the Executive's commitment to provide all council and housing association tenants, and all pensioners in both public and private housing, with warm and dry homes through the installation of central heating and insulation by 2006."
This should be a non-debate. Given the circumstances of Scotland's housing and the desperate need for investment, we should expect no one to oppose the principle behind the Scottish Socialist Party's motion and the SNP's amendment. I hoped that I would not have to speak because the minister would concede the principle of the motion and confirm her intention to rescind immediately the capital receipt set-aside rules, as the Labour party demanded when it was in opposition. However, I have long since realised that the Executive has a different perspective on housing and on many other issues from most Scots.
Perhaps the minister needs to be reminded of the housing issues that must be tackled. Approximately 25 per cent of Scotland's houses are affected by dampness or condensation—that is about half a million homes in which young people and particularly the elderly face significantly increased risks of respiratory and other illnesses. The problem affects as many as 370,000 young people and more than 100,000 of our elderly population. It is no wonder that illness and death beset our elderly at this time of year because of cold-related illnesses.
Those deaths are not often headlined, but we know that they occur. We know why they occur, and we know what we should do to prevent them. Improving social housing stock would help enormously, but still the Executive dithers. Still, the Executive relies on the panacea of housing stock transfer to provide the resources for much-needed investment. Still, the Executive refuses to recognise that the right to buy means that fewer council tenants will foot the bill for council housing improvement and repair. That is why rents are rising. It is crazy and out of order that the majority of the proceeds from right-to-buy sales cannot be used to improve the lives of the people who remain in social housing.
Will Linda Fabiani take an intervention?
No.
Those funds cannot be used for even basic central heating—which is mentioned in the Executive's amendment. Why are we waiting so long? In Glasgow, is it because we must wait for the housing stock transfer?
The set-aside rules and other factors have led to the massive reduction in public investment in housing. Since the rules were introduced in 1996, public capital investment has been reduced to half what it was during the preceding years of Tory rule. At first glance, this debate appears to be about unintelligible rules of public finance, but it should be about the impact of those rules on the lives of ordinary Scots and the people who look to the Parliament and the Scottish Government to make a difference.
Before the election, the Liberal Democrats supported the call for greater public investment in housing. The Executive's programme promises only greater private investment, and that only if tenants can be forced to vote yes in a ballot. I ask the Liberal Democrats to use the debate to show that they are firm in their support for greater public investment in housing by supporting Tommy Sheridan's motion, as amended by me on behalf of the Scottish National Party.
I move amendment S1M-1626.1, to leave out from "also" to end and insert:
"notes that the imposition of the capital receipt set aside rules is only one example of the attack on public investment in housing that began under the Conservatives and has been continued by the present UK Government and Scottish Executive; regrets that the Labour Government and this Labour/Liberal administration have continued this Conservative policy, and calls upon the Scottish Executive to rescind the capital receipt set aside rules with immediate effect and so inject much needed funding into Scotland's public sector housing."
I echo the irritation that was expressed about the manner in which the debate is taking place. To be frank, the length of time that has been allocated to the debate negates its value and renders it worthless.
The SSP motion proposes the removal of the set-aside rules that the Conservative Government introduced in 1996 and that the present Executive retained with slight modifications. The set-aside rules were implemented because the housing debt was going out of control. It was as high as £4 billion, and from 1987 to 1996 it increased by £1 billion. Action was necessary.
Margaret Curran may not like this, but I suggest that one of the reasons why the action had to be taken was the quadruple whammy that Labour councils imposed. They had run up a massive housing debt, had large housing lists and a large number of vacant houses, and were carrying bad debt provisions. In Glasgow, the figure was £12 million. Therefore, there was not too much realism in some of what Margaret Curran said. I feel with some wry amusement that she is the classic case of a poacher turned gamekeeper.
The motion does not say this, but the SSP's policy is to rescind Scotland's housing debt obligations altogether. The problem with that is similar to the position of someone who defaults on their mortgage—they are no longer able to obtain loans. Does the SSP want Scotland's local councils and Government to be unable to obtain funding? That is the situation that we are talking about. If we renege on the undertakings that we gave when the loans were taken out, no one will believe us any more and we will not be able to obtain money. We will be unable to take the actions—many of which have been properly identified—that are needed.
The thinking behind the motion is simplistic and immature. Frankly, if we proceeded along the suggested lines, we would be following the economics of the madhouse.
I am sorry; I do not have the time to allow an intervention. If the debate had been longer, I could have taken one.
I consider with some amusement the Administration's amendment, which the Conservatives will support. How times change. I do not think that Margaret Curran would have taken such a line five years ago.
In principle, I have no difficulty in accepting the possibility of changing the capital set-aside rules. The situation is no different from when a householder takes on additional borrowing on his mortgage to pay for central heating. However, the householder who does that must be able to deal with the extra interest that that borrowing creates. That is the basic point. At the end of the day, this is a debate about stock transfer—particularly in Glasgow—in another guise.
We should take it as read that all members accept that the quality of much of Glasgow's and Scotland's council housing stock is unacceptable. We all want to deal with that and create conditions in which all our citizens live in warm, dry and decent houses in nice environments. I say that because sometimes the quality of debate, in speeches such as those that were made by Tommy Sheridan and Linda Fabiani, suggests that only those members are concerned about the matters at hand and that the rest of us are a bunch of charlatans, chancers and idiots.
Let us look more closely at the facts and assume that the basic laws of economics continue to apply. By that, I mean that money borrowed must create a liability to pay interest and that someone must pay that interest. Glasgow has a debt burden of £900 million on its housing, which costs £107 million a year to service. The average weekly rent in Glasgow is £44.10—among the highest in Scotland. About half of that services the debt charge. It is doubtful whether the housing stock that is created, managed and renovated to a modest degree as a result of that expenditure has a significant net value.
The situation is the result of inadequate investment by successive Governments, the removal of the asset value of the best stock by council house sales at high discounts and bad management over generations by local councils—which were largely dominated by my present partners in the Labour party. What is Tommy Sheridan's solution? It is to entrench the power of the failed municipal model of socially rented housing. It is to condemn council tenants to another generation of the same. It would mean the indefinite continuation of bad housing, damp housing and sink estates. It would also mean higher rents—all within the huge paradox of accessing the proceeds of council house sales, the principle behind which he does not accept.
The alternative is the community model that the partnership supports. That is exciting, innovative and dynamic. It is also a major challenge for us. It deals with the debt charges by making them the problem and the responsibility of Scottish taxpayers. They will take on the burden only because they are satisfied that doing so will deal with the problem. The action will do that, because it will harness the energies of the people who are affected. We are giving ownership of the future of the houses to the people who live in the areas that are involved. The model is a step change for tenants that will deliver the good housing that all members want. Tommy Sheridan's proposals would not do that.
Robert Brown touched on the key paradox—Mr Sheridan crying for the receipts of the very council house sales that he opposed in his amendment to the programme for government motion last week. Tommy cannot have it both ways. He should reflect on that.
Tommy Sheridan does not have a commitment to deal with national debt issues, because his political agenda is based on the destabilisation of that economic structure. He benefits from a revolutionary, Trotskyist perspective. That is his core agenda but, unfortunately, we do not have debates like this often enough to find that out. We are dealing with showbiz socialists; we are talking about finding simple answers to complex problems.
I understand why local authorities have accumulated debt over the years—it is not the result of the picture that was presented by the Conservatives today, but of far more complex issues. We do not resolve debt by giving somebody who has incurred debt another credit card and telling them to spend the money and make the same mistakes again. That goes against much of what Tommy Sheridan has said on debt counselling advice, diligence and how we should support folk in finding routes out of debt and not accumulating debt in the first place.
Will the member take an intervention?
I am sorry; I have only three minutes.
Tommy Sheridan has joined the home ownership fraternity in the past year or so—I welcome that. However, it is not a serious economic proposal to go to the building society and say, "I'm awfully sorry, Mr Building Society Manager, I don't want to continue paying interest on my existing house, but is there any chance you can give me a loan so I can pay the interest payments on another house?" In isolation, Mr Sheridan's motion seems attractive, but it is much less so when we consider the programme for government.
Last week—to my astonishment, and in contradiction of his essential point—Mr Sheridan proposed
"a replacement of the tenant's right to buy with a comprehensive rental bonus scheme awarding long-term tenants of 15 years or more in the one property with a rent-free period".
He does not specify the period or the cost, but the idea seems attractive.
Let us take a one-year scenario. It would cost £400 million a year for a third of the council tenants who have more than 15 years' tenancy to be given a rent-free period. Quite apart from the disharmony that would be caused in communities when the folk on low incomes who have bought their houses felt that they were disadvantaged by a proposition that was solely for council tenants, that would not even be a sensible use of the economic resources that are available to the country. I care about that—Tommy Sheridan does not. That is the key distinction between the two of us, in economic policy and in political theory.
This is a minor issue that is masquerading, as Robert Brown said, as the bigger debate about stock transfer. In the real debate that faces not only Glasgow, but every other authority that has large volumes of debt, Mr Sheridan needs to address whether he wants to cling to a municipal model that has failed, or to find a different model that is debt free and delivers for tenants much more quickly than any model that he clings to.
Mr Sheridan's model might be a failed municipal model, but it used to be Mr McAveety's municipal model. Although Mr McAveety supports the 75 per cent rule now, he did not when the Tories introduced it.
Will the member give way?
I would love to let Mr McAveety in, but I have only two minutes.
The reality behind the debate is that—quite apart from the highest ever homelessness levels—Scotland continues to have one of the worst housing records in Europe. Far too many of our fellow citizens live in damp, overcrowded and poorly insulated houses that are a disgrace in the 21st century. Far from curing the situation, present Government policy on capital finance prevents any long-term solution.
Council housing departments, working with and complementing private and public housing agencies, should have been the engine room that drove forward rising standards in Scottish housing provision. Instead, Tory policy that has been adopted by new Labour has starved local authorities of the finance that is required and wiped out council house building in Scotland. Our democratically elected councils are being prevented from making a positive contribution to increasing, repairing and maintaining Scotland's housing stock. Council house sales should have been inextricably linked to a building and replacement policy. Capital receipts worth £642 million should have been part of a programme for positive investment to raise public and private housing standards throughout Scotland. Instead, there is a shortage of housing at sustainable and affordable rents for the people who most need it. Simply dumping whole swathes of council properties into the private sector will not cure the problem of supply and investment—it will exacerbate it.
Seventy-five per cent compulsory repayment of debt from capital sales should have been dumped by new Labour, not adopted by it. The result of the 75 per cent rule and the dogma of London Treasury rules is lack of investment. It is a short-sighted, self-defeating policy that fails to meet present needs and that stores up massive problems for the future. It is time that we had sensible, positive, Scottish capital finance policy that is designed to meet Scottish needs.
It is frustrating that we have so little time for the debate.
I am staggered every time I listen to SNP members such as Linda Fabiani and Andrew Welsh. I know that they are going through a rolling programme of changing their policies in the lead-up to the election—I am desperately looking forward to hearing their policy on housing, because perhaps we will get final clarification. Are they in favour of the right to buy or are they not? They change their tone opportunistically, depending on the circumstances. We listen to Linda Fabiani's speeches and think "My God, what extra resources does she have to commit to deal with all the problems?" The fact that central heating cannot be put in overnight is a criticism from the SNP, which comes nowhere near grasping how housing investment must be managed.
What SNP members did not mention is redistribution from England to Scotland. The extra capital receipts from England have helped new housing partnerships. However, the SNP does not want to talk about that, because it concerns England.
As for the Tories, let me speak to Bill Aitken. Let me make it clear—the Executive's approach is completely different to local authorities' approach.
Will the minister take an intervention?
If Kenny Gibson listened, he might learn something for a change.
We have a completely different approach, because we are dealing decisively with the debt. Councils try to leave the debt with the tenants, but the Executive will help out the tenants of Glasgow and of Scotland. The Executive does not use the fantasy economics of Tommy Sheridan, who would bankrupt Scotland if he could get away with it, but a sustained, coherent programme of tenant involvement, tenant power and investment in housing. We will tackle Scotland's housing debt problem. That is the future for Scotland's housing and the SNP cannot bear it because it knows that we are going in the right direction. We reject their amendment.
Presiding Officer, allow me to quote a letter, dated 7 September 2000, to Wendy Alexander from Norman Murray, the president of the Convention of Scottish Local Authorities. It is quite instructive, especially in relation to Mr McAveety's contribution.
Mr Murray says:
"COSLA has made representations on a number of occasions to the Scottish Executive, at both Ministerial and official level, about the case for removing the set aside on housing. Yet, in separate conversations recently with Jack McConnell and Frank McAveety, neither was aware of the case we had been making. I am therefore writing to you to set the record straight."
The problem in the debate on capital receipts is that Labour members in the chamber seem to have had a remarkable loss of memory. That same party wailed in huge numbers about the Tory Government's instruction to set aside capital receipts and to disallow spending of that money on damp-ridden and dilapidated houses. Quite rightly, those same members attacked the Tories for a disgraceful decision, which they now pathetically defend.
Where is the redistribution in the past four years? The only people who have paid the cost of the set aside of capital receipts are the tenants of Scotland, 250,000 of whom have not had central heating or double glazing installed. I say to the minister that I am not talking about what could be done overnight, but what could have been done in the past four years. She stands condemned.