Emily Thornberry (Islington, South and Finsbury) (Lab): I congratulate my hon. Friend the Member for Regent's Park and Kensington, North (Ms Buck) on managing to secure this debate on an important subject, and I thank her for her kind words, although I feel that they were undeserved. For many new Members, it is of enormous assistance when we first come here and find Members of Parliament such as my hon. Friend, into whose slipstream we can fall. Her comments are of course richly applicable to my right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman) for her work in fighting for leaseholders. It is very important that the poor should be represented strongly by inner London Members of Parliament, and it is fantastic to be able to fall in with such a strong team.
I have had a large number of letters and e-mails from leaseholders about today's debate. They feel that no matter how strongly they try to explain their difficulties their case is not represented strongly enough, and that nothing is happening. There is enormous frustration. Perhaps I may begin by painting a picture of Islington; I apologise for having to do that, but people tend to make an assumption about Islington that is only partly true. They know it as leafy lanes, Georgian squares, coffee shops and the media, but that is because people who work in the media live in those leafy lanes and Georgian squares, and spend their time in the coffee shops. They do not spend a great deal of time on the other side of the road, on Islington's estates.
Nearly half the people who live in my constituency live in council estates or former council estates. The average income of people living in council properties is £5,000 a year, according to the housing needs survey. That of people living in housing association estates is £6,000 a year, and that of people with homes in streets is £40,000 a year or more. Unfortunately, in my constituency, when a poor person moves out of social housing in Islington, an even poorer and more desperate person moves in; properties are increasingly in demand, and to get one they need to be so desperate as to get sufficient points to enable them to be rehoused. Equally, when a rich person moves out of one of the streets in Islington an even richer person moves in, because now housing prices are such that a small flat in Islington costs £300,000. That is 10 times the average income of a Londoner. I hate to think what will happen to my constituency in the years to come, because we do not have the people in the middle. Leaseholders often represent that group, and they are a very important part of my constituency. I strongly believe in mixed communities. We need to be able to work and live together. I am proud that my constituency is as mixed as it is, but economically we are becoming increasingly divided.
The picture that I want to give of my constituency is not only one of the rich tending to live in streets and the poor on estates-a result of what happened in the 1980s. While one famous and indefatigable national political leader was selling off council properties, another famous, strong-minded and indefatigable leader-of Islington council-was buying up street properties on the council's behalf. The present Minister for Industry and the Regions, my right hon. Friend the Member for Barking (Margaret Hodge), was at that time buying street properties on the open market and turning them into social housing. Thus we have a mixture: some people live in social housing in streets, and a number of leaseholders live on estates. I have lived for 14 years in a street in Islington, where nearly half the properties were owned by the council as social housing; but they have all been sold, and the street is now private housing. There is movement.
I want now to explain the core of the matter, and the fundamental injustice felt by leaseholders in Islington about the way that they are charged. I believe that when the Conservatives were in charge of this country they left estates in Islington and elsewhere to rot. They did not invest in them as they should have, and the estates were in a disgraceful condition. The state of the lifts and stairwells was disgusting. People were not treated with sufficient respect, and the level of investment that was needed was not something that a Labour council could deal with alone. Such investment must be made with the assistance of a Government, and at the time we did not have a Government who were interested.
We now have a generous and hyperactive Labour Government who want to make sure that social housing properties in places such as Islington are brought up to the decent homes standard. When we were elected in 1997 only 25 per cent. of the social housing in Islington was at that standard. We are now investing £157 million in doing up the social housing in Islington, so that we can be proud of it and people can be proud of living there. It is a good thing for us to be doing. The difficulty is that those who are caught in the fire are leaseholders who have bought their social housing, because they thought that that was the right thing to do, and who are now being hammered by huge bills.
As I described earlier, our properties are split into, on the whole, street properties and accommodation that is run by Homes for Islington, which is an arm's length management organisation. The difficulty is that the law says that when street properties are done up, which happens under the private finance initiative, there must be a £10,000 cap. It would not be a caricature to say that leaseholders who live in the streets are often professional couples who have bought from original right-to-buyers and who now benefit from living in a flat in a Georgian square that was originally bought by my right hon. Friend the Member for Barking. When their properties are being done up they have to pay only £10,000, whereas pensioners-the original right-to-buyers-who live on the estates are being charged limitless amounts of money. It is terrifying and fundamentally unfair.
My first request today is that the Government should seriously consider adding arm's length management organisations to a little bit of legislation: the Social Landlords Mandatory Reduction of Service Charges (England) Directions 1997 apply to someone whose property is being done up under the single regeneration budget or the estates renewal challenge fund, so why cannot we also include arm's length management organisations? If we could just do that, leaseholders on estates in my constituency could have their charges capped at £10,000. At the moment enormous injustices are happening.
Ms Buck: I completely agree with my hon. Friend, but does she also recognise that any cost of applying the cap should not benefit companies and that the cost of the cap should not fall on tenants because of ring-fencing within the housing revenue account? If a local authority chooses to fund a cap as my hon. Friend suggested, the resource should be found other than from the pockets of local authority tenants.
Emily Thornberry: Yes. We should be considering that matter, among others. I wrote to the 80 leaseholders who had originally written to me, and sent them a survey. I do not know whether any politician has ever had the response that I did. Guess how many I got back? I got 80. I asked them about hardship and whether they felt they had been consulted and about fairness. I sent the results to the Department.
I then wrote to more leaseholders. I have pruned the responses from people whose answers were not as disciplined as I wanted, and I have sent the Department 134 cases, detailing the hardship and difficulties that Islington leaseholders have suffered. The Department is reviewing the effect of the decent homes standard on leaseholders, and I hope that that record of the experiences of Islington leaseholders, which I sent to the Department, will be taken seriously and inform their decisions. Something must be done.
Six thousand leaseholders have bought what was formerly social housing in Islington-a very large number. We must consider other factors to ensure fairness for leaseholders, and the legislation allows councils to exercise some discretion. Although we are all in favour of decentralising power and allowing local authorities to make decisions locally based on local information, what happens when we give a local authority the power to exercise discretion and fairness and, as with the Liberal Democrat council in Islington, it refuses to exercise any discretion or do anything to assist leaseholders who are pensioners, suffering because of bills of £35,000 and on pension credit?
The discretion allows the authority to extend the repayment period, but leaseholders receive bills-huge estimates-and they are told that they will have only two or three years to pay them. They come to me and say, "Emily, what are we going to do?" and I reply, "I'm putting pressure on the Government, and I'm trying to put pressure on the local authority," to which they respond, "You've been doing this, Emily, but nothing is happening." Authorities can extend the repayment period, provide loans, put a charge on the property-a discretion that the Liberal Democrat council in Islington is prepared to exercise-and even reduce the bills, but they must consider matters case by case.
Andrew Stunell (Hazel Grove) (LD): I agreed with the hon. Lady until her comments verged on the political. Is she aware of the report to Islington council's executive group in February, setting out the scheme that it now has in place? It seems to answer her point.
Emily Thornberry: The important point about the document to which the hon. Gentleman refers, as with many similar documents, is that it has a fantastic title and it can obtain good coverage in the local paper. However, I invite him to consider carefully what the Liberal Democrat council is actually going to do to assist leaseholders, as opposed to the headlines. He will see that it is not going to do anything. There is nothing of any substance; it is all spin.
Several difficulties can be addressed by exercising discretion and considering the issues case by case. I shall go through some cases. Mrs. A lives on pension credit, and is being charged £10,000. She says that that is very harsh, and she pays £240 a month. Another pensioner, Mrs. B, living on pension credit, has been charged £4,627. Her husband has undergone major surgery for cancer twice in the past four years, and they are struggling to keep their heads above water as it is. Mrs. C, who is expected to pay £8,468, also has a husband with cancer, and Mr. D, who is lucky enough to have a job, says that the £20,000 that he is being charged is one year's pay.
Mrs. E, another pensioner living on benefit, is being charged £29,287, and she says that because they are leaseholders, it does not mean that they have ways of paying such bills. Mrs. F, another pensioner, will be paying £39,614 for repairs on her flat. She has lived on the estate since 1971, and in all that time no major repairs have been undertaken. Mr. G will be charged £41,000.
We all want our social housing to be brought up to a decent standard, but some Islington leaseholders are being asked to pay an unfair share of the cost. There should be a fair limit. Mrs. A is expected to pay £10,000 out of the £32,000 needed to repair her home, but that is because her property is being done up under a private finance initiative, so she receives a £22,000 subsidy on the work. However, Mrs. F, a pensioner in similar circumstances, is expected to pay the entire £39,000, almost four times as much, just because her property is an arm's length management organisation property. When Islington tenants voted for an ALMO to take over their properties, would not the possibility of the leaseholders among them receiving limitless bills have affronted their inherent sense of fairness and decency and affected their views on whether they should vote for the ALMO?
We must help the poorest. Of the 134 leaseholders whose cases I have sent to the Department, 10 per cent. say that the bills do not cause them hardship, so 90 per cent. say that they do. They also say that they are not receiving value for money, and I agree profoundly. The difficulty is that on the face of it, the framework contracts for which organisations bid under the European Union Official Journal tendering process will include a tender for the cost of a new kitchen or bathroom, but nothing if the building is listed and, for example, one needs tiles from eastern Europe. The builders may originally say, "It'll cost you £10,000 for a new kitchen," but when they need to undertake outside works the cost can spiral out of control.
Owing to the new framework agreements, leaseholders do not feel that they are consulted. If they were consulted, they would be able to consider, for example, three builders and their prices, and during the consultation they would be able to opt not for the most expensive, but for the middle price or the lowest. However, because there is already an agreement anda system of preferred bidders, when so-called consultation takes place the leaseholders are not even asked which builder they want. They do not feel consulted, and they are right. There is also therefore little control over the prices that are charged.
In the end, it is largely public money that is being spent. When there are a couple of leaseholders in a block it often does us all a good turn, because they blow the whistle, saying, "That scaffolding has been up for eight weeks, they haven't done any work on it and we are being charged for it to be up for eight weeks." The alarm bells start ringing, because public money is being spent. The leaseholders still get charged, and we do, too, indirectly as taxpayers, but leaseholders play a helping role.
Leaseholders are not even told that they have a right to opt out of window installation under the decent homes standard. If one has just installed new windows, why would one need further new windows? It would be a clear waste of money. The leaseholders have a right not to have new windows put in, but in Islington they are not told about it. When they find out, they are told that because they have their new windows, they do not need to pay for new ones as long as they pay for a surveyor to assess them, and for a lawyer. For a leaseholder in Islington to keep their new windows when a property is done up, they have to pay £1,000-to keep their new windows. That is not fair, and people can see that it is not. They also cannot help but wonder, "How much can new windows cost, and how much more than £1,000 can they cost?"
There is a right to appeal, but it is to the leasehold valuation tribunal. Some leaseholders have none the less had some success. One indefatigable woman, Mrs. Wong, has appealed against her service charges generally, and she has enjoyed some success. She is now taking Islington council to the Audit Commission, and I shall certainly support her. We will also refer the matter of leaseholders' charges in general to the commission. That might be another way in which we can get fairness. But it is a slow process, and the leasehold valuation tribunal is scary and intimidating, as is going to the Audit Commission. Why cannot leaseholders in Islington simply get justice?
