Speeches, etc.

Margaret Thatcher

General Election Press Conference (housing)

Document type: Speeches, interviews, etc.
Venue: Conservative Central Office, Smith Square, Westminster
Source: Conservative Party Archive: transcript
Editorial comments: 0930-1000. MT shared the platform with Lord Young, Nicholas Ridley and John Patten. MT contributed nothing to the section on housing which accordingly attracts no theme tags.
Importance ranking: Major
Word count: 4377
Themes: General Elections, Monetary policy, Taxation, European Union (general), Foreign policy (Middle East), Labour Party & socialism, Religion & morality

Mr Nicholas Ridley

In our first two terms of Government, we widened the opportunities for home ownership. Our policies have been extremely successful. There are two and a half million more home owners now than when we took office. There is a chart showing the effects of this policy on sales of houses: over 1 million public houses sold; two and a half million more home owners than before. All this was done in the face of bitter opposition from the Labour Party and today's leaders of the Alliance. We gave council tenants the right to buy their homes at large discounts.

Labour have still not contradicted their earlier commitment to let councils deny tenants in some areas the right-to-buy. I challenge Neil Kinnock to say whether or not this pledge still stands.

Our approach of widening choice and increasing responsibility must now be applied to rented housing. The private rented sector has shrunk. In too many council estates, there are huge social problems for those who cannot afford to exercise choice through buying their homes. It is notoriously difficult for council tenants who find new jobs to move home. Homelessness is a symptom of the shortage of rented housing in some areas. We aim to bring the 550,000 empty private homes and the 115,000 empty public sector homes into use. We, alone, are putting forward the policies which will deal with these problems.

First, we will encourage more letting by private landlords. For new lettings only, we will amend the Assured Tenancy Scheme to remove restrictions on the type of property and the landlord who can let. This will be attractive to institutional landlords who want a fair return, but are prepared to give tenants security of tenure. For new lettings only again, we will amend the Shorthold Tenancy Scheme. The lease must be for at least six months. The tenant will have the right to register a rate of return rent and not, as now, a fair rent. This will bring many homes belonging to small landlords into use. We will encourage resident landlords to make more accommodation available. We will ensure that housing associations offer a wider choice than at present in new lettings by supporting them with a re-structured [end p1] housing association grant system. Also, we will strengthen the law against the harassment and wrongful eviction of tenants. We will give these tenants, under the new Assured and Shorthold tenancy rules rights to have repairs done. All existing private and housing association tenants will continue to have their present protection as regards rents and security of tenure.

Next, we will give council tenants far more choice. Council tenants will have the right to choose a new landlord. New landlords will have to be on a new approved list to which stringent criteria will be applied. Tenants of houses will have the right to transfer individually. Tenants of flats or maisonettes can transfer collectively. Any tenant wishing to remain with the local authority will be able to do so. Our reform of local authority housing accounts will stop transfers between the rate fund and the housing account.

We will take determined action to tackle the problems in some of the worst areas of council housing by setting up Housing Action Trusts—initially as an experiment—to take over housing, renovate it and use public money to attract in private investment and ownership.

These are very bold and radical measures to overcome the longstanding problems in public and private rented sectors. We have taken the lead here and we look for support from all quarters for these new proposals.

Q

Does the Secretary of State already have in mind some areas where he will set up his Housing Action Trusts? Which areas, in his view, are the worst areas in the country?

Mr Ridley

No. We have not selected any particular area. We want to get the details right as to exactly how it is going to be done. We want to do it, first, as a pilot—as an experiment. If that succeeds, and we discover what the problems are and how best we can help, then we might go forward and set up a lot more. But we have not identified a special area yet.

Q

Mr Ridley said that tenants of flats or maisonettes can transfer collectively. Then he goes on to say that any tenant wishing to remain with the local authority will be able to do so. Does that mean that in some blocks of flats—council [end p2] owned blocks—you will have council tenants and, next door, private tenants in which case how can the thing be managed?

Mr Ridley

What will happen is that the tenants will be asked to ballot if there is a proposal to change the ownership of that block of flats or that maisonette. Unless a majority object to the transfer, it will take place. Those who wish to remain tenants of the local authority will be able to do so because the new landlord—the tenant co-operative or a housing association; whatever it is—will sub-let back to the council those flats which do not want a transfer, and the council will then have a tenant and landlord relationship with its tenants in the flats which it lets back from the new landlord. Is that absolutely clear? This is what happens all over the shop now.

Mr Patten

We have it already with the right-to-buy tenants having purchased flats in blocks of flats, where the block still remains in council ownership, and those management problems are dealt with very successfully.

Mr Ridley

There are a very large number of blocks of flats, particularly in London, where there is a multiplicity of different types of tenure and leasehold all under one major freehold owner sub-letting the units in different ways. It is quite common.

Q

Can you explain the mechanism by which those rents would be fixed both for the private tenants and those wishing to remain with the council?

Mr Ridley

Yes. The present tenancy, which they have with the council, and the present rent will still be the bases on which the transfer takes place. If, of course, tenants and landlords wish to agree to a new basis either of tenancy or of rent, they will be free to do so. But they will make an agreement at the time of transfer as to how those conditions are going to be carried forward into the future. The tenant may well agree to some increase in rent for major improvements to the property. He may not, in which case, of course, the landlord will have to consider whether he wishes to enter into a bargain himself. It will be a mutually-agreeable solution [end p3] based on the existing tenants' rights.

Q

You mention, in relation to the council tenants opting out, an approved list of new landlords. Does that list also apply to some of the extensions of existing private landlords under the Assured and Shorthold Tenancy Scheme and so on? Is it the same approved list? What are the criteria of the list, and how will it be monitored?

Mr Ridley

I am glad you asked that, Peter, because it enables me to make it absolutely clear. There is, at present, an approved list for landlords operating the Assured Tenancy Scheme. That list will be brought to an end; we are not requiring Assured Tenancy landlords to be on an approved list under these new arrangements. We will set up a new list of approved landlords who will accept tenants coming out of local authority control under these new arrangements. It will be a different list—a new list; purely applying to those who come out of local authority ownership. The basis of the new list will be sound, financial and legal bases of the landlords. Secondly, that they are of high repute. But we will go on and make them a limited list of large corporations—not necessarily large, but responsible corporations with a good reputation. We will carefully consider that nobody gets on to that list who cannot be fully trusted to behave responsibly. There will also be arrangements if somebody who is on the list turns out to default or go wrong later on. The main likelihood is a financial default in which case, of course, the property can be transferred on to other approved landlords. But we will be thinking of what is the best back-up arrangement if anything goes wrong with any of those landlords' behaviour.

Q

Could I ask you about the situation of tenants who decide that they want to stay with the council rather than transfer? If the majority of the people transfer—and you mentioned earlier on that there will be a negotiation on the rent levels—what will happen to the rent levels of people who stay with the council? Will they be forced to pay a higher rent if a higher rent were negotiated with the majority of people who opt out? [end p4]

Mr Ridley

No. The council will become part of the negotiation in fixing the conditions, the service charge and the rent for that block. The council will, therefore, be in a position to decide whether to pass on the whole of the rent and the service charge to the council's remaining tenants, or whether not to do so. That will be a decision for the council; it will be the sub-lessor of the flat, and it will pass it on to its tenants in any way that it wishes to enter into an agreement with those tenants.

Q

… that the council would be left with the debt when the house was sold. In fact, of course, that would be the ratepayers. Would you think that they would be justified in seeing this as the Tory equivalent of nationalisation without compensation?

Mr Ridley

I am also glad that you asked that. We said that the basis of the transfer price would be the value of the income, or rent stream, less, of course, the cost of management, repairs and maintenance. To put it another way, it is the market value of the property as restricted by the tenancy which is in force on that property. Now, in some cases, that value will be greater than the house stands in the local authority's books, in which case, it will be in surplus or in profit as a result of the sale. In some cases, of course, it will be the same. In others, it will be in deficit because the transfer price will be less than the historic cost standing in the local authority's books. In the latter case, at present it would get rate support grant towards the cost of that remaining debt, and we are considering how best to deal with any problem which might arise from the local authority. Broadly speaking, it is not intended that the local authority shall either make a profit or a loss from this policy in terms of their borrowing. I think, on the whole, they are more likely to end up with some profits because the value may be greater for old stock than what they have got in their books.

Q

Will this approved list be published? Will the new landlords have the same obligations under the Race Relations Act as owners of council properties have now?

Mr Ridley

The answer is yes to both questions. I point out that in all of these new forms of tenancy whether they be Assured Tenancy, Shorthold Tenancy, transferred from the [end p5] council or in tenant co-operatives, housing benefits will be available to meet the rents up to whatever level of rent is dictated by the various types of tenancy which we are providing. So housing benefit will be available, so that all will be able to afford to take these new tenancies, or whatever sort they are.

Q

Secretary of State, British Coal ran an approved list of landlords in the sell-off of their properties. There have been problems in the sense that landlords sold them off to other people, and there was also auctioning of property. What guarantees can you offer that you will be able to prevent local authorities at arm's length from getting involved in anything that has happened like British Coal.

Mr Ridley

The Coal Board sales of housing were sales by a nationalised industry in no sense similar to what we are proposing, which is transfers between local authorities and the new bodies that I have described. We will lay down the rules under which this takes place—both the approval of the landlord; the rules. Every transfer will have to be approved by—not necessarily me—whoever is Secretary of State at the time, and we can make sure that no practice takes place which is undesirable. There is nothing we can add on that.

Q

On the private landlord, what is a rate of return rent? Is it going to be bigger than a fair rent?

Mr Ridley

Yes, it is going to be bigger than a fair rent. The district valuer or the rent officer—I think the rent officer will assess the capital value of the property and I will specify a rate of return on that capital ‘x’, ‘y’ or ‘z’ per cent., and that will be the maximum rent which can be charged if the tenant seeks to register the rent.

Q

You seem to have indicated that some local authorities could actually make a loss on these sales. Could you give any commitment that you would compensate these local authorities in their rate support grant?

Mr Ridley

Yes. I said that they would get rate support grant on the interest of any debt which was left with them if [end p6] they did make a loss on that transaction. But I have to point out that they have made that loss already because houses which have a lower market value than their historic debt are always going to be a loss for the local authority's books. Equally, older houses which were built at very much lower cost, say, 30, 40 or 50 years ago are a profit in their books because they are worth far more than the historic debt which is attributed to them. There is nothing new about that particular phenomenon.

Q

If a council tenant does transfer, what happens to his right-to-buy under the present arrangements, and how will it be financed if it will still exist?

Mr Ridley

It is a statutory right-to-buy, which attaches to the tenant under statute law. It, therefore, overrides any transaction which may take place in the future about transferring to a new landlord, and he would take his right-to-buy with him, whether it be a housing association, including a charitable housing association, or a private landlord. His right-to-buy would still apply if he wished to exercise it. He could, of course, negotiate with his new landlord to refrain from exercising it, but he could not have that right taken away.

Mr Patten

It is exactly the same with the transfer of security of tenure under the 1980 Housing Act. That goes as well; complete security of tenure.

Q

How much extra housing benefit will you have to pay out to cover the cost of the higher rents? Would not it be very expensive for central Government?

Mr Ridley

It will depend how fast the policy develops and how fast it goes. But as I said, when we discussed this earlier, there will be compensating savings because the more that housing is transferred out of the local authority and public sector, the less there is that the public expenditure has to find for its repair because it has gone, and there is also the receipts which come in from those sales which contribute. We have costed this policy over a 15-year period, and we are satisfied that it is the most effective way of making sure that we can improve the whole rented housing stock at minimum cost to the public, but at [end p7] the greatest speed possible by bringing in the private sector capital, which will contribute to the total. The actual amount that it will cost will, obviously, depend on how quickly the different forms of tenancy develop, and I am not going to give precise estimates. But we have costed it and, of course, we have allowed for the increase in housing benefit.

Mr Roth

The London Borough of Camden and, no doubt, other extreme Left Boroughs—the London Borough of Camden under its housing chairman, Alan Woods, have thought out the scheme that you can stop right-to-buy applications very effectively by threatening to convert the flat and evict the tenants. Now this is done to small flats and large flats. People in smaller flats have been asked by their neighbours, “How dare you jeopardise my home by making a right-to-buy application?” This document may cause a great deal of harassment before the law against harassment comes into force. Will you do something to stop this sort of thing before your law actually comes into force, because Camden council has been making the two-finger sign for the right-to-buy for years?

Mr Ridley

I have answered your question twice, and have failed to satisfy you. So I am going to get John——

Mr Patten

Camden is behaving disgracefully along with two or three other London boroughs, and Sheffield as well. Camden was brought into the Department of the Environment last week to have a final warning issued to it. If it does not take that final warning and not speed up its rate of processing applications of right-to-buy sales, we will have to move in and do it for them as we have the ability to do under the law, which we already have on the statute book under the 1980 Act, and that is that.

Mr Roth

What if they say that they will convert you and throw you out?

Mr Patten

That will not be a possibility for them to do under the provisions of the 1980 Act because it is possible for us to move in and to speed up the whole process of exercising the right-to-buy in Camden and elsewhere. [end p8]

Q

You have been concentrating mainly on existing housing stock. What are you going to do to create new housing stock?

Mr Ridley

Under the Assured Tenancy development, there will be a great increase in new housing stock, and housing associations may build for assured tenancy, too, and they may go for other forms of tenancy or assured tenancies, but we believe that the major increase in the amount of new rented housing stock will come from large, financially-strong landlords, institutions, building societies, insurance companies, pension funds and, at the same time, housing associations, which will be operating with probably public money, private money in a 30 per cent. to 70 per cent. ratio.

Mr Patten

Only two days ago, we announced the quarterly new construction orders, which show the highest level of building orders in the construction industry and the house-building industry for 14 years, going back to 1973.

Mr Ridley

It is up 16 per cent. on this time last year.

Q

Do you think, Secretary of State, that the housing proposals here make housing policy simpler? Are you confident that you and your colleagues can explain it to the general public in the way that everyone can understand, and without risking a lot more cases in the courts?

Mr Ridley

I cannot claim that what we are proposing makes housing policy simpler. It is in a terrible mess—from 60 years of restriction, over-emphasis of council house building and all the different attempts that have been made to tinker with it. It is not an easy subject as you will have heard from this conference. On the other hand, we want to bring it back into a position where it is much simpler, and this is a transitional period to get to a sensible position in which everybody has the right-to-buy, the right to rent, there are markets in both public and private rented and owner-occupied sectors. This is a transitional phase. But I think that, having explained it to this very large audience of extremely well-informed and intelligent people to their total satisfaction, I will have a little bit more difficulty with the public at [end p9] large, but I will do my best to get it all across in the simplest way. There will, of course, be a Bill and during its passage, there will be ample opportunity to debate all the detailed points and to explain them, consult, get people's views as we go through Parliament with the Bill.

Mr Brunson

I wonder if you have anything to say on the report of the British diplomat who has been kidnapped in Iran, and whether you have yet heard anything from the Iranian authorities to whom, I gather, a request for information about the incident has been made?

The Prime Minister

We are today, again, in touch with the Iranian Embassy here, and of course with the authorities of the Government in Iran protesting extremely vigorously, and doing everything we can to secure the release of our diplomat. There is nothing further at the moment to add.

Q

Do you have any idea of his kidnappers?

The Prime Minister

We are not aware of the organisation concerned with the kidnapping.

Mr Bevins

Could you tell us the circumstances in which you would put value added tax on water, gas, electricity? You have already said that you cannot rule it out. I wonder if you can tell us and the voters what is the level of crisis at which you would be forced to put value added tax on such items, please?

The Prime Minister

We do not have crises in finance under Tory Governments. We do not have crises in finance under Tory Governments. We are fighting vigorously at the moment a case in the European courts—fighting it extremely vigorously and will continue to do so.

Mr Bevins

So you will not put value added tax on those things?

The Prime Minister

We are fighting vigorously a housing case in the courts. We do not have finance crises under a Tory Government. [end p10]

Mr Cole

My question is also on value added tax, Prime Minister. It was raised again by your opponents on television last night. If you can look ahead to further reductions in income tax in your term, if you were re-elected, why can you not give some forward look at spending taxes, which you have raised in the past?

The Prime Minister

May I point out that we are the party which has brought down inflation by bringing down the RPI. We are likely to continue to be that party because we wish to bring down inflation further, and for a party which took inflation up to 27 per cent. to accuse us of those things is absolutely absurd.

Mr Cole

Why not give an undertaking …

The Prime Minister

When you get the Chancellor here, we will answer that question.

Q

Do you believe that Britain could, or should, be involved in protecting shipping in the Gulf?

The Prime Minister

We have the Armilla (?) patrol there already. Its function is to protect British shipping.

Q

In terms of any further requests from the United States?

The Prime Minister

We have not had further requests. If we do have further requests, or if we do get proposals from the United States—the French are also there—we would, of course, consider them. But at the moment we have, I think, two or three ships on duty and their first duty is, of course, to protect British shipping.

Q

The Chancellor earlier this week categorically ruled out the imposition of any VAT on food. Does that mean that the Government intend to veto plans to approximate VAT rates throughout the Community, or can you confirm now that you intend to widen the VAT base in Britain? [end p11]

The Prime Minister

We would veto plans. Any changes in Community tax have to be by unanimous vote—unanimous vote. We would veto plans to come under a Community VAT system. In other words we, ourselves, would use our vote to veto a change in those laws. I want our VAT to be decided by us. The case at the moment, I think, is a case on the precise scope of our zero-rating. There is some technicality, which I cannot quite remember about that housing case, and I do not want to answer it until I am sure about that technicality. But if the Community comes in with a Community law to change our capacity to zero rate—what we want to zero rate—then we should use our veto against that.

Mr Dimbleby

The campaign has begun in fairly forceful style, both on the Conservative and Labour sides. Do you think that there is a danger of running out of new things to say to the electorate in the coming week?

The Prime Minister

No. No more than you are likely to run out of questions!

Q

Back to the Gulf—you said that you have not received a formal request from the United States to increase your presence. But Secretary of Defence Weinberger has made a rather broad request to the allies that they increase their presence. As you considering that in any way at this point?

The Prime Minister

No, if we receive a formal request, we shall have to consider how to answer it. But our own resources there are limited. The Armilla patrol consists usually of either two or three vessels, according to the numbers which are on duty at the time and, sometimes, we have an extra one on. But I think that their first duty is to protect British shipping, but of course we consider co-operation if those proposals are put to us. We are not aware of any proposals at the moment. So I honestly cannot go any further. The Armilla patrol is to protect us. It is vital also, I agree, that that shipping highway be kept open. [end p12]

Q

In your mind? is there any need for an increase at this point?

The Prime Minister

I have no proposals before me. My main concern obviously—with limited capacity—is to protect our shipping. That is our prime duty. Any further considerations we would look at because it is in the interests of us all that that shipping highway be kept open.

Q

One of the tactics that the Conservative party has used in the campaign has been to attack the Labour party and some Labour councils for their support for lesbian and gay rights. Now, a number of gay Tories have expressed concern to me that the effect of those tactics is to stir up anti-homosexual prejudice. What reassurance can you give them and, indeed, 10 per cent. of the electorate that homosexuals, like the Health Service, are safe in your hands?

The Prime Minister

I do not accept that the last part of your question arises from the first. Our fundamental principles on this matter will continue as now. Thank you for allowing me to make it clear.