Housing Associations: Charges

– in the House of Commons am 7:00 pm ar 22 Tachwedd 2023.

Danfonwch hysbysiad imi am ddadleuon fel hyn

Motion made, and Question proposed, That this House do now adjourn.—(Mark Fletcher.)

Photo of Caroline Nokes Caroline Nokes Chair, Women and Equalities Committee, Chair, Women and Equalities Committee 7:02, 22 Tachwedd 2023

I very much appreciate having been granted this debate tonight. I reassure the Minister that I come here not in anger, not in sorrow, but with deep, deep concern at the charges being levied on my constituents, specifically by the Aster Group, which is the largest housing association operating in my constituency. I am not alone in my concern, and I am conscious that my hon. Friend Richard Drax is facing similar, although not identical, issues, as is my right hon. Friend Kit Malthouse, who is here this evening. However, it does seem as though Romsey and Southampton North is particularly impacted, and I will go on to explain why and how.

First, I draw the Minister’s attention to a salient piece of correspondence: a letter from my right hon. Friend the Secretary of State dated 4 September and addressed to the chief executive of the Aster Group. He concludes it with the phrase:

“I will be taking a personal interest in how your organisation continues to deliver its responsibilities”.

I come here in the spirit of wishing to help my right hon. Friend the Secretary of State in his mission to keep a very close eye on how Aster is delivering.

I also, of course, welcome the Under-Secretary of State for Levelling Up, Housing and Communities, my hon. Friend Simon Hoare, to his new role. He knows how pleased I am to see him on the Front Bench responding to this debate. I know that he is familiar with the Aster Group, which operates in his constituency as well as my own. I seem to recall an Adjournment debate in 2017 in this Chamber. Like him, I recognise the huge importance of housing associations and the phenomenal work they do to support many of our constituents, especially the most vulnerable ones.

To give a short history, in 2000 Test Valley Borough Council transferred ownership of its housing stock to Testway Housing, which was later bought out by Aster. By and large, that deal has worked well. There are always challenges, but nothing that even begins to compare with the current situation, which I first raised in the House several years ago, sadly to no avail.

In 2000, when the sewage treatment plants were handed over from Test Valley Borough Council to Testway Housing as part of the large-scale voluntary transfer of housing stock, those sewage treatment plants were in full working order, with the requisite environmental permits. Now, none of them is in full working order and none of them has the correct permits. As is tradition, Madam Deputy Speaker, I will give way to Jim Shannon.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Human Rights), Shadow DUP Spokesperson (Health)

I commend the right hon. Lady for securing the debate. She outlined a situation where housing associations become bigger by absorbing smaller ones. In my constituency, in my experience, when housing associations become bigger, their accountability to their tenants and residents decreases. Is the right hon. Lady saying that in this case, the bigger the housing association becomes, the less responsible it becomes?

Photo of Caroline Nokes Caroline Nokes Chair, Women and Equalities Committee, Chair, Women and Equalities Committee

The hon. Gentleman raises an important point. He is right to highlight how some housing associations have grown and grown. Somebody came to my constituency surgery last week to raise an issue about a different housing association, Adbury, whose ambition is to become one of the largest housing associations in the country. There is a problem with scale, because as these organisations become more remote from the residents they seek to serve and cover an ever wider geography, the individual contact and understanding of the needs of individuals can sometimes be lost.

Aster is a large housing association, with many thousands of properties and customers, and an annual profit in excess of £50 million. I do not begrudge people making a profit, but I resent it when it comes at the cost of decent relationships between Aster, as the provider of local sewage treatment plants, and residents who have worked hard and saved to be able to purchase their former housing association home. In my constituency and others, they are now living under the tyranny of a housing association that seeks to recoup the costs of the housing association’s failure to maintain and repair sewage treatment plants in the villages across Test Valley that do not benefit from mains drainage.

We all know that 95% of properties in the UK are connected to mains drainage, but my plea is on behalf of the people who live in the 5% of properties that are not, some of whom in my constituency are seriously financially challenged and plunged into enormous debt, just because they cannot be connected to the mains.

I know that some in the Department were concerned that the debate would be about sewage, and therefore required a response from the Department for Environment, Food and Rural Affairs, but I reassure the Minister that the debate is not about the sewage itself, but the principle of whether it is okay to charge some residents as much as £480 per month for their waste water disposal. Aster recognises that those charges are unaffordable, because their own tenants pay about £600 a year for their sewage disposal. That figure is not means-tested in any way.

Aster has accepted that their tenants cannot begin to afford charges of many hundreds of pounds a month, but it does not accept that just because someone has been able to buy their former council house, they may not be wealthy. It does not recognise that many will be pensioners, single people with only one household income or in low paid work, particularly in very rural areas, where much of the economy still revolves around agriculture.

In East and West Tytherley, Awbridge, Ampfield, East Dean and Nether Wallop—I will not reel off every single village that is affected—the sewage treatment plants, owned and maintained by Aster, simply have not been maintained. That has resulted in long-standing and expensive tankering operations and poorly maintained plants, at the very end of their life, that in some instances discharge foul drainage into ditches, causing Aster to come to the attention—not in a good way—of not just the Secretary of State, but also the Environment Agency.

That brings us to the cost. Some residents have been receiving bills of over £400 a month and are now being invoiced £3,500 as their “share” of a replacement plant. I invite the Minister to cast his mind back just 12 months, when the Government quite rightly recognised that average energy bills of £2,500 per year were unaffordable, and stepped in to help. Some of my constituents have been receiving sewerage charges that are twice that. If my maths is correct, I can identify one household where the bill will be £5,760 this year, and that is before they are further billed for the maintenance of the plant.

I am very specifically not asking the Minister to step in to pay those bills, but I am asking for his advice as to how hon. and right hon. Members can best hold Aster to account, bring the weight of the Department for Levelling Up, Housing and Communities to bear, and highlight to the Secretary of State that a company in which he is already taking a close personal interest, is now seeking to rinse my constituents for Aster’s failures to maintain its own facilities.

I have in my possession a report dating back some eight years plus, which identified all the maintenance and dilapidation issues of these small sewage treatment plants. And what have we seen since 2015? We have seen not a programme of repairs and replacement, but a programme of tankering, recharged to the residents who had bought their former council houses, and with remaining Aster tenants having their “share” of this cost capped. As Aster told both me and Councillor Nick Adams-King, who has been tireless in his pursuit of this issue, it recognised that the charges were unaffordable. Aster’s response when challenged on this is that it is entitled to do this. This has not yet been tested in law, but I fear that it may come to that point—if only there were a resident who had not had to spend all their cash on Aster’s ever spiralling demands.

Aster itself has had no dilapidation or sinking fund, so it has made no provision to replace these plants, which might reasonably have been expected after some 40-odd years of service to be coming to the end of their lives. Aster had not planned and it had not prepared. I know that because, back in 2011, this issue was first highlighted to me by the residents of Strawberry Lane in Up Somborne, who came to me at that time complaining of sewerage bills in the region of £100 per month levied by Aster. Little did we know at the time that Strawberry Lane would be just the first in a long list.

I also wish to pay tribute to the former borough councillor, Tony Ward, who negotiated a solution in Up Somborne for each property to have an individual septic tank installed. Although it was expensive in capital costs for installation, over the past 10 years those residents will have been paying only a fraction of the cost of what an ongoing relationship with Aster would have cost them.

I thank my hon. Friend Richard Drax for the information that he has provided from his constituency. In Dorset, we see a very similar picture to Hampshire, with Aster interpreting deeds to mean that homeowners must pay for the maintenance of Aster infrastructure, whereas homeowners had understood that sewerage charges would be levied in line with those charged by Wessex Water for a similar service. Since the housing stock was transferred there, homeowners had only ever been charged for the service that they used, but are now being asked for an additional sum, running into thousands and thousands of pounds for replacement and upgraded infrastructure. There they can point to the poor value Aster appears to be receiving as part of its maintenance work, with one provider charging it £18,000 for the installation of a handrail and the cleaning of a single tank. That is a very similar picture to the massive price of the tankering contract in Hampshire, where tankers are coming in from Kent to pump away waste from facilities—often several times a day. There is one example of a £1,250 charge to Aster to empty 4,000 litres from a sewage treatment plant that is not working, when a local supplier had quoted £175. That gives an idea of the scale of the waste, when we know that these tankers are operating many times a day at different locations. Local waste management companies are simply aghast at the sums being charged and the distances being travelled, when smaller companies could have dealt with a short-term crisis much more cost effectively.

That is the real crux of this: it is not a short-term crisis; it is a long-term pattern of a company that has historically made huge profits simply by not reinvesting in maintenance and upgrading systems to meet 21st-century requirements. When the crisis hits, it is forced to adopt expensive short-term solutions and then longer-term upgrades, the burden of which is passed on to those who have bought their own homes and are therefore deemed by Aster to be wealthy enough to afford it. The only comfort that Aster is prepared to give is that it will not pursue people immediately for those charges; it will simply levy a charge on the house to recover the money when they die.

There are two case studies that I will specifically highlight. Brent lives in East Dean. He bought his house in 2020 with his wife, and they now have two small children. They were told by Aster when they bought the house relatively recently that the sewage treatment plant was in working order and that their estimated cost per year would not exceed £80. He is now faced with charges of £480 per month. That is more than his mortgage. He is trapped in a home that he cannot sell, because who would buy a house with that sort of sewerage charge? Elizabeth is a pensioner from Cowleas Cottages in Awbridge. Aster is charging her an amount for sewerage that is equivalent to two thirds of her pension, leaving her just one third of her monthly income for all her other bills, food and day-to-day living costs.

I have some questions for the Minister, as you might expect, Madam Deputy Speaker. I want his advice on how we can best hold Aster to account. The housing ombudsman cannot help because these are no longer Aster tenants; they are now homeowners. Ofwat is not interested because Aster is not a registered search provider. I wonder whether that should be part of the picture going forward. The Consumer Council for Water says that, because it is a contractual relationship, it cannot become involved. At every turn we have been stumped, which is what brings me here to ask the Secretary of State, via tonight’s Minister, whether he can please use his existing concern about Aster and help us to find a solution.

Photo of Simon Hoare Simon Hoare Chair, Northern Ireland Affairs Committee, Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities) 7:16, 22 Tachwedd 2023

I thank my right hon. Friend Caroline Nokes not only for raising this important issue but for the way in which she did so. I described her as my right hon. Friend; she is also a friend and near constituency neighbour in a neighbouring county, so it is a real delight for me to make my Dispatch Box debut responding to her debate this evening. I, too, congratulate her colleague Councillor Nick Adams-King for the work that he has been doing on this issue, along with my county neighbour, my hon. Friend Richard Drax.

The first question that my right hon. Friend asked was how we can help. She was right to point out in her concluding remarks that such issues can often get passed from pillar to post—different names with different acronyms, with everybody trying to, Pontius-Pilate-like, wash their hands of it. My Department will not do that. Of course, her constituents are perfectly entitled to seek legal advice. That would come at a cost, and it may well be that the conveyancing at the time of purchase is worth a re-exploration.

Pausing there, my right hon. Friend presented to the House some pretty horrible and frightening figures. We are all conscious, particularly those of us who represent predominantly rural constituencies, of the fierce hit that the cost of living has had on many families, so we can only begin to wonder at the fear generated in the homes of the families and individuals who are being presented with these body-blow bills. The idea of their having to incur legal costs to try to seek a remedy, which is likely to be a long time coming, would not be a particularly welcome solution.

I have an invitation for my right hon. Friend to take up, together with her councillor colleague should she wish to. This is a rhetorical invitation; I think that she will bite my hand off. My noble friend Baroness Scott, to whom I have spoken, as it is her portfolio that would look at this, will convene a meeting in the Department to be attended by Aster and my right hon. Friend, picking up on the point that she alluded to in the letter of 4 September this year from my right hon. Friend the Secretary of State, which he addressed to the chief executive of the Aster Group.

Again just pausing there, I am not entirely sure this is still the situation, but I know that at the time when I introduced my Adjournment debate, which my right hon. Friend the Member for Romsey and Southampton North referenced, the chief executive of the Aster Group was the highest paid chief executive in the housing association sector. It is not just our right hon. Friend the Secretary of State who is taking a personal interest in how the organisation continues to deliver its responsibilities; so too is my noble Friend Baroness Scott and so am I, because what the constituents of my right hon. Friend the Member for Romsey and Southampton North have been presented with is indefensible and, frankly, bizarre.

From what my right hon. Friend has told the House in her powerful and persuasive speech, it seems that the housing association has spent little if any money investing in these local sewage plants, has understood the need now for investment—in some sort of a Damascene conversion to the need for housing providers to invest in maintenance and other repairs—realises that the costs are eye-wateringly high, and decides to reduce them for tenants and to pile on the costs to those who have merely, through the sweat of their brow and hard work, striven successfully to exercise their right to buy their former council house. And they are now being clobbered with above-inflation costs, subsidising those—one can see the argument for this, potentially—in the social rented market, and the housing association is then having the magnanimity, in this almost-upon-us season of good will, of defraying the costs until death. That seems to me not exactly in the spirit that we would expect people to be operating in.

My hon. Friend Jim Shannon—no Adjournment debate would be complete without his presence—hit on an important point that occasionally this House has overlooked: the general transition over time of housing associations. When housing stock was transferred from local authorities, most if not all of the housing department went into that organisation, often a new organisation, and they took with them the mindset of supporting some of our most vulnerable constituents and the mindset of our public sector housing. Over time those people have retired and over time housing associations have grown very big; that does give them resilience in a fluctuating market, but it also means quite a lot of that local knowledge and empathy and understanding has been lost, and they are now operating in exactly the same sphere as our major private house builders. That is producing a change of ethos; my right hon. Friend the Member for Romsey and Southampton North has brought this situation to the House, and I have to say that that is not a change for the better.

Photo of Kit Malthouse Kit Malthouse The Minister of State, Ministry of Justice

It is great to see my hon. Friend at the Dispatch Box for the first time and I congratulate him. I am grateful to my constituency neighbour my right hon. Friend Caroline Nokes for raising this issue and I have the same issue in the village of Hatherden in my constituency and want to make two points about what my hon. Friend the Minister was saying.

What was of course lost in the transfer he was talking about was councillors and the sensitivity that local councils would have to their residents in the way we are trying to give effect to this evening; that has been the biggest disconnection in housing. Also, one of the arguments that is put—I have had this with other issues of maintenance of stock in my constituency, where Aster is a large landlord—is a purely mathematical one: the housing association says, “You’re right, we haven’t really maintained this for 20 years, but we also haven’t charged you for it for 20 years so all we are doing is catching up on the charges,” and it fails to reflect on the economic hit to residents when an accumulation of charges is levied in one big blow.

Photo of Simon Hoare Simon Hoare Chair, Northern Ireland Affairs Committee, Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

My right hon. Friend is absolutely right. Whether Aster and others presuppose that merely the fact that a family or an individual has recognised that right to purchase their home suddenly makes them as rich as Croesus, I am not entirely sure. However, we can only imagine the very real anxiety that seeing these sorts of bills creates—particularly when this issue has come as a bolt from the blue, as I understood my right hon. Friend the Member for Romsey and Southampton North to say. People were being told that everything was fine, that those local sewage works were absolutely up to scratch and that one could sell ones home in perfect confidence that there would be no extraordinary item for potential new purchasers to pick up.

Maybe it is a lack of investment, coupled with misleading those former tenants, that Aster will be questioned about at the departmental meeting—and they will attend; of that I am absolutely certain. We will make them attend to talk to Ministers and to make clear what they are going to do, because their current suggested modus operandi is neither sufficient nor acceptable.

Although it is in the future, I also point my right hon. Friend and her constituents to the leasehold and freehold Bill, which will be published later this month. That Bill is intended to drive up transparency of the estate management charges that homeowners have to pay, as well as giving homeowners the right to challenge the reasonableness—that is the key word, because after the Wednesbury case, reasonableness has a status in law—of those charges in the appropriate tribunal, which of course in England is the first-tier tribunal. The Bill will also include measures to help leaseholders to challenge service charges, including improved transparency requirements and scrapping the presumption that leaseholders should pay their landlord’s legal costs when challenging poor practice.

This Government are committed to providing the framework, but it is vital that potential homeowners have access to the right information before they buy. That information should, of course, be set out as part of the conveyancing process. I mentioned at the top of my remarks that, if a current homeowner such as those identified by my right hon. Friend is unhappy with the service they have received from the conveyancer or their solicitor, and the internal complaints process cannot resolve the issue, the legal ombudsman may be able to help.

In conclusion, I thank my right hon. Friend again for raising this issue in her inimitable style. The House always listens to her, because when she speaks she has something to say. She has spoken on behalf of her constituents very clearly and the Secretary of State, the Department and I share her concerns. She was right to quote directly from the Secretary of State’s letter to Aster of just a few months ago. My Department stands ready to work with her to ensure that her constituents, as well as those of my right hon. Friend Kit Malthouse and my hon. Friend the Member for South Dorset, are not—and here I will close by using the word my right hon. Friend the Member for Romsey and Southampton North used in her speech—rinsed.

Question put and agreed to.

House adjourned.