Council used grants in second votes deal: Westminster 'spent homelessness funds to finance gerrymander'

MILLIONS of pounds in government grants to fight homelessness were used to finance gerrymandering by Westminster City Council, with the full knowledge of the Department of the Environment.

Inquiries by the Independent have established that council tenants in the borough were given up to pounds 20,000 to move in a scheme that should have left their houses free for homeless families. But in many cases, the properties were sold to people likely to vote Conservative.

Westminster City Council admitted last night that some of the homes were sold privately, and a housing department spokesman said the Department of the Environment, which funded the scheme, was told of the deals.

Jack Straw, Labour's environment spokesman, immediately called upon ministers to explain how much they knew about Westminster's use of the grants in apparent breach of the 1988 Housing Act.

'This is further proof, if any were needed, of the complicity of central government in the Westminster scandal,' he said. 'This may require the investigation not only of the district auditor but also of the Public Accounts Committee. I will be tabling some Parliamentary questions to flush out who knew what.'

In his scathing preliminary report on Westminster last week, John Magill, the district auditor, criticised an incentive scheme funded by the council under which council tenants were paid to leave their properties. He argued that the scheme, which ran from 1987 to 1990, may not have been legal and had cost ratepayers pounds 21.25m.

But there is evidence that a second scheme, this time funded by the Government, was used between 1990 and 1993 to free properties in designated areas, the marginal wards into which Tory councillors wanted to introduce more Conservative voters.

The money was made available under the Cash Incentive Scheme, a programme under which tenants could be given up to pounds 13,000 towards buying a new home provided they left their council property.

Westminster topped up some grants to pounds 20,000. Ministers, who introduced the legislation in April 1989, reasoned that paying such grants was cheaper than providing endless bed and breakfast accommodation for homeless families.

A Department of the Environment spokesman said yesterday that properties freed were supposed to have been used exclusively to house the homeless. But Westminster admitted it had sold some properties privately.

Westminster started taking government cash in 1990. Up to April 1991, 75 properties were vacated after grants were issued at a cost to the Government of pounds 1.4m. In 1991-92, 125 grants, totalling pounds 2.5m, were issued; and in 1992-93, pounds 1.61m in grants were issued in respect of 81 properties.

The council could not say yesterday how many of the council homes were sold off. One housing officer, authorised to speak for the council, said as little as 8 per cent may have been involved, but Labour councillors pointed out that up to one- third of the properties involved had been designated for sale, and so a proportionate number may have been sold.

The housing officer said: 'We have to make returns to the DoE each year and we give information on how the grants were used. They knew how we spent the money.'

Gavin Millar, Labour's housing spokesman on the council, said: 'The Department of the Environment knew very well what was going on, but it chose to turn a blind eye. We need to know who made the political decision to allow this to happen.'

Westminster drew up another plan to pay other councils pounds 400 a head to accommodate its homeless in an attempt to alleviate the growing gerrymandering scandal. In June 1991, 60 councils around the country received a letter from Westminster asking if they would consider housing homeless families, in return for pounds 400 per person per year.

One of the councils contacted was Blackburn, 225 miles from from London. Others included Wigan and Burnley. Mike Higginson, then vice-chairman of Blackburn's housing committee, said yesterday that he and his fellow councillors in the Lancashire town dismissed the idea. 'We had our own waiting list which was as long as your arm - and besides, we didn't agree with buying and selling people.'

At the time, Westminster presented the scheme as being for the destitute. But, Mr Higginson said, 'we now know they weren't homeless at all. Presumably, they were just council tenants who didn't vote Tory.' The letter 'was treated as a bit of a joke - although there was something odd about why Westminster was so keen to do this'.