John Glen (Salisbury) (Con)
I welcome the opportunity to bring this important matter to the Floor of the House. It is a vital matter for serving armed forces personnel, and I speak today as someone who wants to make some constructive suggestions to the Minister in order to improve the uptake of mortgages. I do not think that that will mean new financial commitments from or undertakings by the Government, but I hope that it will deliver meaningful savings, if implemented well. I am particularly grateful for the support of my hon. Friend the Member for Beckenham (Bob Stewart) and the hon. Members for St Austell and Newquay (Stephen Gilbert) and for Ellesmere Port and Neston (Andrew Miller), who will contribute later.
Before I focus on access to mortgages, I pay tribute to Heropreneurs, a new charity founded by Richard Morris with the relatively simple aim of providing those who leave the armed forces with an entire business package, including start-up capital via a debt-for-equity model, pro bono legal and financial advice, a dedicated mentor, access to second-stage funding and a support network of people who have already made that journey from military to civilian life.
One beneficiary of Heropreneurs is Nick Cowan, a former colour sergeant with 23 years’ service in the Royal Green Jackets, who has set up a not-for-profit company called Mortgage for Life, which enables those in the armed forces to buy accommodation at significantly reduced cost via special deals that it sets up with developers, banks and building societies. Mr Cowan has met various hon. Members, including the Minister for the Armed Forces and the leadership of the Council of Mortgage Lenders.
In discussions with Heropreneurs and Nick Cowan, however, it has become clear that there are specific issues with enabling service personnel to get on the housing ladder prior to their exit point, so I want to focus on that and on how the Ministry of Defence and the Department for Communities and Local Government can enable more serving armed forces personnel to overcome the particular inhibitors of their employment status in order to access the housing market in the same way as their civilian peers.
Despite the investment of Governments before and after the general election, the National Audit Office has found that the MOD did not have sufficient accommodation overall to meet current demand; that, if it did, the properties were in the wrong location; and that many did not match the need among those families in the right places. The NAO estimates that it will take two decades to sort that out, so the MOD is spending £38 million on maintaining vacant properties and paying out £16 million annually on private rented accommodation.
One way to resolve those issues and high costs is to make home ownership a more accessible alternative option. It is potentially a cost-saving alternative to private rentals, and the MOD is responding. Giving the military covenant statutory force means that we have some confidence in the seriousness with which it takes a range of issues, and the Minister for Housing and Local Government, who is in his place, has also made encouraging announcements in the past week.
Housing agents will be dispatched to barracks throughout the country and abroad to help troops apply to buy a home under the £500 million Firstbuy scheme, which aims to help more than 10,000 households purchase a new build home over the next two years. There are some questions about that, however. Who are the agents? Will they be paid? Will they be on commission? How often will they visit personnel? And, what qualifications do they have?
The first indications from those who have been observing this matter are that, in the Firstbuy paperwork, priority for housing will be given to existing social tenants and MOD personnel, so service personnel will not receive quite the priority that was suggested in the announcement by the Minister a week ago. Though that was welcome, it is still the case that there is very little social housing in this country and most property is owned by housing associations. If we want to tackle this problem in its entirety, we have to unlock the issue of housing associations having the autonomy to decide what to do with properties. The challenge is to make them open up the categories of person to whom they let property. An ongoing concern is that service personnel no longer receive a discount towards purchasing their social housing or housing association property. In the past, time served in service families accommodation would count towards the discount when buying their council house. The removal of that rule offers some challenges.
The challenges remain significant. As a member of the Select Committee on Defence, I am clear that thousands of personnel will leave the services in the next six months and, while specific initiatives will assist in the short term, we need to do more to change the lending culture towards the armed forces. The Council of Mortgage Lenders has confirmed that the industry supports measures to help overcome barriers to home ownership for military personnel. The mortgage application process will be refined and lenders will accept the principle that serving men and women should not be disadvantaged, but the details are important. It is critical that this is put right.
I understand that we will shortly get to the point where lenders’ systems do not reject applications because they come from British Forces Post Office addresses, so we should be in a situation where prospective lenders take applications from military staff out of their automated response processes, where appropriate. It is astonishing that there are these barriers to service personnel that mean that they cannot get beyond the application stage.
I understand that that industry is producing top tips for prospective borrowers from the services to assist them with key elements of the mortgage application process, and that is welcome. However, it is critical that the Minister ensures that this recently announced initiative is embedded in the mindset of the MOD. We cannot have the MOD saying, “Well, we’ve been doing it this way for some time and we don’t need your assistance, thank you.” We need a cross-departmental approach to ensure that the best outcomes are secured for these people who do so much for their country. There are real barriers that materially disadvantage service or ex-service personnel in securing a mortgage—in short, they cannot get credit-scored simply because of their profession.
I shall set out some of the key issues for consideration. Heropreneurs and Nick Cowan have written a mortgage manifesto, which addresseses how staff in retail branch networks handle mortgage applications and how they should have clear and consistent guidelines on how to treat certain savings products. Armed forces personnel should have access to the best possible discounts and fixed and tracker products, in line with those that civilian members of the public can access. Lenders should no longer be able to charge serving armed forces personnel more for life assurance premiums in relation to policies that are required to support a successful mortgage application than they do civilians of the same age. The Council of Mortgage Lenders, the British Bankers Association and their respective members should have a dedicated armed forces and veterans page on their retailing banking websites to give specific financial advice to those clients.
Strong consideration needs to be given to providing better-quality advice within the armed services themselves. It is critical that, embedded within training at different stages, serving personnel can get advice and access to independent financial advisers. I am not saying that the Minister or the MOD should become IFAs, but they should facilitate wise advice. If investment decisions are made when people are in their 20s they tend to determine how people will fare in their 40s and 50s, and they will have an impact on the generation that comes after them.
All serving armed forces personnel should have the opportunity on at least an annual basis to receive specialist advice. The issues relating to the use of long service advance of pay should be simplified as a matter of urgency, so that there is a clear presumption in favour of the money being used to put down a deposit or pay for the legal fees associated with a mortgage application. At the moment, that seems very difficult to deal with. The resistance to allowing people to secure a buy-to-let property also inhibits take-up.
Let me finish by acknowledging that the Minister has taken a lead in addressing some of the issues. I am here to urge him to go further, to work with his MOD colleagues and all Ministers across Government to ensure that our armed services personnel get the best that they deserve. The core concerns underlying this debate are beginning to be addressed. The matter has such serious implications for the financial well-being of our servicemen that we need to look broadly and deeply into this issue and at every aspect of it to ensure that we achieve what rhetoric and headlines would have us believe will be the outcome.
Andrew Miller (Ellesmere Port and Neston) (Lab)
I congratulate the hon. Member for Salisbury (John Glen) on picking up the baton on this issue. Like me, he met Richard Morris from Heropreneurs a couple of weeks ago. I first knew Richard when he was involved in the Bright Ideas Trust and he is an extraordinary character who puts an amazing amount of energy into helping other people, and all credit to him.
There are the beginnings of a solution in the pilots that the Minister inherited from the previous Administration. There was a £20 million shared equity scheme, which was jointly supported by the MOD and the Department for Communities and Local Government. The scheme was a good idea, but what the hon. Gentleman has highlighted is a whole range of different parts of this problem that go much deeper than we first thought. The matter requires fresh thinking on a cross-departmental basis to ensure that we can persuade the various lending authorities to treat service personnel in the way that the hon. Gentleman has described. Service personnel are special to us and they deserve special treatment in all sorts of ways.
I am quite convinced, having looked at the challenge, that it is perfectly feasible for any self-respecting building society listening to the debate to find a vehicle that will work for this category. If a single building society can do it, perhaps others will, too. I should like the Minister to commit the Government to work with the private sector to bring that about.
Such work needs to cross a number of boundaries. With long-term planning for service personnel, their family situations would be more stable, and they would stay in the services for the longer term. Part of that work spills over into education. The Minister needs to liaise with his colleagues in education, so that we overcome the other little barrier: the placement of young schoolchildren when people leave the forces to ensure that they are in stable school environments within the geographical areas where their families plan to live. A holistic approach is needed, and the problem can be solved with a bit of joined-up thinking.
The Minister for Housing and Local Government (Grant Shapps)
I congratulate my hon. Friend the Member for Salisbury (John Glen) on calling this debate on a subject that is enormously important to many hon. Members and to people beyond. The constructive and helpful manner in which he has addressed the issue is appreciated. It is right that we do everything possible to honour those who have served this country, who have gone out of their way and put their lives on the line. In my view and, in fact, that of the Prime Minister—he said it from this very Dispatch Box earlier today—it is not enough simply to remove the disadvantages that having been away from home might bring. If we put ourselves in the position of those who defend the rest of us, we see that it is fair to expect them to be given a foot on the housing ladder as well. I want to make it a specific goal of the Government to ensure not only that we are removing those disadvantages but that we are actively helping.
My hon. Friend raises a number of key points, some of which we have already been talking about. I will try to address his concerns. He refers to the Firstbuy initiative that we launched recently, and ensuring that those who have served this country are at the top of the Firstbuy list. He rightly points out that it should help 10,000 or 10,500 families to purchase homes. I want to ensure that our ex-servicemen are at the front of the line to do that, and we have said that we will ensure that they are. They are being prioritised right at the top, along with people at the top of the housing waiting list. None the less, I intend to ensure that we promote the scheme properly to those who are in the target category. In doing so, we will send Firstbuy special agents into military bases here and abroad, as my hon. Friend mentions, to ensure that we find the right people, so that they know about the schemes. That activity is already under way, and I can put my hon. Friend’s mind to rest about the detail at that scheme by letting him know that the network of Firstbuy agents is already in place and active. For example, I have the marketing material that they are sending to barracks to promote the scheme.
My hon. Friend mentioned social housing. Of course, people do not always want to return to purchase houses, as that might not suit their situation. They might return and want to get on to the social housing waiting lists. Again, I have some good news for him: I intend to consult on how we can better handle their position on the social housing waiting lists. I am determined—I am sure that the whole House is—to ensure that people do not return and find themselves languishing at the bottom of the housing waiting lists, perhaps because a local authority is trying to apply a local connection rule. That is completely wrong, so I reassure my hon. Friend that we will consult on a better way to ensure that returning squaddies are at the top of that list.
Bob Russell (Colchester) (LD)
First, on social housing, I urge the Government to ensure that those councils with large garrison communities have additional resources if that priority is to be meaningful. Secondly, I seek the Minister’s assurance about the failings of an organisation called Blue Force that was based in my constituency and operated from the former Colchester barracks with MOD phone numbers. It was set up to encourage serving personnel around the world to buy, but it went under owing hundreds of thousands of pounds, with many serving military personnel losing thousands individually.
Grant Shapps
On the first point, my hon. Friend is absolutely right that resources need to follow. He will be aware that we have launched not just the Firstbuy scheme to build 10,500 homes for purchase, but a range of different schemes for affordable rent that will very much apply across the country, and aim to build 150,000-plus homes. Of course, as I announced a few moments ago, we will ensure that military personnel are right up there on that list. I intend to consult on the matter after the Localism Bill has finished its progress through the other place. The case of Blue Force is not one with which I am familiar. I would be happy to receive further information on it.
It is interesting that my hon. Friend the Member for Salisbury raised the issue of right to buy and whether time outside the country counts towards the right to buy qualification. I am reliably informed that nothing has changed since the Housing Act 1985. This Government certainly have not made any changes, and I do not think that the previous Government did either. Again, I invite him to provide details if he has any concerns about that. Someone who serves abroad should certainly not lose that time, when it should count towards their right to buy.
As my hon. Friend knows, I have promoted these issues, particularly by holding a military housing summit on 16 May, the same day that the military covenant was launched. I sat around a table and held discussions with a range of military leaders, charity workers, defence officials and many others about how we can improve the situation. I reassure him that a whole range of ideas came out of that meeting—from the Firstbuy discussions, to what more we can do to let our armed forces have a fair crack of the whip at social housing, and to the problems that he eloquently outlined involving how British Forces Post Office addresses have not qualified, until now, with the credit reference agencies that all the mortgage lenders use when assessing a mortgage application. That is an extraordinary problem that should be solved easily. I can inform the House that we have been working to resolve it for several months, since the coalition came to office. We are fairly close to a resolution.
Andrew Miller
The Minister is making an important point. Will he send a strong message to all credit reference agencies that both the Government and the Opposition are incredibly proud of BFPO? It reflects an important part of our society, and we regard it as an insult to our troops that they should be treated in that way by credit reference agencies.
Grant Shapps
The point has been made clearly, and I hear that other hon. Members agree, as do the Government. We have been discussing the matter and are close to resolution. It is an example of how a tiny piece of bureaucracy can cause complete mayhem for somebody’s future life. The inability to score highly on a credit record is important, and it is only a matter of a software change—the computers at Experian and elsewhere simply need to be able to accept BFPO postcodes so that they do not create a problem. Indeed, it could be part of the solution, because once it has been flagged up that somebody has been in the military, all the additional assistance that I have mentioned— for example, Firstbuy—could be brought to bear simply through that information coming to light. I have found the Council of Mortgage Lenders and others to be very helpful in trying to resolve the problem, and we are not far off making an announcement. That is good progress.
I can also report that the scheme managed by the MOD that the hon. Member for Ellesmere Port and Neston (Andrew Miller) mentioned is expected to help a minimum of 250 families into affordable home ownership. I know that that will be widely welcomed. Of course, there are several other key challenges, and I intend to pick up on those themes at a further first-time buyers’ housing summit, which I will hold on 5 July. I will add some of those items to the agenda so that we can keep proper tabs on where we have reached.
I believe that we are considering an issue that one cannot simply approach once and expect it to be resolved.
Grant Shapps
We have to keep returning to the matter, just as the hon. Gentleman is about to do with his intervention.
Andrew Miller
Will the Minister please add to his agenda the special tools that are needed to enable people to transfer from buy-to-rent to buy-to-live-in? A special vehicle is needed for military personnel in that category. That would help them to buy early, which would obviously help later in their careers.
Grant Shapps
I am grateful to the hon. Gentleman. I have not examined that so far, and I am certainly happy to add it to the agenda and give some thought to how we could assist.
We are trying to assist in many different ways. One strange problem is that, six months before someone is discharged, they get a notice of cessation, which tells them that they will be moved out of their military accommodation. There is not much connectivity between that and the local authority, which may not know that those people are about to come down the line and may be in need of housing help, advice or assistance. We intend to join that process up as best we can. That is important.
The more I have looked into the matter, the more it strikes me that the key is joining all the dots. It is not that the country is not grateful and nobody wants to help—far from it. My experience has been the opposite. However, the dots have not been sufficiently joined up. The bureaucratic barriers have got in the way. I commit us to ensuring that, in every possible way, we will seek out and actively try to destroy those barriers, taking on board the excellent ideas that have been presented in debates such as tonight’s and any others, wherever they come from. It is my goal and the Government’s intention to ensure that when those who have bravely served in the military come home, that bravery and the job that they did so selflessly is recognised by everybody in the country, particularly when it comes to housing needs.
Question put and agreed to.