Housing

Lord Collins of Highbury Excerpts

Thursday 6th June 2013 Lords Chamber

[Lord Collins of Highbury]

My Lords, I, too, thank my noble friend Lord Dubs for initiating this debate. He has a terrific and proud record of raising housing issues and developing housing policy.

We face the biggest housing crisis in a generation, and the Government’s housing and economic policies are not helping. The first priority must be to address, by building more homes, the housing shortages that are the underlying cause of homelessness, overcrowding, high rents and low standards of accommodation.

Housebuilding is crucial to economic recovery and to helping families to get on to the housing ladder. Young people today are increasingly being priced out of buying or renting a home of their own. People from all walks of life struggle to get the housing they need or want, and it holds them back in life. Meanwhile, our economy is held back by the lack of construction.

History tells us that a major programme of housebuilding has always been at the heart of economic recovery in our country—public and private—and that it is not possible to have a sustainable economic recovery without a major programme of housebuilding. The CBI rightly makes the point that the 100,000 affordable homes will see 1% added to GDP. As has been highlighted in this debate, housebuilding fell by 11% in 2012, the number of housing completions has fallen in both years since the general election, and homelessness is up by a third. As my noble friend Lord Dubs reminded us, in 2012-13 a total of 108,000 homes were completed in England, yet Shelter’s report, Homes for the Future, identified an annual need for 242,000 new homes to meet current demand.

I am the first to acknowledge that the biggest housing crisis in a generation does not date back to May 2010. Having said that, I should point out that in 2010 we warned what the consequences of the crisis would be. The £4 billion cut in affordable housing investment in the Chancellor’s first Budget resulted in a 68% collapse in affordable house building and a 97% collapse in council house building at the worst possible time.

The impact of these cuts in public investment has been extremely serious. The number of housing association starts has fallen by 23% to 19,500 in the past year, and the uncertainty created by changes in the planning system has not helped. As noble Lords have pointed out, it is not necessarily a problem of planning.

Currently there are more than 1.8 million households on waiting lists and more than 500,000 households living in overcrowded conditions in England, as highlighted by my noble friends Lord Morris and Lord Sawyer.

There is no doubt that the planning system was in need of reform but it is clear that it was never as big a problem as some have pretended. Indeed, there is land with existing planning permission capable of sustaining 470,000 homes. Those homes are simply not being built. The Government have launched four major housing schemes in three years and made more than 300 announcements on housing, yet all of these schemes have so far completely failed to tackle the housing crisis. By simply stimulating demand through plans for Help to Buy, mortgage guarantees and equity loans rather than directly boosting supply, there is a danger, as my noble friend Lady Blackstone has pointed out, that it will simply push up prices.

As my noble friend Lord Griffiths put so well, the property market is becoming out of reach for many renters. Research in a Scottish Widows report published last month found that at people’s current saving rates a first-time buyer will take almost 13 years to save the £27,984 required for the average deposit. With property ownership seeming a distant dream, its research suggests that many renters may have given up on property ownership, with only 29% actively saving to put a deposit on a home.

Although I accept that we may have a small positive sign with the news from Nationwide a few weeks ago that first-time buyers are beginning to get on to the housing market, we also need subsidised housing for those who cannot afford to purchase or to pay full market rents. Action on affordable housing is needed and the announcement that an extra £225 million will be available is welcome news. However, only £125 million will be spent before 2015, according to the OBR, and that is dwarfed, as I have said, by the £4 billion cut in funding for affordable housing.

As my noble friend Lady Turner has said, and many noble Lords in today’s debate have highlighted, while one government department introduces measures to support housing another exacerbates the problem. The bedroom tax, the levy on housing association and council tenants deemed to have a spare room, penalises those in work as well as those who must find money from their other benefits by cutting back on essentials.

Not only does it have a human impact, as highlighted by many noble Lords in the debate, it will also have other perverse outcomes. If people are pushed into the private rented sector, there is the potential for rents to be higher, which increases the housing benefit bill and the potential for greater homelessness. There is growing and disturbing evidence of the potential of this now to have an impact on new builds—on supply—because of the write-off of bad debt and the burden of cost being imposed on housing associations and local authorities. As chair of a credit union myself, and as the noble Lord, Lord Palmer, highlighted, I am only too aware that many housing associations whose tenants are being hit by the welfare changes anticipate major problems with rent arrears.

While scrapping this measure would be best, can the Minister say whether, when the Government review its impact, they will consider the current discretionary housing payment that local authorities need to deploy in the many cases of hardship where tenants cannot be offered a suitable smaller property? All of this means that housing bodies must cut back on spending on new housing investment just when the Government need them to do more. Also, they will be less able to undertake broader community work such as addressing those with special needs, tackling anti-social behaviour and supporting young people into training and jobs.

With the huge squeeze on living standards and a faltering economy, the Government’s failure to provide affordable housing means that millions of families are being priced out of living in a decent home. Not only have affordable housing starts collapsed from 49,363 in 2010-11 to only 15,698 in 2011-12, we have the added problem that many of the homes under the Government’s affordable homes programme, let at 80% of the market rent, are not affordable in many parts of the country. I would also point out to the noble Lord, Lord Palmer, that it is a bit cheeky to claim that the proposal to provide 170,000 affordable homes was realised as a consequence of this Government’s actions when the National Audit Office has made the very good point that 70,000 of those homes were commissioned and paid for by the previous Government.

Statutory homelessness rose from 10,000 at the end of 2010 to 13,570 by the end of 2012. As a result, as has been highlighted by some of my noble friends, local authorities are placing a worrying number of families in temporary accommodation. Some 53,130 households were living in temporary accommodation at the end of 2012, 9% higher than the previous year. The failure to tackle this problem is devastating for many families and, according to new research by the Bureau of Investigative Journalism, it is proving to be incredibly costly. Over the past four years, the UK has spent almost £4 billion housing vulnerable homeless families in short-term temporary accommodation. Again, in the past four years, £1.88 billion—enough to build 72,000 homes in London and house all 53,000 households that are currently homeless—has gone on renting temporary accommodation in 12 of Britain’s biggest cities.

I hear what the noble Lord, Lord Tope, says and I will not be tempted by his kind offer to make a spending commitment. Like the Minister, I am not in a position to do so. However, the noble Lord is absolutely right to recognise that over and above what we commit by way of grant and investment, we need innovatory forms of funding the housing supply. The Communities and Local Government Select Committee of the other place was right to advance a debate that we badly need to have about a housing investment bank. Last summer, the leader of my party proposed a British investment bank with a focus on manufacturing and housing. Labour has previously called on the Chancellor to use the money raised by the 4G mobile spectrum auction to build 100,000 affordable homes. Ed Miliband has also called for an immediate tax on bankers’ bonuses to fund 25,000 affordable homes.

My noble friend Lady Blackstone highlighted the issue of housing benefit—the rising cost and the proportion of costs accounted for by benefits. Today, Ed Miliband, in tackling the rising cost of housing benefit, committed the Labour Government to giving councils the power to negotiate over housing benefit on behalf of tenants, to get greater savings than an individual can get on their own. Ed Miliband said that not only would they be able to create those savings but to retain some of them, as long as the money was used to build new homes.

People should have a decent home at a price they can afford to rent or buy. The crucial point is how we locate that in the context of economic recovery in our country. Sustainable economic recovery will not happen unless we have a major programme of public and private housebuilding. We have the biggest housing crisis in a generation and an economy that is bumping along the bottom. As my noble friend Lady Blackstone said, the Government badly need to come forward with a serious long-term strategy for getting Britain building.