Housing: Affordability

Lord Whitty Excerpts

Wednesday 22nd January 2014 Lords Chamber

[Lord Whitty (Lab)]

My Lords, I declare an interest both as the chair of Housing Voice and as a vice-president of the LGA. I thank my noble friend Lady Ford for starting us out by looking for a new strategy in this area.

I have a few points to make. First, on terminology, as the noble Lord, Lord Shipley, said, affordability applies in all sectors of the housing market; it should not be regarded as synonymous with social housing. Moreover, a good bit of social housing is clearly not affordable for those who occupy it at its current level of rents, otherwise we would not have seen the huge increase in housing benefit which, in terms of government resources going into housing, is clearly a misallocation compared with actually increasing the supply of housing.

Secondly, I can hardly complain that the Government have been negligent in coming forward with new initiatives, apart from their very early cut in the affordable and social housing budget, which was plainly disastrous. They have come up with numerous schemes, from the New Homes Bonus, which admittedly the Select Committee down below said has not worked, to First Buy, Help to Buy, the NewBuy Guarantee scheme, mortgage guarantee, Right to Buy and so forth. There have been a whole lot of schemes but they have been piecemeal, inadequate and, in many respects, misdirected by emphasising demand, not supply. In terms of geographical balance, they have helped more to overheat the market in the south-east than to spread into the regions and rural areas.

I am not here to proclaim that the Labour Government did it any better. Frankly, we have all failed so let us have a political consensus that that failure should be driving us to seek a new approach and a new strategy. We also need to recognise the sheer size of the problem. I was looking at some of the statistics on household growth. The growth of households has slowed down a bit. Compared to the reference by the noble Lord, Lord Borwick, to divorce and split families, kids staying at home because of the economic recession has increased the size of families, so that it has slowed down a bit. Even on those figures, it is clear from the Cambridge study that we need 240,000 new homes to meet the new households being created—almost twice what we are building. We need to create a million new homes in the next five years, and that process needs to go on until 2031—a 20-year programme. That is a major strategic commitment and we do not have the mechanism to deliver it. We do not have the vehicles for delivering it and need to reinvent those vehicles.

One of those is the role of local authorities. I am simply repeating what the noble Lords, Lord Shipley and Lord Best, said. The most immediate role is for local authorities to be able to borrow and engage in developments on their own, with housing associations and the private sector, in different ranges of housing. Unless the cap is raised—we welcome £150 million, but it does not go very far—local authorities which are the most obvious ones to deliver at least part of this massive total will not be able to do so. Almost everybody in the housing world agrees with that except Her Majesty’s Treasury. Unless we raise that figure, we will not be able to deliver the beginning. We may need to do a lot of other things as well, but at least let us start with that.