Cost of Living: Energy and Housing

Baroness Hodge of Barking Excerpts

Thursday 5th June 2014 Commons Chamber

[Margaret Hodge (Barking) (Lab)]

I start by offering my sincere apologies to you, Mr Deputy Speaker, and to right hon. and hon. Members for not being present at the start of the debate; I was chairing a meeting of the Public Accounts Committee, which was attempting to hold the Government to account over their major projects.

I wanted the opportunity to speak in this debate because this is the final Queen’s Speech of this Parliament. I looked at it to see what it offered my constituents, the good people of Barking and Dagenham, but I am afraid that it offers them nothing. The recent European and local elections placed centre stage the challenges that many communities face from migration. In Barking and Dagenham, we have been dealing with the impact of migration on our community for over a decade. Indeed, the extreme right, in the form of the British National party, tried to exploit the legitimate concerns and fears that people have when dealing with change. Although we saw off that divisive, racist and intolerant threat, the concerns remain, and there was nothing in the Queen’s Speech to help me or my constituents to respond to them.

The Government’s rhetoric continues to be about being tough on immigration numbers, but inevitably the Government fail to deliver on that promise. When the Government fail, that strengthens and deepens people’s loss of trust in their politicians, democracy is damaged and community cohesion is undermined.

More migration across national borders is a feature of the inter-dependent world of the 21st century; nobody can turn the clock back on that. The Government should start tackling the issues on which they can make a difference and respond positively to people’s concerns as well as articulate much more positive messages about the benefits of migration to our economy, culture and communities. If they were to do the practical things, anger would not be turned on migrants or indeed on second and third generation British citizens who are scapegoated for our Government’s failures.

My constituents feel bewildered and frustrated by the Government’s failure to respond to their needs. Top of their agenda is housing. They are desperate for a decent home at a price they can afford. Our need for more homes in Barking and Dagenham has gone beyond a crisis. Our population is set to grow by around 50,000 over the next decade. We have more than 13,000 families on the housing waiting list, and homelessness has increased by a staggering 167% since 2010 when this Government came into office.

In London as a whole, more than half a million new homes are needed by 2021 to meet the projected increase of a million in the city’s population, according to the figures that are produced by the London councils. If we factor in existing need, the number of houses needed in the capital over the next seven years grows to more than 800,000. What is the Government’s pathetic response to this crisis? It is a help-to-buy scheme that most economists believe is fuelling the housing price bubble and is anyway having minimal impact in helping first-time buyers or people in housing need in London.

Proposals in the Queen’s Speech simply tinker at the edges and fail either to unlock the potential or to provide the resources needed to respond to my constituents’ need for decent, affordable homes. The Government’s failure to act where they can simply fuels hostility against migrants and breeds division rather than supporting cohesion and harmony. There has been too much talk and too little action on housing. The Government need to stop making grand claims about how many homes they are going to build and get on with unlocking the investment to make things happen on the ground. Critical to that is getting the essential transport infrastructure in place. All I can see, and all my constituents can see, are a series of what I call big boys’ toys, such as HS2, for which the case is not yet proven, and Boris Johnson’s vanity cable car project.

We need a proper strategy that links up housing, transport and other regeneration so that we can achieve the potential and the prosperity for Barking and Dagenham and the east of London that are taken for granted in the wealthier parts of the capital.

Let me take Barking Riverside as an example. This is one of the biggest regeneration sites in London. It has been more than 20 years since the site was first bought by Bellway. There have been endless master plans, but since 2008 there has been planning permission for nearly 11,000 homes to be constructed on the site. About a third are supposed to be homes with three or more bedrooms, and more than 4,000 are supposed to be affordable. That means that 26,000 people could be housed on Barking Riverside—half the number of extra people we expect to be living in the borough over the next eight to 10 years. Yet so far, only 360 homes have been completed and another 300 are under construction. At that rate it will take more than 100 years to complete the development.

Failure by both the Government and the Mayor to take the necessary steps to speed up this development is a blatant dereliction of duty. Putting the necessary transport infrastructure in place is part of the planning deal to build these new homes, yet when Boris Johnson first became Mayor in 2008, he stopped the proposals to extend the docklands light railway to Barking Riverside on the grounds of cost. Only in 2013 did he start lobbying Government for the funding of a cheaper proposal—to extend the Gospel Oak to Barking line to Barking Riverside. However, in the last Budget all we got was a plan for a plan, with woolly words and no concrete commitments. The Government said that they would

“work with the Mayor of London to develop proposals”.

No funding has been made available.

The Government are prepared to commit £50 billion to HS2, but cannot commit even the £180 million needed to extend the Gospel Oak to Barking line to Barking Riverside. Boris spends £60 million on his cable car—a facility which, according to a recent freedom of information request, is used by just four regular commuters. Neither the Chancellor nor the Mayor has committed the money needed to unlock the huge potential for housing and regeneration in the heart of my constituency.

The Queen’s Speech could have delivered for Barking and Dagenham, and for London. We have the land to build a significant proportion of the homes we need. Indeed, there are 4,000 hectares of brownfield land in London alone, about 40% of which is owned by the public sector. Lack of planning permission is not an excuse. In my borough, we already have planning consents for at least 20,000 new homes, yet over the past 10 years, the housebuilding average has been around 500 homes a year. This is about political will. The Government should use their infrastructure programme to unlock the potential of communities, rather than feed the vanity of the coterie of men who control the legislative and financial purse strings.

The Government should legislate to ensure a ruthless and determined use of compulsory purchase powers so that disused sites can be brought into use and new homes built. They should legislate to penalise both public and private bodies which simply sit on land to let its value grow, rather than building homes.

The Government should lift restrictions on London councils to enable them to borrow against their assets to build new homes. Far from weakening section 106 powers, the Government should strengthen them to ensure that a good proportion of new homes are affordable to local families. That would be a legislative programme that brings optimism and hope to the good burghers of Barking and Dagenham, and across east London. That would be a pragmatic and serious response to the concerns expressed by voters in the recent elections. That is what the Queen’s Speech should have contained and that is what my constituency, London and Great Britain need.

--- Later in debate ---

[Hilary Benn (Leeds Central) (Lab)]

I draw the House’s attention to my indirect interest, as previously recorded in Hansard. We have had a wide-ranging debate that was opened by the Secretary of State for Energy and Climate Change, who made the Liberal Democrat case for the coalition. Were he here, I would gently point out to him that there has not been a council tax freeze for about 2.2 million people on the very lowest incomes who have been hit by the changes in council tax benefit. The most passionate part of his speech was when he talked about energy bills, but I would remind him that energy bills went down when my right hon. Friend the Leader of the Opposition was Energy Secretary, whereas they have gone up during his tenure.

My right hon. Friend the Member for Don Valley (Caroline Flint) then made what I think was a forensic speech, making the case for what could have been done in the Gracious Speech to do something about markets that do not work in the interests of consumers, which has dominated this afternoon’s debate. The hon. and learned Member for Harborough (Sir Edward Garnier) gave what I would describe as an hon. and learned master-class—one with which I was not familiar before—on heroic negligence. [Interruption.] The Secretary of State for Communities and Local Government assures me across the Dispatch Box that he will further enlighten us on the subject when he replies.

My hon. Friend the Member for Sheffield South East (Mr Betts), who chairs the Communities and Local Government Committee, in a typically thoughtful and well-informed speech, made important points about brownfield land, viability, the impact of migration and the importance of devolving power to answer the English question—a point reinforced by my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart).

Several Members—led by the right hon. Member for Meriden (Mrs Spelman) and supported by the right hon. Member for Uxbridge and South Ruislip (Sir John Randall), my hon. Friends the Members for Ynys Môn (Albert Owen) and for Brent North (Barry Gardiner) and the right hon. Member for Hazel Grove (Sir Andrew Stunell)—spoke passionately in support of the Bill to tackle modern-day slavery. There is not a single Member of the House who does not look forward to the day when that Bill reaches the statute book.

We also heard contributions from the hon. Members for Angus (Mr Weir), for South Basildon and East Thurrock (Stephen Metcalfe), for Fareham (Mr Hoban), for North Dorset (Mr Walter), for Brentford and Isleworth (Mary Macleod), for Stafford (Jeremy Lefroy) and for Northampton North (Michael Ellis),

A number of Members, including the Chair of the Select Committee and my hon. Friends the Members for Islington North (Jeremy Corbyn) and for Stretford and Urmston (Kate Green), raised the problem of the insecurity and expense faced by the 9 million people who now rent from private landlords, including a growing number of families. We know that many of them would like to buy their own homes but cannot afford to do so and that private renting is the most expensive form of tenure. On average, people renting privately spend 41% of their income on housing. For those in the social rented sector the figure is 30%, and for owner-occupiers it is 19%.

We also know that renting privately can mean insecurity—the point made yesterday by my right hon. Friend the Leader of the Opposition. How can parents of children starting school this September, for example, feel confident about a stable future family life when, with 12-month tenancies being the norm—that is a fact—they do not know for sure whether they will still be in their family home a year from now? Landlords can tell their tenants, “Of course I will renew your tenancy, but I want to increase the rent by 10%.” How can a family plan their future finances, and have a sense of future stability, when there is that degree of uncertainty about both their tenancy and their rent?

We also know that very frequent turnover in properties is not very good for landlords, because properties lie empty and they lose out on rent during that period. It is not very good for tenants, as I have just explained. The one group of people it is good for, of course, is the letting agents, who can charge fees every time there is turnover, both to landlords and tenants. I think that the House will agree that the industry has been poorly regulated. Parts of it have developed some very bad habits, including charging hidden fees for having pets and dealing with inventories and references, all of which are on top of the large amounts of money that people have to find for rent in advance and for a deposit. Many people have to borrow to meet that bill in order to get a home, which is why we would stop lettings agents from charging fees to tenants—as is now the case in Scotland. After all, when we buy a house, it is the seller who pays the estate agent, and not the buyer; that is the parallel. I welcome what the Government propose to do in relation to transparency, but it does not tackle the root of the problem.

To be fair to Ministers for a moment—[Interruption.] I shall be fair; I am always fair. They claim to get the problem of insecurity and uncertainty in the private rented sector judging by the “Better tenancies for families in rental homes” document. It talks about longer tenancies to enable greater stability and rent review clauses that are index- linked to inflation, and yet when we recently announced that we would give greater security by offering three-year tenancies as the norm and peace of mind that any subsequent rent increases would not be excessive, what happened? The former Housing Minister, and now the Chairman of the Conservative party, instantly denounced them as Venezuelan-style rent control.

Then somebody in No. 10 Downing street suddenly thought, “Hang on a minute, didn’t we say something vaguely positive about this in that CLG document?” Lo and behold, the Prime Minister came to the Dispatch Box and said that he was in favour of longer-term tenancies. So, Venezuela, having hoved into view, then disappeared off the scene, but the Prime Minister denounced the idea of rent control.

Then something very curious happened. The hon. Member for West Suffolk (Matthew Hancock), who is a Minister in the Department for Business, Innovation and Skills, went on the “Daily Politics” show, and said

“on the rents issue, we put forward that policy at our conference last year.”

We have three different Members of the Government and three different positions, at least two of which fully support our policy. I say to the hon. Member for Esher and Walton (Mr Raab), if he is still in his place, what is really a riddle wrapped in a mystery inside an enigma is tenants wondering what the Government really think on this question of greater security for tenants. The only possible explanation, in the absence of any legislation in the Queen’s Speech to give people that security and greater certainty about rent increases in years two or three of what we have proposed in the three-year tenancies, is that the Government are willing to concede the point, but are unwilling to lift a single legislative finger to give tenants that greater security and peace of mind.

The only conclusion I can draw is that the Government are ideologically averse to the state using its power on behalf of those for whom markets do not work, and it is exactly the same issue in relation to the energy market. I simply say that it is not much use to all those tenants who find themselves in that position. It is the difference between us and the Government. We will give tenants greater security as of right, and the Government will not.

On building the homes that we need, I welcome the proposal in the Gracious Speech for an urban development corporation to support the building of the Ebbsfleet garden city. However, I say to the Secretary of State that the statement from his Planning Minister, the hon. Member for Grantham and Stamford (Nick Boles), that he would not require a particular level of affordable housing in Ebbsfleet—he said that in answer to my hon. Friend the Member for City of Durham (Roberta Blackman-Woods) in the House recently—is frankly astonishing. Are Ministers saying that in all the garden cities that all of us from all parts of the House want to see built, there will be no requirement for affordable housing? What will that do to the housing benefit bill given that there has been a staggering 60% increase in the number of working people claiming housing benefit since the coalition took office? As my hon. Friend the Member for Llanelli (Nia Griffith) said, we are talking about 400,000 more people. If that does not reinforce the point that was made yesterday by my right hon. Friend the Leader of the Opposition that for many people in this country work does not seem to pay or reward them, then what does?

My hon. Friends the Members for Bolton West (Julie Hilling), for Ogmore (Huw Irranca-Davies) and for Brent North all spoke eloquently in their own way about the effects of insecurity and low pay on people’s sense that they lack liberty and equality, and on how as a result they do not feel a sense of fraternity in our society.

We want to see the details of the housing and planning measures announced in the Gracious Speech, but after four years of announcements and headlines, the truth is that the Government’s record is not much to shout about. Four years in, the number of homes completed has been lower in every single year that the Secretary of State has occupied his post than it was in any of the 13 years of the previous Labour Government. We built more homes than the coalition. The number of social homes completed last year was the lowest for at least 20 years—the Government’s own figures. That is not surprising. Why? The first act of the Secretary of State on housing was to say, “I have a good idea. Let’s cut the capital budget for affordable housing by 60%”—surprise, surprise, the lowest figure for at least 20 years.

Far from having the “self-build revolution” promised by the then Housing Minister, the right hon. Member for Welwyn Hatfield (Grant Shapps)—he said that the Government would double the size of the sector—the number of self-built homes is at its lowest level for 30 years. For people who want to get a foot on the housing ladder, it now takes a lot longer to save for a deposit, but even when they get to that point, they find that house prices are now rising nationally at 8% a year and in London at 17% a year. No wonder that the Governor of the Bank of England recently said that Britain’s housing market has deep structural problems and that the failure to build enough homes and rising house prices are the biggest risks to financial stability.

As I have said before from the Dispatch Box to the Secretary of State, we support help for people to realise their dream of home ownership, especially first-time buyers. But, if the Government simply increase housing demand without increasing housing supply, which they have not, all that happens—and indeed it is happening—is that prices continue to rise out of the reach of people who want to get their foot on the ladder. That is what is missing from the Queen’s Speech—a recognition of the structural problems in the land market and the house building market.

Much of the focus has been on planning, and there is more to come, but as my right hon. Friend the Member for Barking (Margaret Hodge) pointed out, there is planning permission for 20,000 homes in her borough, but I think she said that fewer than 1,000 of them—

[Margaret Hodge]

Five hundred.

[Hilary Benn]

Only 500 of those homes have been built. The problem is not the planning permission, because more than 19,000 houses with planning permission are waiting to be built; they are simply not being built. What is the structural problem? In part, it is because 30 or 40 years ago two thirds of houses in this country were built by small and medium-sized builders, but by 2012 that figure had fallen to a third. That is a profound change in the structure of the house building market. As the number of small builders has declined and as the big firms have grown even bigger, it has become easier for the dominant firms to buy up land. As Kate Barker found in her report 10 years ago—many Members know that this is true—it is not always in the interests of those big builders to build out the sites on which they have got planning permission as quickly as possible or as quickly as the nation needs.

The truth is that to get the number of houses we require to be built, there has to be a change in how the housing market works—something that Ministers have simply failed to acknowledge. We have to get more firms into house building to build homes and to provide competition, because the high cost of housing is driven by the high cost of land. That is why, compared with the rest of Europe, we have really expensive homes with really small rooms in this country. Not enough land has been released for housing development and, by the time land is given planning permission, it is often prohibitively expensive. That creates an incentive to bank land rather than to build on it.

Those who argue that land banking is not a problem forget what the Office of Fair Trading found in 2008. It said that strategic land banks bought with options, which accounted for 83% of land banks, were worth 14.3 years of production, and that that would be enough to build 1.4 million homes, which would be a welcome addition. What is more, under the current system there is very little that local authorities can do about land banking. Compulsory purchase order powers are little used because they are complex, legalistic, difficult and so on, so authorities, on behalf of the communities that they represent, have no effective way of bringing land forward to the market. That is why we would create greater transparency by ensuring that developers register the land they own and have options on—[Interruption.] The Secretary of State is chuntering, but he is in favour of transparency, so will he support that measure?

We want to give councils and communities the power to charge developers escalating fees for sitting on land with planning permission to incentivise them to build and, if they do not, to release the land. The Secretary of State has denounced the idea, but of course it was supported by the hon. Member for Grantham and Stamford before he was given the job of Planning Minister. As a last resort, we would give local authorities the power compulsorily to purchase land and to assemble land so that we could make progress. The purpose of all those measures is to address the imbalance of power between local communities and developers. I say to Ministers that the land market and the housing market are not working and that is why there is this fundamental problem. There is not enough competition and I do not understand why a Government that includes a party that prides itself on being an apostle for competition is doing nothing about that.

My final point is about how we can get consent and get the houses built in the right place. I congratulate the local authority of the hon. Member for Fareham on the leadership it has shown—he outlined that for the House this afternoon—in recognising that there is a need for more housing and saying where it would like it to go. That is the essence of the deal. We have a much better chance of getting communities to come forward and take responsibility for meeting housing need in their area if they think that the sites they identify are where the housing will go. As we have heard in debates in this House on many occasions over the past two or three years—this is the reason the Planning Minister sometimes gets a tough time—it does not work like that. Developers say that the land is brownfield and too expensive, that they cannot build a lot there and that they want to go for a greenfield site. That has to change.

The fundamental problem with the Gracious Speech is that it does not get why so many people voted the way they did or did not vote at all on 22 May. It does not get the costs and insecurity that many people have to live with, whether they are caused by zero-hours contracts, the bedroom tax, high energy bills, insecure tenancies, unaffordable house prices or having to go to a complete stranger and say, “Can you help me because I can’t feed my family this weekend?” That is the truth. The Government are unwilling to use the power of this House to help people in those circumstances. In the end, the public will judge, but if we want to restore faith in democracy we must use our democracy to help people who find themselves in that position.