Property Market

Alison Seabeck Excerpts

Tuesday 25th January 2011 Westminster Hall

[Richard Harrington]

My hon. Friend makes a valid point on a subject that I intended to mention later. The Financial Services Authority is reviewing the mortgage market and, from all the indications that we have received, it intends to bring in, with the intention of protecting the consumer, various restrictions, such as appraising customers and reducing the type of mortgage available, that will significantly reduce the supply. I know that Ministers are aware of that, and I hope that they will bring as much pressure to bear on the FSA as they can. It is fair to say that the lending side is definitely a short-term constraint, but for the purpose of this debate, I will put it to one side. However, I am not trying to reduce its validity.

The core of my argument concerns the supply side of housing—the availability of land with planning permission to build social and private houses. Although I fully support the Localism Bill and its core values of local people and their representatives being responsible for their own actions, I believe that in respect of planning, it could significantly adversely affect the supply of land for housing. If the incentives on offer do not outweigh the anti-development sentiments of residents and their elected representatives, we are in real trouble.

Indeed, the Localism Bill will liberate local communities from stifling Labour targets, especially the well-intentioned but misdirected regional spatial strategies, because it is clear that they have not worked. New homes are being built at the slowest rate since the war.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

Does the hon. Gentleman not acknowledge that since the Secretary of State’s letter went out saying that people could ignore the RSS and everything attached to it, planning applications, and therefore the build for housing, has actually gone off a cliff?

[Richard Harrington]

I agree to an extent with the hon. Lady, and I hope that my position will become clearer a little later.

Watford, like many constituencies in the south-east, is badly in need of housing supply; there is no dispute over that. Even during this recession, there has not been an overhang of unsold properties. If development does not come to such regions, a whole generation of people may find themselves priced out of the market for years to come.

The Localism Bill fails to address a serious issue with regard to policy and planning. A YouGov survey, commissioned by the New Homes Marketing Board, revealed that more than eight out of 10 people believe that Britain needs more housing for sale and rent, especially for first-time buyers. That is very much like a “hands up all those who are against sin” argument. The survey also showed that far fewer people—just about 50%—welcome the construction of more homes in their immediate neighbourhoods. Such a view is significantly understated, because when I send out surveys to my local residents, stopping nearby developments comes back as an important priority.

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[Richard Harrington]

May I make a little bit of progress first? I am not trying to ignore the hon. Gentleman; I am just trying to get my flow going.

I am against the centralised approach of the past. I am asking only for effect to be given to a measure proposed in the open source planning document as well as the Government’s Green Paper. We have to carefully monitor the incentives that we are introducing, such as the new homes bonus, to ensure that they in fact do what they are intended to do. If development targets continue to be halved by local authorities, surely we have to consider other ways to encourage the increase of supply that we all believe necessary. It would be much better if the powers were put in place now, rather than when the problem manifests itself, when it might be too late.

It is very clear to me that the Bill must contain a presumption in favour of sustainable development, so that if the local community has not drawn up its own plan for development, businesses can get involved. The economy is a very important reason for increasing the supply and taking the initiative, but obviously it would have to be proved that the proposals were sustainable. I am most impressed by the presumption in favour of sustainable development. It was one of the most far-sighted proposals in last year’s “Open Source Planning” Green Paper, and was reaffirmed with even more vigour in the local growth White Paper later in the year. It is really important that it is brought into effect as soon as possible.

[Alison Seabeck]

I thank the hon. Gentleman for giving way during his very thoughtful speech.

The presumption in favour of sustainable development is not in the Bill, and a number of witnesses have raised concerns about that in the Bill’s first public evidence session.

[Richard Harrington]

I thank the hon. Lady for her intervention, and I hope to sit in on some of the future public sessions of the Bill Committee.

In the Minister’s opinion, does the Bill remain in step with the White Paper statement about its three functions? The White Paper states that those functions are to allow people to shape their own communities—which I think it clearly does; to provide sufficient housing to meet demand; and to support economic development. I am not sure whether the new homes bonus is enough in respect of the second and third functions, and I think that the Government should create a back-up plan to ensure that development continues.

I should like to take this opportunity briefly to consider shared ownership schemes, which are a very important way of increasing home ownership, and of helping the demand and supply sides to meet. On 21 October, I submitted a written question to the Minister for Housing and Local Government about the Government’s plans to increase shared ownership and low-cost home ownership schemes, which, as I have seen in my constituency, are a very affordable and attractive prospect at the present time. The response was very positive:

“We announced in the spending review almost £4.5 billion investment…a new delivery model is expected to deliver up to 155,000 new affordable homes”.—[Official Report, 2 November 2010; Vol. 517, c. 671W.]

To the best of my knowledge, the details that we have been promised have not yet arrived, and I encourage the Minister to give us some information on that. I very much support what the Government are trying to do with shared ownership, and would like to see progress on that as soon as possible.

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[Oliver Colvile (Plymouth, Sutton and Devonport) (Con)]

Thank you, Mr Turner, for inviting me to speak in this Westminster Hall debate and for giving me the opportunity to serve under your chairmanship. I congratulate my hon. Friend the Member for Watford (Richard Harrington) on successfully securing this very important debate. I need to declare an interest. Before I was elected to this House, I ran and was a director of a communications company, which specifically dealt with issues of public consultation. I no longer have an executive role in that company. I hope that over the course of the past 20 years, I have gained some understanding of the market.

The ability to deliver development hinges on the cost of land—how much it costs a developer to buy so that they can develop it. Last week, we debated the Localism Bill. I was delighted to be able to support it because it is exactly the right road for us to go down. I tried, unsuccessfully, to speak in that debate. Had I done so, I would have reminded the House that when it comes to reforming planning legislation, every Government have always thought that they could speed up the process. Unfortunately, that never seems to have happened, and the process has got progressively slower. If we monitor the whole process now and find that it is slower, will the Minister ensure that we can revisit it and try to reform it?

The key issue for developers is the land and the ability to put together land sites and attract political commitment for development so that regeneration and investment can come forward. The previous Labour Government started off on the right foot. They talked about how important it was to encourage both commercial and housing development. Unfortunately, during the course of their 13 years in power, the process got slower and slower to the point that we were literally looking at only one issue, which was making sure that housing development came forward. In any approach that the Government may take, it is important that they include not only housing but commercial development.

As has been said, we are now building fewer homes than we were in the 1920s and 1930s. The previous Government’s top-down approach has not been as successful as we would have liked it to have been. That is why I feel that the coalition Government’s proposals to introduce incentives so that local authorities can encourage development are incredibly important. I firmly support a carrot approach rather than the stick. It will encourage local authorities such as mine and that of the hon. Member for Plymouth, Moor View (Alison Seabeck) to bring brownfield sites back into use and fulfil their full economic potential.

In Plymouth, 38% of the local employed population works in the public sector. Although they do a good job, we have failed to ensure that we rebalance the economy, and we must try to do so. The largest private-sector employer is Babcock, at the dockyard, but that is of course public-sector employment by proxy. I am therefore keen to encourage more private investment in Plymouth. Just yesterday, the deputy leader of my council reminded me that Plymouth is open for business and can deliver. That is good news, but to achieve it in our part of the south-west, we must not only ensure that we have good transport and infrastructure, as my hon. Friend the Member for Peterborough (Mr Jackson) mentioned; we must ensure that we have a good skills base. If we are to attract inward investment, we need good infrastructure, a good skills base—people move where the jobs are—and the right general design for the area. Plymouth has a low-skills and low-wage economy. To rebalance it, we must ensure that we have the right conditions to attract inward investment.

Last Friday, Plymouth city council organised an event at which I spoke, as did the hon. Member for Plymouth, Moor View and, I am delighted to say, my hon. Friend the Member for Rossendale and Darwen (Jake Berry). We considered the whole business of how to attract investment and so on, and we discussed affordable housing. My hon. Friend did an excellent job and spoke incredibly well. All the reports that I heard said that he certainly hit the issue. It was an opportunity to consider the regeneration that has taken place in Devonport, which we all found interesting and worthwhile.

[Alison Seabeck]

Will the hon. Gentleman at least acknowledge that the development in Devonport, which has been fantastic in turning that community around, was the result of investment by the last Labour Government?

[Oliver Colvile]

Yes. I thank the hon. Lady for her intervention. That investment has continued, and it is impressive how the scheme is progressing. It is developing mixed communities with not only housing but business and commercial opportunities.

Plymouth has about 12,000 people, mainly single, sitting on the city council’s housing waiting list. It has a significant population and a chronic shortage of affordable housing, and we must rebalance our public finances. Registered social landlords and housing associations will not necessarily have as much money available as they do at the moment, so we must consider other ways to develop an affordable housing market.

Many rural communities have decided to go down the route of creating community land trusts, and we should consider that for conurbations. I was elected on a campaign of saying to Ministers that Plymouth is not Portsmouth. We are not 20 minutes away from Bristol, and we should not be ignored. We have a good story to tell. We would welcome a visit by the Minister to Plymouth, which is a happening place, as they say.

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[Alison Seabeck (Plymouth, Moor View) (Lab)]

I need to draw Members’ attention to the entry in the Register of Members’ Financial Interests under the name of my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford), because he is my partner.

This issue is of real importance, and I congratulate the hon. Member for Watford (Richard Harrington) on securing the debate, on developing a strong case for action, and on raising concerns that the Localism Bill will not do what it says on the tin. I look forward to the Minister’s response to the hon. Gentleman’s well-argued policy points.

House prices are falling and are projected to fall during this year in most regions. The Office for Budget Responsibility has significantly downgraded the prospects for house price growth throughout this Parliament. In December, there was a further fall in mortgage lending of 6% from the previous month, and money market rates are rising, which will have an impact on existing borrowers and create a potential for higher mortgage arrears and repossessions.

Some Government Members spoke with optimism, albeit muted, about the prospects for the housing market. Many raised concerns about the mix of the market, and asked genuine questions about the new homes bonus and the conflict between people not wanting new houses in their neighbourhoods but understanding that their children and grandchildren need housing. The hon. Members for Peterborough (Mr Jackson) and for Rugby (Mark Pawsey) raised those issues. The hon. Member for Waveney (Peter Aldous) reinforced, with some expertise, the points that he made in the Second Reading debate on the Localism Bill, and the hon. Member for Plymouth, Sutton and Devonport (Oliver Colvile) spoke with passion about the planning system, land assembly and, interestingly, the importance of design, a sentiment with which I concur. The importance of growth in sustaining the economy and the housing market was obviously mentioned, and Opposition Members will clearly be worried by the comments of the outgoing director general of the CBI, who said that the Government are not doing enough to encourage growth and that decisions are being taken for political reasons.

Politics in the housing market perhaps does not work well, and I suspect that previous Labour Governments learned that lesson too. Stability in house prices depends on a balance between supply and demand, complemented by a financing system that matches the aspirations of people who want to own their own homes and has the capacity to provide finance. We are not building enough homes to meet the demands of the population, and that goes for homes in the private market, homes for shared ownership and subsidised social rents. We are likely to see fewer additional affordable homes built than during the previous Parliament, when the housing industry was hit as hard as any sector of the economy from 2007-08 onwards, first by the credit crunch and then because of the recession. According to the Minister’s figures—they were confirmed in a written answer from the Under-Secretary of State for Communities and Local Government, the hon. Member for Hazel Grove (Andrew Stunell) who, unusually, is not here as he is in Committee—in the previous Parliament, 199,800 additional affordable homes were built. In this Parliament, the Government are aspiring to build only up to 150,000, which is not particularly ambitious.

The Government tell us that development will be driven at a local level via the new homes bonus. The hon. Member for Watford raised concerns here. However, according to the analysis I have seen, if the new homes bonus will work anywhere, it will work in the south-east—not, as my hon. Friend the Member for Hyndburn (Graham Jones) has on many occasions said, in the north. I share the concerns raised by the hon. Member for Peterborough that perhaps impact assessments should have been done prior to the policy being brought forward, so that we really understood where housing needs existed. That reinforces Labour Members’ arguments that the Government are moving too far too fast and that they are not looking at the evidence.

Only last week, the Conservative leaders of 21 councils in the south-east wrote an open letter to the Minister in which they declared their serious concerns. They said that they did not see how the new homes bonus scheme provided enough of an incentive to communities for them to welcome development. Again, those concerns were reinforced by Conservative Members. I am also a little surprised that the right hon. Gentleman the Minister of State, Cabinet Office, is not riding shotgun for the Minister today to ensure that he says all the right things and to protect his back from his own side. Perhaps the Minister will enlighten us on the right hon. Gentleman’s contribution to his Government’s housing policy—the secret review.

The supply of social homes is also relevant to preventing a build up of pressure on an already squeezed private rented sector, tempering rents and allowing potential first-time buyers in the private sector to build up a deposit. The Minister has overseen a process whereby the budget for building new homes has been more than halved and he has placed his faith in the intermediate rent model, which will see social rents charged at up to 80% of the market rent in a given area. In the rest of the country, there is considerable unease that the 80% model will fail to deliver the necessary homes, because for housing associations to move to that model will require a change in their entire business model and therefore necessitate a restructuring of their borrowing with the banks. That will drive up costs and make that method of financing home building unpalatable at best and unworkable at worst. Housing associations are, of course, important contributors to the low-cost home ownership market and shared-ownership markets.

We have noticed, housing experts have noticed and local government leaders have noticed—we have therefore now been told that Downing street has noticed—that the shine is coming off the Minister’s policies. In addition to the developing crisis of supply, we have a similar situation with demand, which will also be affected. I disagree to an extent with the hon. Member for Watford. Unemployment is rising, wages across the public sector have been frozen, mortgage interest rates are already increasing and, with inflation pushing higher because of the hike in VAT, I doubt it will be long before the Bank of England considers that an increase in the base rate is on the cards.

The FSA’s review of the mortgage market, which many hon. Members have mentioned, has mortgage providers and house builders on tenterhooks. Although the Minister’s press team made sure that we were all aware that he would be meeting the FSA—I have also met the FSA—I have not heard very much from the Minister about the meeting’s outcome or what he would like to see out of that review. What did the Minister press Hector Sants to do? Did he ask him to tighten regulation, so that the market stagnates and prices remain low? Or did he argue that regulations should be loosened to encourage more people into the market to stimulate it? Which was it? A stable housing market is a noble aspiration, but it requires concerted action across the sector to deliver the homes we need. I look forward to the Minister’s comments.

[The Minister for Housing and Local Government (Grant Shapps)]

I start by congratulating my hon. Friend the Member for Watford (Richard Harrington) on securing the debate, to which there has been an absolutely terrific response. There has been a great deal of support, particularly from Conservative Members, for the subjects being discussed. As my hon. Friend mentioned, I did not just go to school in Watford; I was born and brought up there. As I said, it has been a good and intelligent debate. I will try to address as many of the points made as I can, but I put hon. Members on alert that because some of them went into quite a bit of detail, I will study the transcript of the debate and get back to hon. Members on some of the specifics raised if I run out of time. I am particularly thinking of my hon. Friend the Member for Waveney (Peter Aldous), who raised a series of detailed points that I do not think I will have time to cover.

[Alison Seabeck]

Will the Minister provide that correspondence to other hon. Members who are present?

[Grant Shapps]

Yes, by all means. I have no objection at all to making this a completely open exercise, and my officials will have noted my comments.

As to what we know about the old system, several Members mentioned that it had completely and utterly failed. We did not get to the lowest house building levels since 1923 under the new system, but under a top-down, almost Stalinist approach, which said that we would be able to build the top number of homes that we had set out in the 10-year plan. The pledge was to build 3 million homes by 2020, but the number built crashed through the floor.

The problem was not just the total number of homes being built, but the number of affordable homes, which was derisory, and I know that the Opposition housing spokesman, the hon. Member for Plymouth, Moor View (Alison Seabeck), agrees. Concern was expressed about the amount of affordable housing that would be built under our plans, but despite the £17 billion pumped into affordable house building over 13 years by the previous Government, the impact was a net loss of 45,000 affordable homes. I can assure the hon. Lady that the coalition Government will do better than that every single year.