Housing (CSR)

Andrew Smith Excerpts

Wednesday 27th October 2010 Westminster Hall

[Mr Raynsford]

I cannot agree with the hon. Gentleman, whom I know well and for whom I have a lot of respect. The truth is that the economy was recovering during the early months of this year, as the figures show. I am not giving my own opinion; I am talking about the opinion of experienced business people, house builders, lenders and analysts who all say exactly the same thing: the housing market was recovering and there was the prospect of growth. In the past five months, that has been taken away by a series of measures—Budget measures introduced by the Government, changes in planning policy and changes affecting institutions that have been summarily abolished. A series of ad hoc, poorly co-ordinated and ill-thought-out proposals have damaged confidence in the market. Any person who is seriously worried about housing should feel very alarmed about that.

[Mr Andrew Smith (Oxford East) (Lab)]

I congratulate my right hon. Friend on securing this vital debate; he is speaking with his customary expertise on this very important subject. Further to the comments of the hon. Member for Cities of London and Westminster (Mr Field), is it not the case that there has been a conjunction in the restriction of supply—for all the reasons my right hon. Friend has set out—and vicious cuts in the ability of the poorest people to meet the costs of the supply that is available? The consequence of those two factors has been to carry out a vicious attack, particularly on the housing needs of the poorest in our community. Once what is happening gets across to the wider public, it will cause outrage.

[Mr Raynsford]

My right hon. Friend, who has great experience in both the financial field and housing, makes an extremely telling point. I have a huge amount of sympathy for what he is saying. From what I will say later, he will hear that I agree wholeheartedly that the impact of the measures announced by the new Government will disproportionately affect poorer people.

After Ministers have been confronted with such dire evidence of the negative impact that their policies have had over the past six months, one might expect that they would be reconsidering some of their impetuous early decisions and the harsh cuts package. One certainly might expect a Liberal Democrat Minister to wonder why he and his colleagues have lashed themselves to the mast of a Tory ship heading directly on to the rocks, steered by a demented helmsman, while the captain appears blithely unaware of the immediate perils, fixing his gaze instead on some distant coastline and imaginary sunlit uplands and—to use the words of the hon. Member for Cities of London and Westminster—prattling on about growth tomorrow, unaware that the reality is one of cuts and unemployment coming today.

Instead of changing course, Ministers continue to press ahead on their doomed journey, ignoring all the evidence of impending disaster and pinning their hopes on the so-called housing bonus incentive, which is about as unconvincing as the imagined sunlit uplands. The scheme has been promised as the panacea for the housing market for the past six months. In the summer, the Minister for Housing and Local Government promised anxious house builders that it would be launched before the summer recess. We were then told that all would be revealed in the autumn. Now we are promised a consultation in November. All the while, confidence is draining away from the housing market.

Perhaps the Minister can reveal today how that supposed panacea will work. Will it, as the Housing Minister originally claimed, apply to all new homes? That was the prospectus. I now gather that it is more likely that it will apply only to net additions to the housing stock. If that is the case—I would be grateful if the Minister confirmed that—what will that do to regeneration? What will it do to areas where there is a need to develop brownfield sites and clear properties or to improve older, substandard ones as part of that process? In such areas, it will probably be years before there is any net addition to the housing stock. What possible benefit will there be in such areas from a bonus scheme that is based solely on net additions to the stock?

--- Later in debate ---

[Mr Raynsford]

If that is the case, I am pleased to hear it, but there has been much speculation in the housing press, based on the Housing Minister’s remarks at the Conservative party conference—not an occasion that I attended—indicating that it would apply to net additions to the housing stock. There is an obvious concern, and I hope that we will have greater clarity than we have so far received on the subject.

[Mr Andrew Smith]

There is a further problem with that bonus idea. We have all been present at planning meetings at which those who are opposed to new housing developments say that they are being built for the money. Chairs of planning have been able to stand back and say, “No, the planning issues are being judged on their merits.” Will not they now have to put their hands up and say, “Yes, we are doing it for the money.”?

[Mr Raynsford]

My right hon. Friend makes a valid point. People who are opposed to housing developments will inevitably see a council’s decision to grant consent as tainted if it is to receive a financial sum as a result of doing so. That will always be a problem with such a scheme, and I highlighted the difficulties that it would create almost a year ago when I spoke with the Housing Minister, who was then the Opposition spokesman.

There are many other areas of uncertainty. How many homes will the scheme generate? We have been given some pretty flamboyant promises by the Housing Minister, but how will the Government’s estimates for the number of new homes generated compare with the 160,000 homes for which plans have already been ditched since the general election, primarily because of changes in planning rules? Tetlow King Planning has estimated in a report for the National Housing Federation that a further 120,000 to 140,000 planned homes could be lost in the coming year.

What will be the impact of cuts to funding schemes for local authorities? Which authorities will gain and which will lose? How will the bonus be split between district councils and county councils, bearing in mind that the former have to give planning consent, but that the later have to meet most consequential infrastructure costs? I hope that the Minister can give us more detailed answers to those questions, but I fear that we may have to wait rather longer, as we have waited in vain for the emergence of detail on the scheme for the past five months.

One question that I hope the Minister will answer is this: given all the questions and doubts that have been raised in so many quarters, including by those who have a real understanding and professional involvement in the field, why has the scheme not been piloted to test whether there is a realistic prospect that it will deliver the benefits that the Housing Minister constantly assures us it will bring? How can the Government claim to believe in evidence-based policy making, when they have not a shred of empirical evidence to support the case for the housing bonus incentive?

As if the damage caused by the harsh housing benefit cuts and their maladroit destabilising of the housing market was not enough, the Government have also embarked, in clear breach of Conservative election pledges, on a dismantling of the whole basis of social housing in England. Why Liberal Democrat Ministers and Members are choosing to go along with those disastrous policies is a mystery. Perhaps the Minister can give an explanation. Enjoying security in one’s own home is an asset that almost all hon. Members take for granted, as do the great majority of the population. The old adage that an Englishman’s home is his castle reflects a deep-seated belief that a secure home is a bedrock of a decent society.

--- Later in debate ---

[Tony Baldry (Banbury) (Con)]

Banbury and Bicester are both growing towns. I now have the 15th largest constituency in the country in terms of population, and, collectively, we most certainly are not nimbys. Planning permission has been granted for thousands of new homes in Banbury and Bicester, for the refurbishment of some 300 houses and for the building of some 700 new houses at the former RAF Upper Heyford site. In addition, Cherwell district council, Oxfordshire county council and Bicester town council are supporting the development of the new Bicester eco-town as an exemplar housing development, demonstrating low-carbon housing and a sustainable community.

We are waiting to learn whether a fully funded flood defence project, supported financially by the district council and businesses such as Chiltern Railways, will get the go-ahead following a public inquiry. If it does, that will enable a new regeneration scheme of mixed residential and commercial properties on the canal-side that runs through the centre of Banbury. Further to that, Defence Estates appears to want to release some sizeable land holdings on the outskirts of Bicester. If it is realistic about the price, the land could be used for shared equity housing and new social housing.

I am sure that Cherwell district council will want, wherever possible, to take advantage of the new homes initiative, a programme under which the Government will give local housing authorities a multiplier of 1.25 times the amount the occupants pay in council tax for six years, in addition to the council tax payment itself.

In my area, planning permission has been granted for hundreds of houses. However, at present, construction of new houses on new sites in my constituency is painfully slow. As a consequence, the prospect of wider community gains, such as a new community hospital in Bicester, has been delayed. Why is that? Simply, it is because house builders are hoping that the market for new houses will strengthen before they start to build, so we have a Catch-22 situation.

The first issue that I would suggest has to be grappled with is the availability of mortgages so that people can buy homes or get the funding for sensible shared equity schemes. Mortgage lending dropped to a 10-year low last month; it was the lowest September total since 2000. So while mortgage rates have dropped in recent weeks, banks and building societies appear to be continuing to tighten their lending criteria. The rates are being reduced but the criteria are being tightened, and the Bank of England has warned that lenders are expected to tighten further their criteria, making it even harder for people to get mortgage funding.

If people cannot obtain mortgage funding, they will not buy new homes and developers will not develop sites. That obviously will make life much more difficult for those who aspire to own their own homes. It also makes it much more difficult to provide new social housing. For some time, in areas such as mine, new social housing has almost entirely been a planning gain; a proportion of new social housing is built as part of large-scale new developments. Therefore, if one does not have significant new housing developments in Banbury and Bicester, one will not have the much-needed new social housing that goes with them. There is no new housing and no new social housing without new development.

What can be done to get the building societies and the banks to play their part in a housing recovery? No one is suggesting a return to the daft income multiples for lending that we saw several years ago, which certainly did not help anyone but simply led to artificially inflated house prices, but we do need the banks and building societies to be prepared to lend at responsible multiples to enable people to start buying their own homes again.

The banks’ targets for lending for 2010 seem unchallenging. My first question to the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Hazel Grove (Andrew Stunell), is what he and my right hon. Friend the Minister for Housing and Local Government are doing to encourage the banks and building societies to adopt lending criteria that will get the housing market going again. That must be in everyone’s interests. Frankly, any discussion about housing numbers will be somewhat academic unless builders feel able to build houses for sale and buyers can access reasonable mortgage finance.

That takes us to the rest of the housing market: social housing and the private rented sector. I have enormous respect for the right hon. Member for Greenwich and Woolwich (Mr Raynsford) and his knowledge and expertise in this area. However, I must say to him very gently that I do not think it sensible to start using words like “sanctimonious” and “demented”, given that the record of the last Labour Government on the housing front was one of lamentable failure. He started his speech by saying that he could never recall “a bleaker outlook” for housing. In fairness, this Government have been in office for just a few months—and that was commentary after 13 years of a Labour Government. Furthermore, that type of hyperbole will not help any of us, really.

Housing figures for the last year of the Labour Government fell by nearly a quarter on the previous year, with only 128,680 new properties becoming available. That was the biggest decline since the Department for Communities and Local Government began collecting data 10 years ago, when it was part of the Office of the Deputy Prime Minister. Moreover, that decline was against a Labour target of 240,000 new homes, which was itself pretty modest. Also, waiting lists for social housing doubled under Labour to five million people, so in fairness it is not for ex-Labour Housing Ministers to be so censorious.

We started off with an inheritance of a huge waiting list for social housing and huge pressures on public finances, and they are both inescapable realities of today. Consequently, it is inevitable that public investment will be limited, although I understand that £1.1 billion will still be allocated to social housing each year for the next four years. Clearly, all of us have to find new ways to try to ensure that public investment goes further. Why have a record of what we would like to have in halcyon days if it is not possible to deliver?

Every Member of Parliament, whether they represent a constituency in inner London or a constituency such as mine, would acknowledge that there are great pressures on social housing. Furthermore, I am sure that pretty well every colleague in this House will acknowledge that one of the predominant issues in our constituency surgeries is the desire of people to access social housing and to have—understandably—a decent home.

At present, social housing is provided by a number of housing associations, and there is a private rented sector with a multiplicity of private landlords. However, very few sizeable businesses have moved into the private rented sector. Why, for example, have the pension funds not become more involved in investing in becoming private sector landlords?

As I understand it, local authorities will be able to borrow against the income that they attract from the new homes initiative to help fund new housing projects, and to encourage those with private finances and property developers to become involved. I say to my hon. Friend the Under-Secretary, who will respond to this debate, that we have heard a lot from Ministers about the new housing bonus. However, we have not had as much detail as I suspect local councillors, council officers and others would find helpful about what local authorities are expected to do to respond to what seems to be a Government offer for local authorities to start to behave in a different way, in terms of local authorities being a catalyst for getting new housing projects going on their own patch.

For many years, local authorities have certainly been planning authorities, and they have sought to encourage registered social landlords to become involved with major new housing developments, but what is being proposed is something new for local government. As my hon. Friend the Under-Secretary will know, it sometimes takes a little time for councillors and council officers to realise what is being asked of them and what they are being invited to do, and if local authorities are being asked to approach local housing supply and housing projects in a different way, it behoves the Government to ensure that the new housing bonus, including how it will work, is fully understood. For example, will local authorities be allowed to borrow against that new housing bonus? If the anticipated bonus will run for six years, can a local authority borrow all the money up front? Will there be freedom to do so? What will the Treasury say about that, and so forth?

There are a number of other issues that we must face up to. I am conscious that others wish to speak in this debate, so I will try to keep my comments short. However, we need to be adult about this. At present, those who access social housing usually have security of tenure for life; indeed, in certain circumstances, they can pass on their tenancy to the next generation. Generally, they also have rent levels that are markedly below those being paid in the private rented sector. By contrast, those in the private rented sector often pay significantly higher rents and have to be assisted by housing benefit, but often they have a security of tenure that is no greater than an assured shorthold tenancy of six months.

In addition—I suspect that this applies to the constituencies of most colleagues, given the way that housing allocation policies work—it is now often extremely difficult for working families on modest incomes to access social housing. A working family—a husband and wife both at work on modest incomes, with two children—have little choice nowadays but to rent in the private rented sector, with significantly less security of tenure. For those reasons alone, and particularly because of that disparity, there are issues that need to be properly debated. As I understand it, what my right hon. Friend the Minister for Housing and Local Government is seeking to do, in part, is remove some of the types of distinctions that have, over time, grown up almost by accident as we have developed housing policy.

There are a number of questions that are genuinely about all of us wanting information and knowledge. For example, I see that my right hon. Friend intends to introduce a new tenancy for social tenants called “affordable rent”. As I understand it, that will effectively almost give a person a short-term tenancy as a social tenant, but there are a number of issues to consider.

At the moment, if one becomes a tenant of a social landlord, one is generally enabled to remain a tenant of a social landlord for as long as one wants. Of course, that is one of the reasons why people are understandably very anxious to be able to access a social housing tenancy; they know that they will then be able to remain in that sector pretty much for as long as they want. However, what happens when someone ceases to be a tenant of an affordable rent tenancy? Do they remain in the social sector? Or what then happens in terms of definitions of statutory homelessness and so on?

We must engage collectively with the substantive issues and not the non-issues, but that is not a criticism of colleagues in the House today. Whether this measure is a new homes “bonus” or a new “homes” bonus is a matter of fact; it should not require a whole load of debates across the House. So I just say to the Under-Secretary that the more the Government, and in particular my right hon. and hon. Friends in the Department for Communities and Local Government, can do to explain all this, the more we will be able to focus on the substantive issues, rather than debating things that are fanciful.

[Mr Andrew Smith]

The comments of my honourable colleague from Oxfordshire about the availability of mortgages and the need for more detail on the housing bonus were well made. I am not quite clear whether he supports the idea that because some people in the private sector are insecure, it is a good idea to make people in the social sector insecure. If he supports that, does he accept that it will have appalling consequences on families? We could all go round an estate and see which houses have shorthold tenancies, because the gardens are a mess and the houses are dilapidated. Does that not threaten to have an awful effect on communities?

[Tony Baldry]

The point that I am trying to make is that at present we have an artificial division in the housing market. On housing estates in the right hon. Gentleman’s constituency and mine, families that would have been the anchors of traditional 1950s estates on which those of our age grew up—working families from Cowley and so on—find themselves in an insecure position as assured shorthold tenants. Whether the categories of tenancies and tenants are endurable in the 21st century is a legitimate debate. I am trying to understand exactly what the Government are proposing. I am seeking knowledge, because our councillors and constituents will soon come to us asking for an explanation, and I would like to be able to provide one.

That takes me to housing benefit, and I have some questions for my hon. Friend the Under-Secretary. I have heard my right hon. Friend the Minister for Housing and Local Government say that the Government intend to increase rents in both the private rented sector and, particularly, the social sector, to nearer 80% of market rents, but families will be able to access housing benefit. I am not clear about this; I  need an explanation of the suggestion that a greater return from housing investment would attract more investors from the private sector—banks and so on. That may be a worthwhile objective, but if that is funded by housing benefit, I do not understand how it will reduce the housing benefit bill. I want to understand how those two policy imperatives relate.

When public finances are tight, we cannot pretend that we can do as Harold Macmillan was able to do in the halcyon days of the 1950s and build as many new homes as we want. Sadly, that option is not available to us, but if we are not to have a frustrating non-debate, the more information that the Government can provide about what is intended, the better.