Council and Social Housing

Austin Mitchell Excerpts

Tuesday 6th March 2012 Westminster Hall

[Austin Mitchell (Great Grimsby) (Lab)]

May I express my great pleasure at speaking under your chairmanship for the first time ever, Ms Clark, and my gratitude for being able to talk on the supply of public or council housing, and housing association or social housing?

We have a crisis building up at the bottom end of the housing market—public housing for rent—which hits those who cannot afford to buy. That can be up to two fifths of the population, depending on the area. The cause is, effectively, 30 years of disinvestment in housing, starting under the 18-year Conservative Government with the right to buy, which substantially reduced the public housing stock. The right to buy is welcome, of course, but should be paralleled by a policy of building one home for every home sold off, to maintain the stock of public housing. There followed 13 years of under-investment by the succeeding Labour Government, who did not invest enough in housing, and who bribed and bullied councils into privatisation. The problem now is that that long period of disinvestment and under-investment is being followed by the neo-liberal policy of the coalition.

When in opposition, the Prime Minister said:

“We support social housing, we protect it and we respect social tenants’ rights.”

That, however, was the prelude to a neo-liberal policy of running down the public sector, building up the private rented sector, and cutting public spending on housing. The result is that we are now building up to a housing crisis that will severely hit those who cannot afford to buy.

[Karen Lumley (Redditch) (Con)]

Will the hon. Gentleman join me in congratulating Redditch borough council, which only last night announced a new programme of building council houses?

[Austin Mitchell]

I am delighted by any building of council houses, but the figures today from Inside Housing show that public housing construction orders are down to their lowest level for many years. Any initiative that produces council housing and new building is welcome, but it is in the context of low public housing build, which is the essence of the problem.

What used to be socially mixed council estates, with people at all levels of the social scale—from top to bottom, almost—are becoming, because of the disinvestment and under-investment, dumping grounds for the poor and the needy, which was not their purpose. The housing stock has shrunk and, given the Government’s announced policy of selling at even more substantial discounts, will shrink further; the houses cannot be replaced at the discount level being given. The waiting lists are already at nearly 5 million individuals— 1.8 million households—and many will never get the housing that they are waiting for. Also, homelessness applications are up by about a quarter. The English housing condition survey says that 391,000 children are living in overcrowded conditions—a figure that is up by about 18%. Housing costs are now at their highest level ever as a proportion of income, and they will be pushed up further, for the people whom we are talking about, by the coming rent increases. Housing build starts are at their lowest level since 1923; there is a pathetic number of council housing starts.

[David Simpson (Upper Bann) (DUP)]

I congratulate the hon. Gentleman on obtaining this important debate. As he will be aware, a call went out in December last year to farmers and rural councils to help with the social housing problem, but that in itself is not enough to deal with the more than 10,000 people on the waiting list.

[Austin Mitchell]

The hon. Gentleman is exactly right, of course. A number of calls, initiatives and gimmicks are being pursued, but there is no firm conclusion, in terms of house building.

[Rehman Chishti (Gillingham and Rainham) (Con)]

I congratulate the hon. Gentleman on securing this important debate and on the passion he has shown on the subject for many years. He referred to some of what is being done as a gimmick, but in terms of substance, does he welcome this Government investing £4.5 billion in affordable housing over the next four years? That will help to increase supply and provide a major boost to people on housing waiting lists.

[Austin Mitchell]

Of course I welcome the statistic that the hon. Gentleman read so brilliantly from the brief, but those are hypothetical houses not yet built, and the problem is now. The situation now is that starts are at their lowest level since 1923, and that is what we need to deal with.

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

May I join in the tributes? The hon. Gentleman has a great record on the issue. However, we all understand the difficult position that the country and the Government are in. The previous Government were hopeless when it came to new council housing build; as he knows, they had the worst figures of any Administration since the war. Can he accept that, given the depth of the recession, the Government’s initiatives are moving in the right direction? We should unite at least in encouraging them to ensure that we have more council and social housing, certainly including at rents that his constituents and mine can always afford.

[Austin Mitchell]

I will come to that point, which is wrong. Hopes are not houses. The Government might have the intention to build an increased number of houses, but the problem is now, and it is getting worse. A crisis is building, to which the only answer is to build more public housing for rent now. That is not being done; it has not even been started. House building is so low that the tragedy will become worse in the next months and years. The right hon. Gentleman is correct in that the Labour Government’s record was pathetic. At the end, we managed to persuade the then Prime Minister—often a difficult job—that we had to build council houses and had to have a building programme. That was initiated by my right hon. Friend the Member for Wentworth and Dearne (John Healey). That was responsible for growth, and for jobs in the recovery from recession, but it was immediately cut by the incoming coalition Government, who had initially promised to maintain that building programme. They stopped it, and began a deliberate policy of diminishing, demeaning, draining and dumping social housing and those who live in it.

I say “diminishing” because of the 60% cut in funding for building social housing. Even that spending is predicated on higher rents providing revenue. That meant that areas such as Grimsby and north-east Lincolnshire got nothing, which is unprecedented. We wanted to build, but we could not, because no money was available as our rents were too low. I say “diminishing” because of the cuts in housing benefit, the cost of which is high only because the building rates have been so low. If we had built social houses over the long term and on a sufficient scale, we would not need to pay housing benefit to the homeless and to move them into expensive accommodation, and would not have the kind of abuses that are serialised every day by the Daily Mail. It is failure to build that has made the housing benefit bill so high.

Other cuts are already affecting new claimants and, from April, they will start to affect those who renew their housing benefit. First, there was a cut for adult dependants at home, which was designed to force kids—adult children—out of the household and into a single person housing market that is not there. The bedroom tax, which comes in in April next year, is a cut in housing benefit of 15% for those with a spare room, and of 25% for those with two spare rooms, to force tenants to move to smaller accommodation, which is not there, or into the private rented sector.

There is the renewal rate for under-35s from April next year, who will be getting the shared-room rate for single people. Then universal credit and caps will come in, which will produce even more difficulties, not so much in Grimsby but certainly in London and the big cities. That is the “diminishing” part of the argument.

The demonisation part is that council tenants are being treated and regarded as subsidised scroungers living on state subsidy. In fact, the Localism Act 2011 ends secure and assured tenancies, which are the basis of establishing a settled community and a good life on a council or housing association estate. It replaces them with short-term tenures. That means that if the family get better off—if the head of the household or members of the family get jobs—and income increases, the tenancy will not be renewed.

[Andrew Percy (Brigg and Goole) (Con)]

I thank my next-door neighbour but one for giving way. On the issue of longer-term tenancies, as the hon. Gentleman will know, my hon. Friend the Member for Cleethorpes (Martin Vickers) and I have joined him in the Lobby on the issue of short-term tenancies. However, what he has not said is that it will be up to local councils to decide whether to offer them, so there is an element of local democracy. It may be that our councils in north Lincolnshire decide not to do that. Secure tenancies have not gone completely; it will be up to local councils to decide whether to continue to offer them.

[Austin Mitchell]

I am a grateful for that point. I am also grateful that, for a period, in Humberside, we have agreed on the issue of short-term tenancies. I hope that the measure will not be enforced by councils, but several are already making arrangements to enforce it, and others are being campaigned against by tenants who wish to persuade them not to enforce it. We will have a patchwork quilt over the country, but the net effect will be that in many cases, people are forced out, and are forced into accommodation in the private rented sector that is not there.

[Simon Hughes]

rose—

[Austin Mitchell]

I give way to the right hon. Gentleman, who is a member of the council housing group, and has worked on the issue for a long time.

[Simon Hughes]

I want to ensure, following the last intervention, that anybody who reads this debate is clear about the position. It will be up to every council to decide whether all or some of its properties do not have secure tenancies. Southwark council—one of the largest social housing landlords in the country—should, in my view and that of my colleagues, keep the policy that everybody in Southwark council housing should have a secure tenancy in future. If it wants to do that, there will be no risk to any of those people. The scandal is people who have salaries or incomes of £100,000 and are in council properties; some of them are not very far away from the hon. Gentleman and from me.

[Austin Mitchell]

There are problems and abuses in any system; in the tax system, for instance, there are myriad abuses that are not being dealt with effectively. The general principle should be that tenancies should be either secure for council house tenants, or assured for residents in housing associations. It is up to councils, as the right hon. Gentleman says, to decide. I hope that they will decide to maintain secure tenancies; that is the only basis on which one can have a safe, secure, settled community of people who are assured that they will be able to stay in their houses and that their kids will not have change schools.

[Sir Bob Russell (Colchester) (LD)]

I am grateful to the hon. Gentleman for giving way, because I think we agree more than we disagree on this subject. Will he explain why, for 35 years—from 1945 to 1980—successive Governments were of the view that council housing was an important part of social society, and why, from about 1980 onwards—this includes the previous Labour Government—successive Governments have turned their backs on council housing? I do not understand why that social phenomenon or change has happened. Can he explain?

[Austin Mitchell]

The hon. Gentleman has asked a difficult question. I do not know the answer. I take it that there was an element of financial stringency—a desire on the part of the Conservative Government to cut taxes, which meant cutting Government spending and therefore spending less on public housing for rent. Certainly, the Labour Government did not spend enough on housing because their priority was to put money into the health service and education, which, after a long period of disinvestment, did get a lot more cash from the Labour Government. The financial situation was pressing in that direction. Also, there was clearly a feeling that we had built enough. That feeling was wrong, because building public housing for rent is a means of providing employment, maintaining full employment, stimulating the economy and providing for social need.

[Andrew Percy]

There was another element; it was not quite as the hon. Gentleman suggests. As he will know from the time he spent in council housing in Hull for “Tower Block of Commons”, there was also a social change, which meant that a lot of people did not want to live in council housing. Consequently, in Hull, where I was a councillor for 10 years, we had hundreds of houses that we could not let because people simply did not want to move into them. It is not quite the case that we simply abandoned social housing the 1980s.

[Austin Mitchell]

But it is the case that a failure to invest made the estates less attractive to live in. Had those estates been updated, modernised and refurbished in the way that was needed—that was certainly needed on the Orchard Park estate—they would have been more attractive places to live in. In the ’70s, they were very much mixed communities, as all the statistics show. It was because spending was cut that they became unattractive. Housing there was also less available, due to sales, which picked the eyes out of many of the estates. That was the reason why people did not want to move in. That movement was coupled with the fact that the Government were spending less, so the housing was less attractive. They were disinvesting in the policy. I do not have the answer to why Governments were doing that—they should not have done it; it was socially divisive and damaging to other social services—but that was the reality. We were spending less, we were not building, and we were not refurbishing or modernising. There was a big modernisation under Labour, to be fair, which brought in private capital by privatising the estates. Again, that was inadequate to deal with the scale of the problem and the disinvestment that had taken place.

I want to resume my thread and talk about draining public sector housing. The new proposals for giving councils control of their housing revenue accounts involve them paying substantial sums to buy back, in order to pay off historical debts. However, that historical debt has in fact been paid off many times over the years. For instance, in the years when daylight robbery applied—that was begun by a Conservative Government, and was carried on for too long by a Labour one—£13 billion was drained out of housing revenue accounts by that system of financing, and the draining has gone on since. The Government were abstracting £1.6 billion every year from housing revenue accounts to pay off historical debts, they said, and to redistribute. The proposal that historical debt has to be repaid by councils that want to run their own revenue accounts is fallacious. It is an attempt to squeeze council financing of development of new housing once again.

The whole programme is imposing sacrifices on those least able to bear them: the poor, the low-waged, the disadvantaged and the handicapped. Given that the approach is to spend so little on social and council housing, the question is: why should those who are not responsible for the financial crisis and the recession be forced to bear the burden of paying for it? That question is never answered. The Department for Work and Pensions’ own risk assessment shows that the benefit cuts are hitting the vulnerable, the sick, the young, and the low-paid. That whole package, plus the other changes, results in fear, homelessness and insecurity. It will also result, particularly in London, in a kind of ethnic cleansing, because the cuts will hit racial minorities who have bigger families harder than other sections of society. People will be forced out to the private rented sector.

The private sector is not rent controlled. We need to restore rent control and regulate conditions more tightly to control the incipient development of Rachmanism and exploitation. Rents are too high in the private rented sector, yet in the public rented sector they are being raised to 80% of private sector level.

[Sir Bob Russell]

I endorse the points raised by the hon. Gentleman. Does he share my disbelief at the fact that many council houses that have been sold are being rented out by the current owners, yet the rent—which is paid for by housing benefit out of the public purse—is set at a grotesquely higher level than would be paid were the property still a council house?

[Austin Mitchell]

Absolutely. The system causes instability and damage to the estates. People cannot keep up with their payments, so houses are repossessed and sold at auction. Somebody buys those houses as a speculative venture because they are cheap; they put in any kind of tenants because there are no controls, and those tenants claim housing benefit. The rent goes up, and the public sector is drained to pay for that folly. That is the result of many years of sales. I agree with the hon. Gentleman. We need to maintain controls and regulation in the private sector, because otherwise we will have the return of Rachmanism and a situation where Cathy has to come home time and again. “Cathy Come Home” came out in 1966, and followed a long period of difficulty in the private rented sector. Such difficulties are now returning, and we need to dramatise the situation to get the same kind of public reaction that “Cathy Come Home” received.

The situation is hitting the low-paid, the poor, the unemployed and the vulnerable—exactly those people who any civilised society should be helping. It is also hitting other sectors. How can we have good health without good housing? If people live in overcrowded, unsanitary and damp conditions, a health problem will arise. Good housing is the basis of a good health policy. How can we have a good education policy if kids are being shunted from school to school as their parents are forced to move, or if they do not have room at home to study or work in? It is impossible. How can we maintain stable, crime-free communities in which people want to live together, if they are being moved in and out as if they were in a transit camp? People need housing, but they are being shunted around because they cannot afford to pay for their housing, perhaps because of the bedroom tax or cuts in housing benefit, or because a decision by the council means that if they improve their position, they will have to move out of their home. Those policies will produce instability, insecurity and disturbance of the worse possible kind, and will turn places into transit camps.

The only answer—this point is central to the whole debate—is to build big, to build now and to build more than we ever did. We must build affordable, high-quality, public rented housing. It is the cheapest housing to build and run; it returns money to the councils because the rents produce more income that it costs to maintain and manage the estates, meaning that councils will make a profit. Rents are not set to maximise the income of private individuals, but are fixed at an acceptable social level that people can afford and will provide a return to the council. That is the kind of housing that we should be building for people who cannot afford to buy, and that should be the priority.

[Rehman Chishti]

The excellent portfolio holder for housing in Medway said that the way forward should involve

“More financial encouragement for social renting tenants to become owners of newly built or renovated homes, thereby freeing up socially rented properties.”

Does the hon. Gentleman agree?

[Austin Mitchell]

I do agree; I always have. Interestingly, before Grimsby council became North East Lincolnshire council, it was one of the first authorities to sell council housing to tenants. When I was in the New Zealand Labour party, we argued for years over whether state housing should be sold to tenants. We finally decided that it should be, and pioneered that policy in New Zealand, which was welcome. Such policies work provided that each sale of a council house is replaced by a build, so that the stock remains constant or builds up. That is the criterion; it is not about selling off houses ad lib to pick out the eyes of the estates. It must be a policy of sell and build.

The Government say that we cannot afford to build. We can afford foreign wars, high-speed trains and Crossrail, but we cannot afford decent housing for our people. Decent housing is an investment; that is why we should build. We could finance it through municipal bonds—that is how council housing used to be financed, and that is what happens in other European countries. Houses are secured by the asset created by the bonds. We could let pension funds invest in social and public housing; we could even use the revenue created by printing money, or quantitative easing. At the moment, money created by quantitative easing goes into the banks and is stashed away in the reserves. Why should it not be used to pay for contracts for social and council housing, which will house people and create an investment, from which we can derive income that can be secured? There are all sorts of ways to invest in housing, but if we do not invest, we slide into crisis.

I shall conclude on an important point: if we invest in housing, we stimulate the whole economy. Look at what happened in the 1930s when recovery from the depression, which was as bad as this one, was precipitated and stimulated by building the houses in which many of us—including me—were brought up. That changed the face of England in the 1930s; it stimulated the economy, created jobs and took us back to higher employment. Housing policy launched the recovery that was sustained by rearmament from 1938. Housing could do the same now, because it creates jobs and demand. People have to furnish their houses and provide everything in them, and that stimulates the entire economy. Everything—social need and economic sense—points to a big housing programme, particularly for social and council housing. Since everything points to such a programme, why are the Government not building? Why not begin that building programme now to stimulate the economy and serve the people?