Housing: Affordability and the Underoccupancy Charge

Baroness Blackstone Excerpts

Thursday 31st October 2013 Lords Chamber

[Baroness Blackstone (Lab)]

My Lords, I declare an interest as the chairman of the Orbit Group, a large housing association. Like others, I am very grateful to my noble friend Lady Quin for introducing this debate.

There can be few people in this country today who do not believe that we face a serious housing crisis, which is blighting the lives of a growing proportion of our people. The causes of the crisis are complex and previous Labour Governments must take some share of the responsibility for not addressing them adequately. Nevertheless, the present Government’s policies are actually exacerbating the situation, not improving it.

I am especially puzzled as to why the Government have attached so little priority to providing the capital for a large housebuilding programme. I very much endorse what the noble Lord, Lord Shipley, and my noble friend Lord Whitty said about this. It is particularly bewildering in a context where such an investment would help to kick-start the economy and promote the increase in economic growth that we so desperately need. Perhaps the Minister can explain why the Government have done so little in this respect.

Some key statistics illustrate the extent of the housing crisis we are experiencing and demonstrate the wider problems of affordability that many people are facing, which my noble friend Lord Whitty commented on. I will turn later to the bedroom tax but must say that I find it curious—to use the phrase of the noble Lord, Lord Howard—that he has so little sympathy with those who have been affected by it, which in some cases amounts to cruelty.

If food prices had risen at the same rate as house prices since the 1970s, the average weekly shop for a family of four would now cost £453. House prices increased from 3.6 times to 6.5 times the average salary between 1997 and 2011. The affordability problem is most pronounced in the capital. Figures from the Land Registry show that house prices in London increased by 9.3% in the 12 months to September, meaning that the average house price is now £343,000 in London—more than double the average house price for England and Wales. Taking a 3.5 house price to income ratio, a household would need to earn almost £100,000 a year to buy in London.

Home ownership is in decline. It now takes 22 years for the average low to middle-income family to save for a deposit. Most people dream of owning their own house but are denied the opportunity to do so; 1.3 million families are struggling to pay their mortgage or rent, spending more than 35% of their net income on housing costs. This number is likely to grow as average rents in the private sector are increasing four times faster than renters’ wages. In addition, 13% of people have resorted to borrowing on a credit card to help pay for their housing costs.

There are 1.8 million families on waiting lists for social housing. During the financial year 2012-13, nearly 113,000 households in England applied to their local authority for homelessness assistance—an increase of 4% on the previous year. Last autumn there were nearly 2,500 rough sleepers on any one night in England—a rise of 31% from autumn 2010.

In spite of all this evidence of housing need, housebuilding has dropped to its lowest levels since the 1920s. Housing completions in England fell from 170,610 in 2007-08 to 107,820 last year—a 37% drop. Against this, around 221,000 new households are forming annually, yet in the 12 months to June of this year housing starts totalled 110,530, only half of what is needed.

In 1975 more than 80% of public spending on housing was spent on supply-side capital funding. The composition of spending has changed greatly since then. At present, for every £1 spent on housing only 5p is spent on capital funding while 95p goes on housing benefit. This is a truly grotesque statistic and I would be grateful if the Minister would tell the House why no capital programme of any size has been put forward to reverse it.

The impact of higher housing costs is spreading to a much wider group than those who find themselves completely priced out of a home: 22% of 18 to 34 year-olds—2.9 million people—live with their parents, and 17.8 million people believe that their children or future children will not be able to afford a decent home, dashing their aspirations for a decent quality of life for their children when they grow up.

I turn to the underoccupancy charge, known as the bedroom tax. I could produce many case studies revealing the problems that this has given individual people, but I shall give only one or two. They come from the Orbit Group. Miss B had been living in her home since 1992. Because she was unable to make up the shortfall in her housing benefit as a result of the bedroom tax, she had to leave her home, in which she had raised her children. She has mental health problems, which means that she needs the support of her family and friends, who would often stay the night to make sure that she was okay. She is now living in a one-bedroomed flat with no space for visitors and has moved to an area that she does not know and where she has no support network around her.

I take a second case. Mr and Mrs M have lived in their home for nearly 20 years, but were told last year that they were underoccupying and have had their housing benefit cut. Four years ago, they both had serious health problems, which had a big impact on their daily lives. Because of their health conditions, both rely heavily on the support of their children, who live on the same street. They were initially awarded discretionary housing payment by their council, but this has now stopped, and the council has told them that they will receive no further assistance because they are not considering moving to another area. Unsurprisingly, this has caused them an enormous amount of stress, and means that they are heavily reliant on their children for financial support.

A survey of 51 housing associations conducted by the National Housing Federation found that more than one-half of the tenants affected by the underoccupation charge were pushed into arrears in the first three months of the policy. One-quarter of those affected are in arrears for the first time. This is a very unfortunate outcome of the Government’s policy. According to its own impact assessment, the DWP estimates that two-thirds of those affected by the underoccupancy charge are disabled; 100,000 of these are living in adapted properties. Many of these people, if they move, will then require adaptations to be made in a new property, which will be very costly for the taxpayer. Perhaps the Minister would like to comment on that.

The Government’s discretionary housing payment pot, designed to protect the most vulnerable, is insufficient. The Papworth Trust report showed that three in 10 disabled people are being refused a DHP; 90% of them are having to cut back on food or utility bills, and one-quarter are cutting back on medical expenses. As my noble friends Lady Quin and Lady Hollis and the noble Lord, Lord Shipley, have said, there is an enormous shortage of smaller properties for people to downsize to. Across 60 councils, a total of nearly 170,000 households are affected by the policy, while there are only 9,000 one or two-bedroomed properties available in the local authority housing stock in those areas. If all the families hit by the measure wish to move into these one and two-bedroomed homes, only 5.6% would actually be able to do so. How absurd that is.

I conclude by asking the Minister, first, whether the Government will urgently undertake a re-evaluation of this policy, and will also have the courage to abolish it in the light of the evidence that it is failing. Will the Government halt the decline in social housing and help the 5 million people on local authority waiting lists to obtain a house that they can afford with the security that they need by having a major housebuilding programme? Without this, they will not be able to obtain in the privately rented sector either security or a property that they can afford.