Housing: Affordability and the Underoccupancy Charge

Baroness Dean of Thornton-le-Fylde Excerpts

Thursday 31st October 2013 Lords Chamber

[Baroness Dean of Thornton-le-Fylde (Lab)]

My Lords, I am delighted to congratulate the noble Baroness, Lady Bakewell of Hardington Mandeville, on her contribution, particularly as, like me, she has a home in the West Country. Her contribution this afternoon was very thoughtful, sensitive and realistic, knowing what is happening on the ground in so many parts of our country. I welcome her and look forward to listening to many of her speeches in future.

I thank my noble friend Lady Quin for obtaining what are in fact two major debates in this one three-hour debate. They are on very important areas. I welcome, too, the Minister to her new portfolio, though I doubt she will succeed in her continued search for a George Clooney in this area. She certainly has an extremely difficult and sensitive portfolio to deal with. The issue we are debating today will not go away. It will keep coming until we sort this out.

I declare two interests. I am the president of the Abbeyfield Association, which provides homes and residential accommodation for elderly people. I am also a very new member of the board of Places for People, a large registered social landlord but with a lot of commercial activities linked with that.

In the 12 months to June this year, 110,000 homes were started in Britain. That is 40% below the number started in 2006. We need about 250,000 homes per year and if we go on at the current rate we will be 750,000 homes short for our population by 2025. That is the size of the problem. Alongside that, we have the problem that many of us could not say what the Government’s policy is on housing. They do not appear to have either a medium or long-term policy on how we will address the housing shortage in this country.

We talk about affordable housing but the make-up of people who need it today is very different from what it was 15 years ago. Then, a young couple, whether single or getting married, who were in a profession such as nursing or teaching—that whole cadre—would have thought only of buying. Today we have two countries in England. We have London and the south-east, and we have the rest of the country with regards to the housing problem. Many of those young people who would have been able to buy can no longer afford to because of the cost of housing. The average age today of a first-time buyer is 37 years of age. The number of families living in bed and breakfasts is at a 10-year high. I was reminded of something as I thought about this debate: are we ready for another “Cathy Come Home” television programme? That seared this country into doing something about homelessness. We have 4.5 million people on the housing waiting list.

For the first time in 50 years, we have more people in privately rented accommodation than in what we call social housing—a dreadful term: it is the housing of local authorities or housing associations. Yet the average rent in the social sector is £83 a week while the average in the private sector is £164 a week and a typical mortgage outside London is £141 a week. If we are to tackle the cost of housing and support, we must do it in the private rented sector in particular. Part of the problem the Government have is that they do not seem to have a flexible policy at all. We need a policy on housing. How are we to address, in the medium and longer term, the basic housing shortage we have in this country?

A number of ways would contribute to that if the Government would but listen. For instance, they could form a national housing innovation fund which could be small, with small resources, but would encourage innovation and research. There is no doubt that the answer cannot be in one policy or through one channel alone. It can be supplied only by partnerships and consortiums, and by accepting and acknowledging that the private sector has a key role to play. Starts in the private building sector fell off a cliff in 2007. I know: I was at that time and until April this year a non-executive director in Taylor Wimpey housebuilders. We could see there what was happening and we knew that the impact would not just be then but would last for years and years. It takes time to buy land and get planning permission—although we never had anyone at any time who had to wait 10 years for planning permission. We need a policy on how we deal with this issue. That cannot be on just the purely rented sector; it must be different kinds of ownerships. People for Places, for instance, has 14 different schemes, including mortgage, shared ownership and a scheme I worked on some years ago when I was chairman of the Housing Corporation and was asked by my noble friend Lord Prescott to carry out some work.

A lot has been said about the underoccupancy charge. It is a cruel policy. I would accept totally that it makes sense for housing funded through the taxpayer to be used efficiently but you are dealing with people and their lives. Just to have one policy that is almost slash and burn, irrespective of circumstance, is so wrong. We were delighted at Abbeyfield that people in retirement were not affected by the underoccupancy rule. Could the Minister confirm that there is no intention to change that current situation? If it was extended to retired people, the problems we have now would look almost nothing to the real issues we would face.

I would like to talk about the impact of underoccupancy on registered social landlords. The policy only came in from April this year but arrears are going up substantially. There is no doubt about that. Underoccupancy of one bedroom cuts housing benefit by 14% and of two bedrooms by 25%. Where do those people get the money from to fund that? They cut back, obviously—they have to—but we also see an increase in loan sharks knocking on the door on Friday nights for their money. People are getting into personal debt that they cannot or are highly unlikely to meet. We have heard a contribution about the working poor. It is true that people in underoccupied houses are not just the unemployed. They are working people, trying to look after their families, whose pay does not give them enough. Why do not the Government get behind a living wage? That would help these people. They do not want benefit; they would prefer to pay for their own accommodation.

The long-term impact will be wider than the narrow band that we are seeing at the moment. For instance, it could affect the very viability of housing associations, because the level of their arrears is part of the consideration of their financial stability. They loan money in the private sector. They have to answer to the regulator. Rising arrears is one of the factors by which they will be judged.

That will impact on housing availability, because housing associations will retreat into what they have now. They will not expand; they will not need to. They will feel that they risk their balance sheet by expanding. That will substantially impact on our housing policy. Yes, associations are trying to help people with advice about budgeting and bank accounts. If only everyone could open a bank account. The banks need to know that people with a low income need to be able to open an account. How many banks actually go along with that and support those people?

This is a wide-ranging topic, and I look forward to the Minister’s answers on whether the underoccupancy payment is to be extended to the elderly, the retired—but, more importantly, just what is the Government’s housing policy to deal with this huge issue.