Baroness Stowell of Beeston
Main Page: Baroness Stowell of Beeston (Conservative - Life peer)
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Stowell of Beeston) (Con)
My Lords, I am grateful to the noble Lord, Lord Stoneham, for introducing this debate. As the noble Lord, Lord McKenzie, has just said, far from putting me on the spot, this is my third housing debate in the past two weeks. However, I am far from expert in this area and I recognise and acknowledge the great expertise of noble Lords who have spoken today. I also welcome my noble friend Lord Borwick. I have not had the pleasure of participating in a debate with him until today.
Before getting to the substance and specifics of the points raised by noble Lords, of which there are quite a lot, I shall start by speaking in general terms and move on in due course. The most important point to make at the outset is that the Government are committed to delivering long-term economic stability and economic growth. Our purpose and objective in that area have not changed. Whereas the previous Administration oversaw a housing boom and bust, we have done extensive work since coming into office to pick up the pieces. We have introduced a series of initiatives to boost housing supply, increase the provision of affordable housing and support a healthy private rented sector, and by tackling the deficit we are helping to keep down both interest rates and the number of repossessions. However, we are only at the start of a return to recovery. The housing market has turned a corner, but mortgage lending and loan-to-value ratios on new mortgage lending remain below their historic averages, while, relative to earnings, median house prices across England are at around the same level as they were in 2005.
I was pleased to hear the noble Lord, Lord McKenzie, acknowledge in his contribution that his Government did not build enough homes when they were in power. The housing supply today is at its highest since the end of the housing boom in 2008, with 334,000 new homes built in the past three years. It is worth noting that the Chartered Institute of Purchasing and Supply has said that activity in housing construction has been increasing at its fastest pace for almost a decade, and, as my noble friend Lord Stoneham has already acknowledged, starts are up by a third on last year. Indeed, the Royal Institute of Chartered Surveyors reported this week that housebuilding was picking up across the country, which is an important point since it indicates that recovery is not confined to one particular area.
We believe that we are making progress because of the policies that we have introduced and the investment that we have been able to make, and that that investment has been able to attract private sector investment as well. In the current spending round, we have invested £11 billion in housing, which has leveraged a further £15 billion from the private sector in affordable housing. In the next spending round, government and private sector investment will be in excess of £23 billion in new affordable homes, which will be supported by government guarantees of £12 billion to support homebuyers.
In response to many of the points that have been raised in the debate, if housebuilders are to build, they need to know that people will buy. Since the launch of the Help to Buy equity loan scheme in April this year, more than 15,000 reservations have been made for new-build homes. In total, we have helped nearly 30,000 people to buy or reserve a new-build property through a range of government-backed home ownership schemes, including the most recent initiative that was launched earlier this month—the Help to Buy mortgage scheme. This is aimed at people who, unlike the noble Lord, Lord Oakeshott, do not have a bank of mum and dad to rely on but still have every right to aspire to get on to the housing ladder.
The noble Lord, Lord Oakeshott, and others asked whether some of these initiatives were having the effect of creating a housing bubble. In the course of his contribution, the noble Lord referred to different economists and other experts. He will not be surprised to learn that I am about to quote from others who offer a different view. There are plenty of people who very much endorse what the Government are doing in this area. For instance, Huw van Steenis and Charles Goodhart from Morgan Stanley said recently that Help to Buy could help to stimulate far more housebuilding than many believe, while Ernst & Young stated earlier this month:
“The Government’s well-timed initiatives to revive mortgage lending have borne fruit, with prices and transactions recovering from their recent very low levels, in turn supporting the wider economy. The housing revival has given rise to concerns that the government’s interventions—including bringing forward the Mortgage Guarantee Scheme—risk stoking up a housing bubble, especially in London. In our view these worries are overdone”.
I will not repeat some of the national figures that have already been covered in noble Lords’ contributions, but many areas outside London are seeing much lower average prices today than before the housing boom in 2008. For instance, in my home town of Nottingham, in August 2007 average house prices were £103,000; they are now £86,000, which is 17% lower. In the Isle of Wight, which I know the noble Lord, Lord Oakeshott, is familiar with, the average price is 16% lower than previously. Certainly, transactions around the UK as a whole are way below what they were before the crash.
While I am on Help to Buy, I will respond to the point made by the noble Lord, Lord Stoneham, about reverting to a regionally focused Help to Buy scheme if house prices get out of hand in London and the south-east. It is far too early for me to give any response to that but I emphasise that, as the noble Lord knows, we have a proper regime with the Bank of England to monitor these schemes and ensure that they do not have a perverse outcome.
I think we all agree that owning your own house is an important part of our culture. It is a symbol of security and success, which people understandably aspire to. But increasingly, some people are opting for different choices. There is evidence that renting as a long-term option is something that people want, so we have also been improving the private rented sector so that it offers a real, positive alternative. As has already been mentioned, we are kick-starting the building of more private rented homes through our £10 billion housing guarantee programme and the £1 billion Build to Rent Fund, which means that blocks of flats or new estates will be built with the sole purpose of being for rent. Under the Build to Rent Fund, 44 projects have been shortlisted and the first scheme has been agreed at Southampton Quay. The noble Lord, Lord Stoneham, asked about targets for this scheme. It is important to emphasise that this is a demand-led scheme, not one that we would start off with a target for. We want to see how demand for it develops.
Moving from the private rented sector back to affordable housing, the noble Lord, Lord Stoneham, was right to emphasise the importance of supplying social housing alongside new private sector homes. We are building more affordable housing. As the noble Lord, Lord McKenzie, predicted, I will remind your Lordships that the previous Administration saw a reduction in the stock of social rented homes of 420,000. I am glad not to have disappointed him. He questioned whether our Right to Buy scheme, which supports those in social housing who want to go on to purchase housing, is the right measure. I think that it is, because of the reasons I have just given about the importance to people of owning a home.
It is important that we continue to build new houses. In this spending review period alone, with £19.5 billion of public and private funding, our affordable homes programme is on track to deliver 170,000 new affordable homes between 2011 and 2015. The noble Lord, Lord Stoneham, asked for an update: half way through, 84,000 households have already moved into new affordable homes. In the next spending period, we are looking to build a further 165,000 such homes. So there is real effort and impetus in that area. We are also making a great effort to release public sector land so that it is available for new build.
Noble Lords raised questions about garden cities. Our approach is about supporting local areas to develop large-scale schemes while making sure that they are driven by local areas. We have a fund to support that and there is some evidence of action in that area, which I do not have time to offer in detail.
Noble Lords covered various matters to which I have not responded. However, there are points I would like to make because there is quite a lot of action that is worth sharing more widely. I will write to noble Lords and put a copy of that letter in the Library.
My noble friend Lord Borwick had two innovative ideas, including one of trebling the new homes bonus for a third of the scheme, which I will take back to colleagues at the department. As to his suggestions on stamp duty, I know I was promoted a couple of weeks ago but I did not get as far as becoming Chancellor of the Exchequer, so I hope he will forgive me if I do not comment on that proposal. However, I will of course make sure that my right honourable friend the Chancellor is aware of what he said today, and will follow up any further questions in writing.