Housing: Affordability and the Underoccupancy Charge

Baroness Stowell of Beeston Excerpts

Thursday 31st October 2013 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Stowell of Beeston) (Con)]

My Lords, I start by congratulating the noble Baroness, Lady Quin, on securing this debate. While we have differences of view, we all agree on the importance of affordable housing. I am grateful to the noble Baroness for giving us the opportunity to debate this important issue. I also welcome my noble friend Lady Bakewell of Hardington Mandeville and congratulate her on her maiden speech.

We have covered a huge amount of ground and I know that I will not be able to reply to all the questions that have been put to me, but I will ensure that, where I fail to do so, I follow them up in writing. I start by addressing the issue raised by my noble friend Lord Shipley, which was echoed by many noble Lords, including the noble Lords, Lord Whitty and Lord Sawyer, as regards the most important issue being that of increasing supply and the number of affordable homes available to everyone in England. That is why, because it is so important that we increase supply, we are building more of those homes. More than 150,000 new affordable homes have been delivered in England over the past three years.

Our Affordable Homes Programme is generating nearly £20 billion of public and private investment to deliver 170,000 new affordable homes between 2011 and 2015. I say to my noble friend Lord Stoneham that we have already delivered more than 80,000 of those, and around £23 billion of additional public and private funding will help deliver another 165,000 new homes over three years from 2015. All this adds up to being the fastest annual rate of building of affordable homes for at least 20 years. As the noble Lord, Lord McKenzie, and others have heard me say in other housing debates to which I have responded in the past couple of weeks, this compares with the figure under the previous Administration, where the number of affordable rented homes fell by 420,000.

I am grateful to the noble Baronesses, Lady Blackstone and Lady Dean, for their realistic assessment of the previous Government’s performance. However, the noble Baroness, Lady Blackstone, was wrong to claim that things are getting worse because if we focus specifically on council housing we see that more council housing has been built in the three years of this Government than in all the 13 years of the previous Labour Government combined. As regards the increase both in specific council housing and the affordable housing to which I have just referred, it is important to bear in mind two things. The lack of supply under the previous Government occurred during a boom period whereas we are trying to increase supply and tackle the deficit at the same time. That leads me to respond to the point which I think was first raised by the noble Lord, Lord Whitty, but was certainly echoed by the noble Baroness, Lady Blackstone, and the noble Lord, Lord McKenzie, in criticising our policies on affordable housing. It is because of them that less government capital grant is required in terms of building. This means that we can build more affordable homes for every pound of upfront government investment using affordable rent. My noble friend Lord Stoneham questioned whether this was a sustainable approach in the long term. I think that I am just over my three-week anniversary in the job so I do not feel qualified at the moment to get into a detailed debate on that. However, I say to all noble Lords that we are increasing the supply of affordable housing—all noble Lords in today’s debate seem to be united in that request—at a time when we are also dealing with the deficit, so we are having to balance those competing needs.

Noble Lords also asked whether we were using other measures to increase supply. I should say to my noble friend Lord Stoneham, who asked about guarantee bonds, that up to £3.5 billion in government-supported guarantees will be available in the affordable homes guarantees programmes, but we have yet to get the approval of the first of those.

My noble friend Lord Shipley and the noble Lord, Lord Whitty, asked about the capacity of councils to borrow more money to build more affordable housing and whether the Government could raise the borrowing cap. Because of the competing objectives of retaining or bringing down the deficit and trying to stimulate new builds in local areas we do not feel that it is right to lift that cap. However, it is important to note that not all councils are borrowing up to their cap and it is possible from self-financing for councils to have a new source of revenue that was not open to them previously.

The noble Baroness, Lady Dean, asked how innovative we are being. We are certainly looking at a range of options whereby we can provide grant funding towards building new homes, which would first be let at affordable rents but give those tenants the first option to buy. In all of this area we are trying hard to fulfil the absolutely important objective that we all share, which is increasing supply, and we are making positive inroads in that area.

I am not going to get into a lot of detail about the wider issue of housing supply beyond affordable housing, except to say that I disagree with the noble Baroness, Lady Blackstone, and others who said that our efforts are not bearing any results. Housing supply is at its highest since the end of the boom in 2008, with 334,000 new homes built over the past three years. Only last month the Chartered Institute of Purchasing and Supply said that houses are being built at the quickest rate for a decade. The latest GDP figures showed that 2.5% was from construction output and jobs in the construction industry are up 9,000 on last year. I therefore agree that this is an important area but progress is being made.

While there is pressure on us to deliver more new homes, we also have to make the most out of existing stock. We are giving landlords the freedom to do that. The noble Baroness, Lady Dean, was right to highlight how things have changed in terms of those who now need access to social housing than perhaps had been the case 15 or 20 years ago. Some people may need social housing for life but for many others it should act as a stepping stone or springboard that provides stability and support for only as long as it is needed. Councils and housing associations can now offer short, fixed-term tenancies as well as lifetime tenancies to new tenants where it makes more sense. We have made sure that councils can decide who qualifies for social housing in their area while finding alternative solutions for those who do not qualify. I was moved by what the noble Lord, Lord Sawyer, said about people having a right to a home where they work and live. I agree with him about that but our changes to the law via the Localism Act mean that councils have much greater flexibility than they had in the past in terms of their power to respond to the crucial issue that the noble Lord raised.

Before I move on I should mention something that no one has raised in this debate. An important point for us not to lose sight of is that the Audit Commission estimates that around 98,000 social homes in England are being unlawfully occupied and that social housing fraud is costing us an estimated £1.8 billion a year. To try to drive that down because we need to make strong inroads in this area we are giving £19 million over four years to local authorities to help them tackle fraud in social housing. We are also funding a team of experts at the Chartered Institute of Housing who offer free help to landlords on how to tackle fraud and underoccupation.

Let me move on to the other issue raised in our debate—the removal of the spare room subsidy. The first thing I would say is that we in this Government strongly believe that removing that subsidy returns fairness to housing benefit through levelling the playing field. People who receive housing benefit when renting privately, as we have just heard in the exchange between my noble friend Lord True and the noble Lord, Lord McKenzie, have long been entitled to benefit for the number of bedrooms that they need. The Opposition have said that they will reintroduce the spare room subsidy for social housing, but if I understood correctly the point that the noble Lord, Lord McKenzie, was making in his exchange with my noble friend it is the Opposition’s position that they will not extend the reintroduction of that subsidy to those who are in receipt of benefit but in the private rented sector.

[Lord McKenzie of Luton]

Usually the questions go the other way but let me be clear. We see these two types of tenure as being quite different. My noble friend Lady Hollis stressed this point. A person’s council house tenancy is allocated at the time on the basis of their needs. If their need changes over time a change is made. It is different from short-term tenancies in the private sector where there is a much higher turnover. We do not see the two as being the same.

[Baroness Stowell of Beeston]

I am grateful to the noble Lord for that clarification. I understand the point that he and the noble Baroness, Lady Hollis, have made, but what I have been trying to outline regarding the use of existing stock and more innovative ways to address the need for social housing of all kinds—particularly in relation to the point made by the noble Baroness, Lady Dean—is that we need to ensure there is a level playing field in the way we deal with different people.

[Lord McKenzie of Luton]

If that is the proposition, how is there a level playing field when someone who is supposedly underoccupying has no effective means of downsizing within any reasonable space of time or to any reasonable geographic location?

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[Baroness Stowell of Beeston]

I will come on in a moment to transitional arrangements and what is in place to support people affected by the removal of the spare room subsidy.

As my noble friend Lady Seccombe reminded us, pensioners are not affected by this measure, and I am happy to reassure the noble Baroness, Lady Dean, that there is no question of that position changing. The focus is on working-age people who are better able to improve their financial position and make up any shortfalls, and there are a number of other exemptions in addition to pensioners.

[Baroness Hollis of Heigham]

The noble Baroness implied that working-age people are able to work but she will know that two-thirds of those affected are disabled families for whom the option of increasing their income is minimal.

[Baroness Stowell of Beeston]

If I may, I will move on in a moment to how we are helping those who require special support.

Removal of the spare room subsidy is also in part helping us get to grips with the housing benefit bill, which has grown to £24 billion this year and nearly doubled under the previous Government. I promise that I will come back to the remarks of the noble Baronesses, Lady Hollis and Lady Quin, on savings estimates. While it gives me no pleasure to say this, given the spiralling housing benefit bill it cannot be right, as my noble friend Lord Howard of Rising said, that the taxpayer should continue to pay for homes that are too large for the household’s needs. Before we made the change, up to 1 million spare bedrooms in working-age households in England were being paid for by housing benefit.

As I have acknowledged, we are in a transitional period, with both landlords and tenants facing change. The Government are investing heavily in new affordable homes and we have to get that supply coming through. Over time we think that there will be more efficient use of social homes, with the spread of accommodation being more appropriate for the area as a result of the measures we are introducing. However, getting there will take time, which is why we have made available £405 million of discretionary housing payments over this spending review period. The noble Baroness, Lady Blackstone, said that that is not enough, but we have trebled the DHP budget to £190 million this year. I think that it was my noble friend Lord True who talked about how his council is drawing on that fund and how other areas are adjusting to the new situation.

It is early days but I can report in general terms that councils are using the fund to give awards where it is clear that the claimant is unable to make up the shortfall. This includes longer-term awards, including, as the noble Baroness mentioned, to disabled claimants living in significantly adapted homes, and short-term support—for example, to help people who have been off work due to illness but are due to return soon, and people engaging with their landlord in attempting to downsize.

However, many people are of course already managing the change. Among those who are out of work, some are finding work for the first time, some people already in work are able to increase their hours and others are able to move to smaller accommodation. In the two and a half years between the policy being announced and it being implemented, local authorities, landlords and tenants in some areas started to prepare for this change. Because time is limited I shall not go into the detail but Westminster, for example, has used a scheme to ensure that support is available for those who want to downsize. Likewise, the council in Salford is running schemes to help to bring together tenants who may be interested in swapping their homes. My noble friend Lady Seccombe referred to HomeSwap Direct. Through this scheme, for the first time, social tenants who want to swap their homes can now see every available property, thus boosting their chances of moving. More than 10 million searches have been made on that website since it was launched a couple of years ago.

My noble friend Lady Seccombe mentioned some other schemes which support pensioners who, although they are not required to move, might want to downsize. My noble friend Lord Stoneham made an important point when he highlighted the effort made by some responsible local authorities and housing associations to advise tenants on financial management to avoid getting into arrears.

We are taking proper steps to make sure that we understand how the removal of the spare room subsidy is working. We have commissioned extensive research, which will provide evidence of how this and other welfare reforms are working in practice. I can reassure my noble friend Lord Shipley that the interim evidence on the removal of the spare room subsidy is due to be published next spring. In the mean time—I mean this absolutely sincerely—I acknowledge that it is inevitable that we will hear stories, which, albeit anecdotal, will be concerning and upsetting, about whether this is a policy that we support in principle or oppose. However, we believe that it is too early to draw conclusive evidence from the emerging data on how the policy is operating at the moment. We want to make sure that sufficient time is allowed to pass so that we can reach a fully informed view on the impacts on both landlords and claimants. As I have said already, I make it clear that we are committed to giving proper consideration to all that evidence. We will publish it, and be held to account for it, next year.

In conclusion, as I said at the start, this Government are committed to building more new affordable housing and we have made a strong start in putting right the previous decline. We are committed to making the best use of the existing stock of housing and have changed the law so that local authorities and housing associations have more freedom. We are also committed to supporting people who are not yet able to buy or rent on the open market but who, in time and with the kind of support that we are offering across the board, could realise their aspiration to do so.

As always, I have learnt a great deal today. The noble Lord is about to stand up and ask me a question, so before I sit down I shall give way.

[Lord McKenzie of Luton]

I have a very simple question. Obviously in the time available the Minister has not been able to answer all the questions that have been put to her. Will she undertake to look at the record and write to noble Lords where appropriate?

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[Baroness Stowell of Beeston]

Absolutely. I said right at the beginning that I would do so and I am happy to repeat that. I shall ensure that I write as quickly as possible to all those who have contributed today and place a copy in the Library.