Council and Social Housing

Bob Russell Excerpts

Tuesday 6th March 2012 Westminster Hall

[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.

[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.

--- Later in debate ---

[Heidi Alexander]

My hon. Friend gives the short answer. The current Government’s record over the last two years on social rented housing has been utterly shameful.

[Sir Bob Russell]

I regret the line that the hon. Lady is taking, because I thought the purpose of the debate was to try to secure consensus—unanimity—on the way forward. However, as she wants to make a critical point, will she confirm that the previous Labour Government built fewer council houses than the Thatcher Government?

[Heidi Alexander]

I can confirm that in the last five years of the Labour Government, 256,000 affordable homes were built. [Interruption.] I obviously heard the hon. Gentleman when he asked me about council housing and I have said previously that if properties are genuinely affordable, I do not have a problem with whether they are council houses or housing association properties. He talks about the purpose of this debate. My reason for coming to the debate was to scrutinise the policies of the current Government, who I believe are failing. I am sorry if the hon. Gentleman does not welcome my tone, but it is important to put these things on the record.

Let us look at the facts of what the Government have done over the past two years. The national affordable house building programme has been cut by 63%, and there is £4 billion less to spend on new affordable homes between now and 2015 than there was between 2008 and 2011, when we spent £8.5 billion. Some 259 new social rented homes were started across the whole country between April and September last year—a 99% fall on the same period the previous year. In London, a city of 7 million people, just 56 new social rented homes were begun in the same period, which represents 8,469 fewer social rented home starts between April and September last year than in the preceding six months. That is not the record of a Government who are committed to building the homes this country needs; it is the record of a Government who are failing.

In the past few weeks, I asked a major housing association in London to provide me with figures on the number of social rented homes it has built over the past three years and what it plans to build over the next three. Its response was illuminating. Although it has averaged an annual output of more than 1,000 social rented homes—homes that have been built new—in recent years, that figure will halve in the next three years. Those projections are borne out by the amount of social housing that has been granted planning permission since the Government came to power. Last week, Inside Housing reported that the amount of social housing that was granted planning permission in 2011 was virtually half that which had been granted permission the year before. If planning permissions are not granted, the homes will not be built—it is simple.

I also question the affordability of any homes that housing associations or councils do build in the next few years, and my hon. Friend the Member for Great Grimsby (Austin Mitchell) also picked up on this issue. The Government have their strangely named affordable rent model, which allows social landlords to charge up to 80% of market rents, thereby bringing in more money to cover the costs they laid out in construction. The problem is that, in some parts of the country, the rents, which are just 20% lower than market rents, will be anything but affordable. If people in receipt of housing benefit move into those properties, will we not just be adding to the housing benefit bill again? I could be wrong, but I thought that was precisely what the Government were trying to avoid.

The supply of social housing is a function of not only what is built, but what happens to existing homes in the sector. Debates about allocation policies are all well and good, but if there is simply not enough social housing out there to meet the population’s needs, we will just be working out how to cut up the cake, knowing there will never be enough to go round.

On the overall amount of housing available at rents that people can afford, the Government’s enhanced right-to-buy proposals are particularly worrying. Like my hon. Friend, I agree with the principle of a right to buy, but when there is such a shortage of council housing, it seems crazy to deplete the overall stock of socially rented homes. The Government will argue that, for every home sold, another will be built, but I do not see how the finances stack up. Research by Hometrack in December 2011 showed that, where a £50,000 discount is applied, the average receipt from a sale would be £65,000, which would be lower than the cost of delivering a new property. That leaves aside the issue of whether the replacement works on a like-for-like basis. Will a two-bedroom flat sold under the right to buy in London be replaced by the same sort of property in a similar location?