Housing (CSR)

Clive Betts Excerpts

Wednesday 27th October 2010 Westminster Hall

[Mr Clive Betts (Sheffield South East) (Lab)]

The Government’s comments on housing in the spending review suggest that the most pressing problem—indeed, almost the only one—is the increased bill for housing benefit. I congratulate my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) on securing this debate, and on the usual expert way in which he dissected the Government’s policy and its lack of an evidential base.

The housing benefit issue has arisen not because more people have claimed it over the past few years, but because the amount being claimed has risen as rents have risen. Rents have risen because of a shortage of housing in this country, which is the same reason why house prices have risen in the private sector. The Government should address that fundamental problem, and not try to find appalling ways of cutting benefits and forcing people into housing difficulties. I shall give two examples.

The Deputy Prime Minister was upset in the Chamber yesterday when the words “socio-economic cleansing” were used. Undoubtedly, there will be a substantial dispersal of families from the centre of London to the outer boroughs because of the Government’s policy of housing benefit not covering private rents to the same degree as previously. That policy will apply not just in London, and the Deputy Prime Minister should be upset because the problem will also occur in Sheffield. It will not be just the overall target figures for the maximum amount of housing benefit that can be paid that will have an impact, it will be the 30th percentile because of the large disparity of rents in cities such as Sheffield where people will be dispersed from the affluent parts in the Deputy Prime Minister’s constituency to the rest of the city. Those people will not be just the workshy, feckless families that the Government like to stereotype, but people in professional jobs who lose their jobs in the next few months and also lose their homes. That is the reality of the situation.

My second example is the very unacceptable policy—I say no more than that—of dealing with people in under-occupied properties by telling them that the size of property that may be funded by housing benefit will be limited. Let us take a couple in their late 50s who have brought up their family, who have now left home. That couple may be in work, but planning to retire at 65 and to move at some stage to a pensioner’s bungalow if they can find one. They will want two bedrooms because their grandchildren come to stay, and that is perfectly reasonable, but there is a shortage of bungalows, so they will have to wait some time, even when they have retired. Suddenly, they become unemployed—that is a prospect that will hit many people in the next few months—and cannot afford their rent because it is no longer covered by housing benefit. They have a family home in which they have invested and which contains their furniture and family memorabilia. They may have a garden that is their pride and joy, and which they use for recreation. Suddenly, they will be moved to a one-bedroom or two-bedroom maisonette or flat somewhere with the all the costs involved at the very time that they lose their jobs.

Such family situations will occur, and if people move, do they move to a property where the new rent will be 80% of market level? Will the Minister explain whether that will apply to transfers for existing social housing tenants, and to mutual exchanges and assignments? Will it be covered by housing benefit in total, in which case, will the Department for Work and Pensions pay if extra money comes into social housing through the introduction of the new higher rent levels? That is all unclear, and it is incredible that such a major housing policy is introduced with a few words in a spending review.

What do 80% rent levels mean? In his statement, the Chancellor said:

“New tenants will be offered intermediate rents”.—[Official Report, 20 October 2010; Vol. 516, c. 953.]

Does “will be offered” mean that they will have a choice about whether they accept those rents, or will they have to have them? Will landlords have a choice? “Will be offered” seems to imply that all new tenants will have such rents, but the spending review document that the Treasury produced says:

“Social landlords will be able to offer”.

It introduces the word “able”, so what is the Government’s policy? Will social landlords have to introduce rents at that level for new tenants, or will they be able to offer them if they choose? What will happen if they choose to do so?

We understand that there will be a cut of at least 50% and probably more in the amount of money available from the Government for social housing through the social housing grant. That extra money from rents, presumably partly funded by the DWP, is supposed to fill the gap. What is the situation regarding social housing grant? If a social landlord decides that they will not increase rents for new tenancies to the new 80% of market level, they will presumably forgo some of the money that they could otherwise have received to build new social housing. That is apparently the purpose of increasing rents to that level. If they do that, and if in future the option is available to keep rents at the current level and tenancies on the same basis for new tenants—we do not know whether it will be available—will they forgo access to a social housing grant? Will availability of the social housing grant be dependent on landlords being prepared to bring in new rent levels and tenancy conditions for new tenants? We need some clarity on the matter as it is unclear.

A policy has been introduced through a few comments in the spending review. It has significant implications for housing but it has not been thought through—at least, if it has been thought through, we have had no explanation about how that was done. We need a clear explanation from Ministers about whether it will be compulsory for landlords to introduce those rents, whether that will have an effect on housing benefit, whether the rules will apply to existing tenants who move, and whether the policy will be linked in some way to access to a social housing grant, whether landlords introduce the measures or not. Those are key questions that have received no response.

The Government have told us that they do not have housing targets—apparently they are out of fashion, along with regions and one or two other things. However, when the Housing Minister came to the Communities and Local Government Committee on 13 September, he accepted an important point. Success will be achieved by building more homes than the Labour Government built before the recession; failure will be building fewer homes. Therefore, the target is to build more than 200,000 homes. That is what was happening previously, so by default, that is the new target introduced by the Government.

We all know, for obvious reasons due to the recession, that there has been a fall-off in house building. We must find appropriate ways to get that building back. The Communities and Local Government Committee is conducting an inquiry into the abolition of regional spatial strategies, and housing targets at regional level being cascaded down to local level. I do not want to prejudge the outcome of the inquiry, as that would be wrong. However, we have received a lot of evidence from people who were unhappy with the operation of the regional spatial strategies. People felt that they were heavy handed and did not take account of local needs. There was also a lot of concern that the Government had abolished the strategies without thinking through the replacement.

One telling comment was made about the new homes bonus which, importantly, we understand is for every new home, not just additional homes. If the new homes bonus is set at a level that would achieve the number of homes needed in this country, even on the Government’s new target figure of over 200,000, it would not be affordable given the money that Ministers have indicated is available. If the new homes bonus is set at an affordable level, it would not achieve the number of new homes necessary. There is a disjunction between what the Government think they can offer, and what is likely to be achieved.

A letter from the Secretary of State sent to local authorities last week stated that the new homes bonus may be paid not on the basis of homes built, but rather on consents given. Is that the case? If it is, we could find that a lot of consents are given in areas where homes will never be built. Money will be spent but nothing will be delivered. That situation also needs clarifying.

The policy may not have an immediate impact because, as we all know, there is a shortage of demand at present. People are concerned about their futures, living standards and jobs. There is a fall-off in demand for housing; prices have been dropping recently. The major concern about the availability of mortgages has already been mentioned. According to the Council of Mortgage Lenders, some of the proposals from the Financial Services Authority may have even bigger implications for mortgage availability in the future.

Let us assume that in three or four years’ time, economic confidence eventually returns, families feel able to return to the housing market and there is mortgage availability. If over the years, fewer and fewer planning permissions have been awarded because of the change in Government policy, we will see a massive spike in house prices and we will go back to the same problems that we hit in the 1990s. In five years’ time—I am sure that the Minister will be conscious of the relevance of that date for the Government—we could have a situation where fewer homes, in particular affordable homes, have been built, prices have started to rise sharply and rents in the private sector and elsewhere have gone up. People’s misery will have been compounded by the changes to housing benefit. That is not a happy record on which to fight an election.

--- Later in debate ---

[Andrew Stunell]

That, of course, is what was wrong with the targets: they built up resistance in local communities—although not in all of them, of course; colleagues in Yeovil and Chesterfield could not build the houses that they wanted because of the absurd national targets.

The hon. Lady quoted early-day motion 355. Outside Westminster tube station, the National Housing Federation has posted a plea to us all for more affordable and social homes. I want to say very clearly—I shall be saying this on many other occasions—that when it comes to producing more affordable and social homes, a party that finished up with 45,000 fewer such homes than it started out with 13 years before is not in a good position to criticise the coalition Government. When we go in five years’ time, we will leave more homes in the social sector than we started with.

The National Housing Federation briefing, which hon. Members have perhaps drawn on, says:

“Our modelling suggests that the Government’s claim that up to 150,000 homes will be delivered over the four year period is achievable”,

and it adds:

“If one in four new lettings across the sector…are made at 80% of market rent”.

The reference to “one in four” is interesting. Opposition Members imagine that the Government will impose a new model compulsorily on every housing authority. That is absolutely not the case. If the National Housing Federation, which is, let us face it, not a particularly good friend of the Government at the moment, says that we can get our 150,000 homes with a quarter of rents at an affordable level, it ill behoves Opposition Members to spread lies and deceit about the issue.

[Mr Betts]

Can we make sure that the Minister is telling the whole truth about this? The National Housing Federation said that the figures might be achievable if one in four new tenancies was let under the new rents, but it also said that all the new houses that were built—the whole 150,000—had to be let under the new rents. Effectively, on the Minister’s definition that we should treat as social houses only those houses that are let on existing tenures at existing rent levels, no new social houses will be built under the programme proposed by him and his colleagues. Is that not true?

[Andrew Stunell]

I do not really understand the hon. Gentleman’s point, because—[Laughter.] The reason I do not understand it is that it is complete nonsense. The homes that we are building will be available for affordable rent, and we have already set out some of what we want to do. However, I acknowledge straight away that hon. Members could have done with more detail, which is why we are producing a consultation document—hon. Members should note the word “consultation”—to set out many of our proposals and some options, and we are inviting opinions about how legislation should ultimately be shaped.

I was perhaps a little over-exuberant earlier when talking about how the new homes bonus will apply. It will apply to conversions, change of use and other net gains. I am quite content to confess that my adrenalin got the better of me earlier.

I need to deal with some of the other points made, so let me pick them up as best as I can. The hon. Member for Banbury (Tony Baldry) made some important points about mortgage availability. The crucial task for the Government is to ensure that we have a sustainable and growing economy. That is absolutely at the heart of the comprehensive spending review.

Let me make it clear to colleagues that the total being invested in infrastructure is being maintained. We have reprioritised expenditure on measures that will support growth and investment in jobs—particularly green jobs—and in industry. That has come at the expense of the traditional amounts spent on housing investment. All Members probably wish that we had a larger housing programme, but our programme will deliver more homes in the social sector in the next five years than Labour did in its 13 years. That is bound to be true, given that the number under Labour fell by 45,000.

My hon. Friend the Member for Cities of London and Westminster (Mr Field) made it clear that this country has created a housing tenure model that makes little sense. On the one hand, we have people who are excluded from any opportunity of getting social housing. The hon. Member for Plymouth, Moor View, correctly said that 9,000 people in Stockport are waiting for homes. She could have added that there are only 11,000 social homes to go into. People whose names are on the list have no realistic expectation of ever getting into council housing.

We must build more social homes, and we will be building more social homes. We must use the ones we have more efficiently, and we are providing local authorities and housing associations with a way to enable them slowly to do that when homes are re-let. We are, of course, also trying to ensure that the sign outside the House in Westminster tube station is responded to, not just through an early-day motion, but through a policy that delivers more social and affordable housing, exactly as requested.