New Housing Supply

Damian Collins Excerpts

Tuesday 5th March 2013 Commons Chamber

[Mr Andy Slaughter (Hammersmith) (Lab)]

I will certainly do that, Mr Deputy Speaker, and I apologise to the Minister if, given that we are going the distance, I have to leave before he speaks because I have a meeting before 7 pm.

I am sitting alongside my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) and the Chairman of the Communities and Local Government Committee, and that is as near as I will come to pretending expertise in my comments. Instead, I will give a consumer’s view of this subject, based on my experience as a constituency MP. My constituency admittedly has some of the highest housing costs in the country and—not unrelated to that—some of the greatest housing stresses and needs, but it is not untypical of London and other high-value areas, particularly in the south of the country.

As someone who has spent 20 years trying to build housing that is affordable to local people, I know that even at the best of times that is not easy because of land prices; subsidy is always difficult, particularly at the moment. Nevertheless, there is currently a development boom in west London, and it is envisaged that in three opportunity area sites in my small borough, 22,000 new properties will be built over the next 10 years or so. Those are the major sites but there are many other similar sites.

Housing policy states that at both regional and local level, 40% of houses built should be affordable, which is right. A third of existing housing stock in my constituency is affordable social housing, owned by the local authority or a housing association. At the same time, however, 11,000 people are on the waiting list because of severe overcrowding, conditions in the private rented sector and homelessness—I said that 11,000 people are on the housing waiting list and they will be for another four weeks until it is abolished on 1 April. Some 1,500 people will then possibly be rehoused at the subjective discretion of the local authority, depending on their individual merits as assessed on things such as community contribution, previous employment and matters not specifically related specifically to need. Other aspects of the Localism Act 2011 are being introduced with alacrity on short-term tenancies, affordable rents and other matters that, for the first time in generations, put at risk the right to a secure, affordable home for many people.

In those circumstances, one would think that using existing resources would be a priority, but in fact the local policy in my constituency says that there should be no new social housing because too much is available. Therefore, when social housing properties become vacant for any reason, they are liable to be sold. Consequently, the stock is not increasing; it is diminishing. When those 10,000 or 11,000 people go from the waiting list, they will not disappear; they will still be there, often living in conditions of severe housing need.

The bedroom tax has been proposed as though it could be an option to build new affordable housing, but, as I said in my earlier intervention, of 824 council households in my borough subject to the bedroom tax only 48 will be helped, according to the council’s figures, and other social landlords have another 1,840 such households. The people who are moving or who are likely to have moved are those who have been subject to the caps on local housing allowance—540 families so far—and those who are likely to be subject to the overall benefit cap when it is introduced, not now in April but later in the year, sometime between April and September. The date is yet to be revealed. Again, the local authority estimates that that will affect another 800 families.

Where will those people move to if they can no longer afford to live in west London? One answer is Peterborough. I saw a headline on the BBC News site two weeks ago: “Plan to move London homeless to Peterborough is ‘social cleansing’ says MP”. I was perhaps not surprised by that—I thought that perhaps the shadow Housing Minister had been using the media effectively, as he often does, or that my hon. Friend the Member for Westminster North (Ms Buck) or someone of that ilk had done so—but the article says:

“Plans to allow a London council to build homes in Peterborough for its tenants have been criticised by an MP as ‘social cleaning’. Peterborough MP”—

it names the hon. Member for Peterborough (Mr Jackson), who was here earlier but is not in his place now—

“said he could see ‘no advantages for the city’. ‘This is about social cleansing in Kensington and Chelsea,’ he said.”

Those of us who have said for many years that this process of social cleansing has been under way in Conservative boroughs, particularly in west London, dating from the Porter era and subsequently, and who were partially vindicated by the Mayor of London’s former pronouncements now have it written in stone from the hon. Member for Peterborough that that is happening.

In other words, people who are in housing need who could be helped in whatever difficulty are becoming the victims of political ideology and the strategy to alter the social and economic make-up of the area in which they or their families have often lived for generations.

[Damian Collins (Folkestone and Hythe) (Con)]

Many young professional people live in the hon. Gentleman’s constituency. In fact, the first flat that I lived in when I started my working life in London was in Shepherd’s Bush. They will rent in the private sector and not be in receipt of housing benefit. If their circumstances change, they get no protection from market conditions. They have largely no redress on the state if they are still in work. Is he saying that they should be included in his socialised model?

[Mr Slaughter]

The Conservative party is always levelling down, rather than levelling up. The introduction of a competitive, envious spirit to try to make people compete against someone one rung above or below them on the housing ladder is quite an invidious route to take. Of course, I support young families and young single people. They are working and paying taxes, but so are the majority of people in receipt of housing benefit. People on low incomes simply cannot afford astronomical private sector rents. I am glad that the hon. Gentleman intervened when he did because I was just going on to that point.

If we know who the victims are, we unfortunately know who the beneficiaries are. I was quite shocked to read a feature article in the Daily Mirror this morning. It was about a joint investigation by the Daily Mirror and GMB trade union into private landlords who had bought up council properties. That is the source of the statistic, which I gave earlier, that a third of right-to-buy properties that had been quite properly bought by their former tenants are now in the hands of private landlords. What sort of private landlords? One example given in the article is Charles Gow, the multi-millionaire son of a former Tory Housing Minister who, as the report reveals, owns 40 flats in one south London estate alone. The profiteering of private landlords, who buy up former social flats on council estates and individual council properties at a relatively low cost, is now rife. What does that mean? It means that they are able to charge market rents to tenants placed in those properties by local authorities. Those tenants then have to claim housing benefit—not because they are unemployed, but because they cannot, even on a more than average wage, afford the astronomical rent.

The average rent in my constituency is £335 for a one-bedroom flat, £467 for a two-bedroom flat, £770 for a three-bedroom house, and £934 for a four-bedroom house—per week. Social rents are between 15% and 25% of those levels. There is the obscenity. A social tenant in a secure and assured tenancy pays the rent in full by earning a decent average wage, or even, possibly, a low wage. Living next door is a similar family who have been in temporary accommodation for three or four years, who are paying a rent that is four or five times more to a private landlord, and which is being subsidised by housing benefit. The Government’s answer is, “Let’s evict the family by placing a cap on the benefit.” The Government’s answer should be, “Why are we not providing affordable housing for working families”, as every previous generation did irrespective of which party was in control? That is what lies at the heart of today’s debate.

I cannot fault what my right hon. and hon. Friends have said on policy and in their critique of the Government’s housing policy, but I am afraid it comes down to what I spend every Monday morning doing: trying to console increasingly large numbers of people who have been living for years, sometimes many years, in severely overcrowded and unfit housing conditions. At the end of that long wait, they now face not getting what they would have got even 10 years ago—a secure tenancy at an affordable rent for them to bring up their families, something to which everybody aspires—but the prospect of eviction first into a disgusting and dangerous hostel, and then being moved hundreds of miles away from their family network, schools and jobs to somewhere completely alien. I say that with no disrespect to Peterborough; I am sure it is a lovely place to live. However, if someone’s school, job, home, family and community are near Shepherd’s Bush, why should they be forced to move?

Those are the human issues, as well as the financial issues, that the Government need to address. I hope the Minister has read the report in the Daily Mirror and has seen who is currently benefiting from the Government’s policies. I hope that when he replies he will be able to tell us that there will be some movement.

[Damian Collins (Folkestone and Hythe) (Con)]

This has been a comprehensive debate, with great expertise from all parts of the House. I join other hon. Members in congratulating the Chair of the Select Committee, the hon. Member for Sheffield South East (Mr Betts), on an excellent report, which is forward-looking and raises many interesting issues. It poses a number of questions to the Government, and we look forward to hearing the Minister’s reply. I will touch on just one or two aspects of the report.

Today’s debate has already dwelt on the Government’s reforms to the housing targets and the important shift away from the regional spatial strategies towards local plans. It is much better to have local authorities with their own clear plans advocating, rather than resisting, development in their areas. Under the regional spatial strategies, local authorities fought housing targets, used every opportunity to resist housing development and stood up to the last Government in doing so. It is much better to have a system under which local authorities are given incentives to allow development in their areas and, instead of fighting development, are forced to make the case for it. I appreciate that people have raised questions about that point and that several local authorities are still finalising their local plans and targets. The plan by my district council, Shepway, in Kent, which is still being finalised, has at its heart a housing figure greater than the previous target under the regional spatial strategy. It is taking a sensible look at the opportunities for community infrastructure that can arise from development. That is the right way to go.

The Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Grantham and Stamford (Nick Boles), who has responsibility for planning, was in his place earlier, and I make this point for his benefit—so I hope he will check Hansard—and the Minister’s. I ask them both to consider the impact of infrastructure development in communities and on the local economy and housing. I realise that DCLG is considering the planning application for the expansion of Lydd airport in my constituency, which was approved by the district council three years ago. Since then, there has been a public inquiry and we now await the Minister’s decision, which is eagerly anticipated by me, the district council and many in the Bromley Marsh area and Lydd. It would be an enormous boost to the local economy to allow the controlled expansion of the airport to go ahead. Other transport infrastructure around it could make the area considerably more attractive to inward investment, including in new housing, and help to create new jobs, all of which are needed by the community. I ask the Minister to consider the application carefully, make it a priority, which I know he has done, and give us a timely answer. People desperately need to know where the Government stand on the expansion of Lydd airport.

The other Government reform I wanted to touch on was the liberalisation of planning consent for spaces above shops in town centres. This recognises that our town centres are changing and becoming mixed-use spaces for leisure, retail, work and residence. This could breathe new life back into our town centres. We have a lot of empty office space in many of our town centres, particularly in towns such as Folkestone in my constituency, and I think this would be a good use of space. If we can simplify the planning process and get that empty commercial space being used by residents who need it for residential property, it would be a good thing for residents and town centres.

Some of the specifics in the Select Committee report pose an interesting question concerning social housing and those in the private rented sector who claim housing benefit. Why, despite having a market with no lack of demand and a lot of Government spending underpinning it, do we have an inadequate level of supply? Why do we not have a system where we work with that demand and use it to expand supply? The report hits on interesting ways of doing that. The Committee Chair raised the interesting issue of councils borrowing to fund housing expansion. I would be interested to hear the Minister’s views on that.

Obviously, that exists within the current economic climate, with the country having borrowed too much, so it is right that the Government are concerned and careful about allowing too much further borrowing to take place, but it would be interesting to know what other schemes are available, particularly involving institutions, to invest in housing models. The report made some interesting suggestions for how we could bring together housing associations to manage and build properties, institutional investors with ready funds to lock away in long-term investments and local authorities prepared to work with those two bodies as partners. The funds are probably available from institutional investors and pensions funds that could invest—over not just 30 years, but 60 years—in new housing programmes. Local authorities have no shortage of tenants to fill the spaces. Any private landlord or investor will know that what they want: high levels of occupancy. If the local authority can largely guarantee occupancy of such properties, that will make them an attractive investment. Housing associations can manage such schemes to bring those elements together, so that the institution does not have to put in place a management arm and the local authority gets accommodation.

I know that some models have been put forward. I believe that Barking and Dagenham council in London has looked at putting in place a model—some local authorities in Kent are now looking at this too—whereby the institutional investor effectively builds properties for the council, which supplies the tenants and then gets to keep the housing at the end. There is the question—this was raised in the Committee’s report—of what guaranteed rate of return the institutional investor has to be given. What rental increase does the local authority have to guarantee? Is it inflation or inflation plus a small percentage increase over a 50 or 60-year period? That has to be carefully considered, but given that in such models local authorities would control the housing stock at the end—either to sell to the tenants or manage for the foreseeable future—they may be able to manage the risk of being locked into guaranteeing a certain rate of rent against the value of assets.

These models are very interesting. Indeed, it would be interesting to hear Ministers’ views on such schemes. As they are new, local authorities might need encouragement and advice to enter into such partnerships, but they pass the common-sense test. There are large amounts of cash sitting in institutions, and we have a social housing sector with an enormous need for new capacity and an almost limitless number of tenants to fill the spaces. That suggests that these elements could successfully come together in a tantalising and interesting solution to many of the problems that the report looks at. The Committee’s report also touches on direct borrowing from the markets, through municipal bonds or local government bonds, as it were. That could be a different way, but if we can bring these elements of institutional finance together to meet the enormous need that is out there, that could be an attractive solution.

Finally, I want to touch on investment in the private rented sector. Throughout this debate hon. Members have referenced case work in their constituencies involving people in housing need who live in squalor and poor accommodation in the private rented sector and claim housing benefit to do so. We discussed this issue in a Westminster Hall debate last week. I feel strongly that it is wrong to pay out housing benefit to slum landlords—people who maintain their properties in a poor state. They know that their tenants cannot afford the cost of moving out or a deposit. I had a case in my constituency where the cost of simply moving from one two-bedroom flat in Folkestone to another—the cost of a deposit, added to the letting agent’s fees—could be over £1,000. People simply cannot find that money. Bad landlords know that and they know they can get away with not maintaining their properties to a sufficient standard.

Local authorities have the power to intervene under the Housing Act 2004, which was passed by the last Government, but there are understandably limits to their enforcement capabilities. The one thing we do control, however, is the money supply for the housing benefit paid either directly to tenants or to landlords. If we could turn off the tap to bad landlords who will not take action to improve their properties, we would have an opportunity to put pressure on the private rented sector and those landlords, to ensure that such properties are maintained at least to a standard whereby they do not fall foul of one of the category 1 or category 2 hazards under the 2004 Act—largely, that people are not living in severe damp and severe cold. There should be no excuse for that. Putting this right is probably relatively low-cost for landlords. If they were faced with losing two or three months’ rent, they would find the money to put such properties right pretty quickly. That would do an awful lot to improve their tenants’ quality of life.

There is nothing wrong with private sector landlords offering accommodation to people on social rent or those renting with housing benefit, but they have the right to expect such properties to be maintained properly. I think all Members are far too aware of social housing tenants who are trapped in the system, living in poor quality accommodation. Months if not years can go by before anything is done to put it right. In controlling the money supply, we have the opportunity to do that and, in doing so, to correct some of the market failures in the system—empowering tenants to move around it more freely by making moving costs more affordable—and give them a better standard and decency of accommodation in the first place.

The Committee’s report has thrown up a number of interesting questions. I will certainly be interested to hear whether the Minister will produce an updated Government response to it, which I am sure we would all read with interest.