Frank Dobson
Main Page: Frank Dobson (Labour - Holborn and St Pancras)
Frank Dobson (Holborn and St Pancras) (Lab)
I commend the speech by my new hon. Friend the Member for Wythenshawe and Sale East (Mike Kane), who represents the great city of Manchester. He is one of the few people who could survive a headline saying “New MP for Sale” without being investigated by the Committee on Standards in Public Life. I congratulate him on the wit and intellect that he used in his maiden speech, and on the tributes that he paid to his predecessors. One characteristic of both Alf Morris and Paul Goggins was that they commanded rather a lot of respect and affection on both sides of the House. That is a trick that most of us have not pulled off over the years, I have to say, and I hope he manages it. I pay tribute to some of the work that got him here, including his work on promoting a living wage and on trying to undermine and replace the loan sharks who batten on a lot of poorer people. I am sure that he is very welcome in the House.
I welcome the report by the Select Committee and commend the hard work that it has put in, but I am afraid that I do not think it goes anything like far enough in dealing with the problems of the private rented sector in London. Londoners are being priced out of London, and young Londoners are suffering most. Whether they are seeking to buy or to rent somewhere to live, all the options are being taken out of the reach of ordinary people. Over the years, housing policy in London has been a failure, and there is now a housing crisis the like of which I cannot remember in all the time that I have been involved in local politics.
When I first became an MP, I knew that a nurse at Great Ormond Street or University College hospital would not be able to afford to live in the area. Over the years I realised that, increasingly, junior doctors would not be able to afford to live in the area surrounding those two great hospitals. It has now reached the stage where a new specialist consultant can no longer afford to live in the area, which is a ludicrous and damaging situation.
Younger people who are starting careers and who want to start a family and to find a place to live are being pushed out by house prices and rents that have been rising out of hand. The badly off have been hammered and the situation in London is such that—these are official figures—the average weekly rent now exceeds 50% of the average weekly pay. It is not just the badly off who are being driven out; it is people on middling incomes and young professionals who are hoping to start a career. They certainly cannot afford to buy and increasingly they cannot afford to rent.
In the past few years, private rents have gone utterly mad. It is not just me who is saying that. A recent headline in the Evening Standard stated: “Half Londoners fear they’ll be forced to leave neighbourhood: Housing costs in London ‘driving us out’”. A few days later the paper had a similar headline: “Rents rise 8 times faster than wages”. These are unsustainable increases.
The fact is that the private rental market is failing. It receives a £9 billion subsidy from the taxpayer—£9 billion of housing benefit goes to the private sector. It does not reside in the pockets and handbags of the tenants; it goes to the landlords.
The situation now is such that rents are going up, but the supply is going down. Another headline from the Evening Standard read: “‘Generation Rent’”—that is how young professional people are being referred to —“suffers in overheated market as housing supply slumps.” The idea that high, unregulated rents are bringing resources into the private sector is simply not true. Some argue that some sort of regulation or control might harm the supply, but it could not harm it any more than the free market is managing to do at the moment.
Jeremy Corbyn
I thank my right hon. Friend and parliamentary neighbour for giving way and I agree with everything he has said. Does he accept that what is happening in our constituencies is, in effect, a form of social cleansing of those on housing benefit, who cannot afford to pay the gap between the benefit level and their rent and are thus forced to leave, which is damaging to all our communities, families and schools and to everything about London life?
Frank Dobson
I agree entirely with my hon. Friend. I think I invented the phrase “social cleansing” and sometimes I refer to it as the lowland clearances, which might be of interest to our colleagues in Scotland.
A headline in The Sunday Times stated: “Buy-to-let returns top 10 % a year: Investors piling into the market as yields soar”. The supply is not soaring, but the yields are and it is time we shifted the balance in favour of the tenants, with greater security, and longer tenancies. I believe that we cannot afford to avoid introducing rent controls. In fact, I would go further and say that there should be a progressive reduction in the level of some of the rents and that, in future, rent increases should be tied to wage levels.
We of course have the problem of the massive increase in house prices, which is a major factor in the rise in rents. One of the biggest factors is foreign buyers. Some of them buy property in London to live in, but they are a small minority, because most of them now buy residential property simply as an investment that they leave empty. To read another Evening Standard headline, “Super-rich from overseas flock to buy homes in London”. They do not intend to use them as homes; they are simply an investment that is better than putting their money in gold. They cause double damage to people in London: they drive up prices; and they take a lot of housing out of supply, because the places that they buy and do not occupy could be occupied by other people.
We cannot stop EU citizens buying residential property in this country, but we can stop other people doing so. The Government have established a precedent, because they have said that a private landlord must not let to a tenant who is not lawfully in the United Kingdom. I believe that we should change the law so that people cannot sell residential property to somebody who is not entitled to be in the United Kingdom. That would have a dampening effect on these massive rises in house prices.
As the Government are now scrambling around in contemplating sanctions against Russia, may I suggest that, as a pilot scheme, we quickly pass a law to prevent Russian oligarchs from buying houses and flats in this country unless they are entitled to live here, because all that happens is that landlords, estate agents and property companies are making money? They have contributed little or nothing to making London a better place to live. In the southern tip of my constituency, which includes Covent Garden, people—with their children or their parents—battled for years in the 1970s to prevent the wholesale destruction of Covent Garden and to preserve it as the great success that it has become, but they can no longer find anywhere in Covent Garden to live, because properties are bought up by other people, whether British bankers or foreign owners.
We also have the problem of Crossrail, which has cost £16 billion, most of which has come from the taxpayer. With a fanfare of trumpets, the people now running Crossrail have announced that some firm of valuers is predicting, again to quote the Evening Standard, that “Crossrail ‘will boost property prices by up to 25 per cent’”. It has cost billions of pounds of taxpayers’ money, but someone else will benefit from the increase in property values.
In all I have said, I have been very careful to avoid mentioning any socialists, and I will now mention a very unsocialist person. He said:
“Do you think it would be very unfair if the owners of all this automatically created land value due to the…enterprise of the community…had been made to pay a proportion…of the unearned increment which they secured, back to…the community?”
That was Winston Churchill at the great Free Trade hall in the great city of Manchester in 1909. He was right then, and he is right now. My view is that if there is to be a massive increase in property values as a result of Crossrail—I have always supported Crossrail—the public should get some of it back.
I will quote somebody else:
“Both ground rents, and the ordinary rent…are a species of revenue, which the owner, in many cases, enjoys without any care or attention of his own. Though a part of this revenue should be taken from him in order to defray the expenses of the state, no discouragement will thereby be given to any sort of industry.”
He went on to suggest that rents are
“the species of revenue which can best bear to have a peculiar tax imposed upon them.”
That is what Adam Smith said in the “The Wealth of Nations”. If the Tories claim to be Churchillites or say that they support the Adam Smith Institute, it is about time that they adjusted some of their policies in line with what those distinguished people advocated.
It seems to me that there will be no prospect of ordinary folk continuing to afford somewhere decent to live in London until we introduce rent controls and reductions, introduce a tax on gratuitous increases in values accruing to landlords, and do something to stop the stinking rich foreigners buying up residential property in this country. When people talk about immigration, they say that there will be all sorts of burdens on the infrastructure. The suggestion seems to be that there will be such a burden only when poor people come here. The fact is that the people who are recruited by the City from abroad also want somewhere to live. They impose as great a burden on our housing stock as anyone else. I therefore think that we need a much more radical approach. That no doubt betrays me, yet again, as being not old Labour, but heritage Labour.
Simon Danczuk (Rochdale) (Lab)
I genuinely enjoyed the speech by my hon. Friend the Member for Wythenshawe and Sale East (Mike Kane). I also enjoyed knocking on doors in his constituency a few weeks ago in the pouring rain. I am pleased to have helped him get into this place.
I am speaking in this debate because I am a member of the Communities and Local Government Committee, which conducted the inquiry, and because this issue is thoroughly important to my constituency as many of my constituents live in the private rented sector. This inquiry is one of the most interesting and important inquiries we have conducted because it relates to a large proportion of the British population. I enjoyed the inquiry and found it particularly informative. I will canter through three issues: simplifying the legislation, empowering local government and thinking about the long term.
The Chairman of the Committee mentioned the importance of regulating the private rented sector, as did others. He also mentioned that tenants, landlords, local authorities and everybody else who is involved in the sector find the legislation complicated. It adds to the costs, causes confusion and creates a lot of hassle for those who want to rent a house. I hope that the Government will review the legislation to make it clearer and simpler.
As the private rented sector is so large nowadays, there is an opportunity for the Government to conduct a public information campaign on how it relates to tenants and potential tenants. There are also issues with letting agents, as the hon. Member for Harrow East (Bob Blackman) and other Members pointed out. It is important that there is a breakdown of the fees that tenants are paying. There is a view that there should be a national licensing scheme, but although I agree that national guidelines could be useful, I think that is done better by local authorities. Local government needs the ability and flexibility to decide its own licensing schemes that are particular to the local housing area.
On localism, local authorities should be given more powers to tackle rogue landlords, but we should bear it in mind that there are also rogue tenants, as has been pointed out. There are 1.2 million landlords, many of whom could be described as accidental. The vast majority are good, but there are a few rogue landlords who treat people badly and prey on vulnerable people, particularly the old, students and immigrants. That needs addressing by giving local authorities greater powers to impose penalty charges and the chance to recoup costs.
Frank Dobson
Does my hon. Friend agree that we need to address the problem of people who cause a massive nuisance to their neighbours, because the present laws and practices are quite pathetic?
Simon Danczuk
I completely agree with my right hon. Friend, and there is an issue about rogue tenants, which is the point I am making. On unscrupulous landlords, my right hon. Friend mentioned the subsidy through housing benefit, and those rogue landlords are often receiving public money, using it badly, and treating their tenants badly. There is a need for greater powers for local authorities.
On the longer term prospects, I have two quick points. First, as the hon. Member for Harrow East said, there is a real issue of people wanting longer term tenancies. The Government can do something to help and assist that, perhaps by looking more closely at Germany in creating longer term tenancies, particularly for families and those who want to stay in a location for a lot longer than they currently do. Finally, in the long term more broadly we need to start building more homes. Whether this Government or the next get that under way—whichever party is in office—that is the key to this complex problem.
Mr Speaker
Order. I thought he was talking about antisocial tenants a moment ago.
Jeremy Corbyn
I was expressing concern about my Friend’s reading list—Adam Smith and Winston Churchill —but he assured me, and he is quite right, that there was a radical tinge to Churchill who also introduced wages boards. There was also a radical tinge to Adam Smith, although he was grossly misrepresented by the far right of the Conservative party many decades later. We will not debate that.
I congratulate my Friend the Member for Wythenshawe and Sale East (Mike Kane) on his election and membership of this House, and on an absolutely superb opening speech. I have never heard anybody start with Aristotle. I hope he carries on in that philosophical mode. It was absolutely brilliant.
I will be brief, you will be pleased to hear, Mr Speaker, because those on the Front Benches wish to wind up the debate. Like my Friend the Member for Holborn and St Pancras, who has the neighbouring constituency, I represent inner London where the housing crisis is acute beyond belief. I hold regular advice bureaux, as all Members do, and my walk-in advice bureau on the third Friday of the month frequently lasts for anything from six to eight hours. The vast majority of the people who come have housing issues, and they are devastated by the situation they are in. They are often people who have been placed in the private rented sector by the local authority, which must house them because they are in desperate housing need and the family is in danger of homelessness, or has medical needs and so on. I do not blame the local authority for that. People’s rent goes up, their housing benefit is capped, they cannot afford to meet the gap, and the only alternative for them is to be moved out of the area to a distant place. At the moment, my borough does not place people outside London, but I suspect it is only a matter of time before all London boroughs decant people outside London because they simply cannot find the private rented accommodation to house them. Schools are disrupted when families are moved out and the community is weakened. The flats are then rented to somebody at an even higher rent.
I am pleased that the Communities and Local Government Committee has decided to concentrate on the private rented sector. I agree with much in the report, including the regulation of letting agents, better conditions in the private rented sector, the guaranteed return of deposits, and the protection of tenants against unfair eviction because they have the temerity to complain to local environmental health services.
I would like those measures to be introduced, but we must address the elephant in the room—the rent levels in the private rented sector. In answer to a question from me yesterday, the Minister asserted that private rented sector rents in London are going up by 1.4% per year. I tested that out on a few people last night in my constituency. The answers ranged from, “Which planet is he living on?” to “Did he mean 1.4% per week?” There is a total disconnect between the figures the Department works on and the reality of life for people in the private rented sector.
Government Members say, “We cannot interfere with the market,” but we are already doing so. As my Friend the Member for Holborn and St Pancras has pointed out, the public are putting £9 billion a year into the hands of private landlords. That is market interference. I support housing benefit, but it has an effect. No rent regulation is associated with housing benefit, and there is no control on rent levels. That must be addressed. I recognise that, in most of the UK, private rents are not excessively high. In many parts of the country, they are lower than council rents. When I talk to colleagues about supporting my ideas on the regulation of private rents, they say, “It’s not an issue in my area.” I fully understand that, but in London and on the fringes of London, and in one or two other cities, it is a massive issue. A third of my constituents live in the private rented sector. They ask me, “How much longer can I afford to stay in your constituency?” Some of those people are not poor—their salaries are quite good. They are young professionals who want to live in an inner-city area of London but can no longer afford to do so.
There is a knock-on effect on the London labour market. I have been to the Royal Mail sorting offices in my constituency, the local hospital—on many occasions—the fire station, the police station, social services, the council departments and other places, and have asked people where they live. If they are under 40, the chances are that they live at home with their parents. They do not want to—the parents often do not want them there either—but are stuck in that situation. If they have managed to buy a place, it is a very long way away from London, and they spend an awful lot of time and money on commuting, which has an environmental effect. A few years down the line, where will the nurses, the teachers and the firefighters come from if we do not address housing for people who need houses and places in London?
To my local authority’s great credit, it is building council houses. It hopes to complete about 2,000 with the housing associations on affordable or social rent models. That is making a good difference to a lot of people’s lives. It is a great pleasure meeting families who have lived in grossly overcrowded, poor-quality accommodation when they get a decent, permanent, reliable and secure council flat. That has changed their lives, and has changed the attitudes of the young people involved. However, we are not doing enough of it; instead, we are letting the market rip, and allowing all the problems that go with that to arise.
I have introduced a Bill under the ten-minute rule procedure, the Regulation of the Private Rented Sector Bill. I think that the majority of Members would find most of it unexceptionable. It deals with the need to regulate letting agents. We could start with Criminal Records Bureau checks—in some cases, that would be quite helpful—and then move on to full regulation of the way in which agents charge, the extent of their transparency, and so on. Not all letting agents are bad, just as not all private landlords are bad, but there are some pretty seriously rogue elements.
Agencies discriminate blatantly not only on grounds of ethnicity and race—as “Panorama” discovered—but against people on benefits. They say “We will not allow anyone who collects benefit to rent a flat through this agency.” Why do they do that? It is an interesting question, because someone who pays part or all of his or her rent by means of housing benefit will actually be a very reliable tenant. The answer can only be that the agencies do not want the attention of HMRC to be focused on the levels of income they are receiving.
We need regulation to deal with that, we need transparency in regard to how deposit schemes work and how tenants get their deposits back, and we need serious attention to be paid to the longevity of tenancies. Six months for assured shorthold tenancies is far too short; at least five years strikes me as a reasonable basis, although obviously there should be an appropriate form of get-out clause for people who, for instance, get a job in another part of the country. That can be worked out.
Other countries manage to regulate rents. Germany has a very regulated and a much bigger private rented sector, and, in general, private rented properties are owned by much larger landlords—co-operatives, insurance companies or others. When the Minister without Portfolio, the right hon. Member for Welwyn Hatfield (Grant Shapps), told me that regulation of the private rented sector would bring about the economic ruin of Britain, I asked him whether that was a parallel with the economic ruin that Germany was facing as a result of its regulation of the sector. I am still awaiting his answer; I do not know when he will be able to give it to me.
My Bill proposes that local authorities should play a key role, because they understand the communities they represent. Newham council, Oxford city council and a number of other authorities have introduced registration schemes, and have sought to introduce some degree of regulation of the private rented sector. Of course, as my hon. Friend the Member for Sheffield South East (Mr Betts), the Chair of the Select Committee, pointed out, the problem is that it is the good landlords who tend to register voluntarily, and it is the rogues whom we want to be registered. Nevertheless, that is a good initiative and a good step forward. Moreover, if local authorities introduced their own private letting offices, they could use them for their own purposes when they have to house families in the private sector because they do not have enough council houses to deal with the demand.
The Bill also proposes that a combination of the Mayor and London boroughs should be given the opportunity to introduce a rent registration and rent regulation regime across London, which would have some bearing on the affordability of properties. That would give access to housing to a range of people who are currently excluded from it, and would thus create more stable, more harmonious communities.
I welcome the work that the Select Committee has done, and I welcome the fact that we are beginning to have a serious debate about the private rented sector. It should be remembered that more than a third of the communities in many parts of London are already living in the sector, and that, according to all the predictions, it will grow a great deal. I very much hope that this will become a big issue at the next election. I hope that parties including my own will understand the need for regulation and the need to limit the excessive rents that have been charged, so that we can bring about some sense of harmony and decency in this sector of the housing market throughout the country.