Housing

George Hollingbery Excerpts

Wednesday 5th September 2012 Commons Chamber

[George Hollingbery (Meon Valley) (Con)]

I hope colleagues will forgive me if I ramble through my remarks fairly swiftly, as I have quite a lot to get through.

The lack of housing for British people is of great concern to all of us, and we have to ask ourselves why sufficient homes are not being built. It is a simple matter of economics. Interest rates may be low, but the country is deleveraging. Private individuals are very cautious about increasing debt, which means fewer individuals are looking to buy. Banks are strengthening their balance sheets, and reducing their risk profiles and setting aside capital. The ultimate consequence is that there is a smaller pool of people who want to borrow, and fewer of them are qualifying for borrowing, and less money is available to lend to them. In short, this all boils down to a reduction in the amount of capital available to build homes. Is it any wonder, therefore, that house building numbers are falling?

Although £19.5 billion of public and private funding is currently lined up to be spent on affordable housing by 2015, there is very little land to build it on. That land relies on section 106 agreements from private housing developments and they are not happening.

Back in the earlier part of this year, the Chairman of the Select Committee, the hon. Member for Sheffield South East (Mr Betts), proposed that we reported on the financing of new housing supply. That report was published in May. The broad conclusion, as he has already said, was that there was no one silver bullet with which the housing deficit could be removed. The crucial question is now what can be done and whether the Government are acting on the possibilities.

A number of options are available to the Government and action has been taken on some. First, crucially, we must keep interest rates under control. We are borrowing internationally at the lowest interest rates in history and that is a crucial part of the package. Any serious upward tick in rates would almost immediately increase the strain on existing owners through their mortgages, reduce the already low level of building and price further prospective owners out of the market. The clear implication is that any measure that added significantly to the debt burden the country is carrying would be likely to be entirely counter-productive in the medium term and might even reduce the number of houses available.

Secondly, the Government can look to their own assets. They can provide public land for development, such as that brought forward under the “Buy now, pay later” scheme, which has been widely welcomed. Grainger plc said that that would help it run a build-to-rent programme. The Association of Greater Manchester Authorities reported to us that it was actively investigating investing its pension funds in rental accommodation on land that it would provide, with both funds coming together to make a cohesive package.

The Government can provide guarantees to lenders and borrowers, and we have heard a great deal about that with the announcement of the Get Britain Building programme and the Firstbuy equity deal. We have had the NewBuy guarantee and just at the beginning of August the funding for lending scheme was announced. That is an 18-month programme to allow almost unlimited borrowing by swapping assets for funding from the Bank of England to invest in small businesses and lend to private individuals to buy homes.

We can also return the control of local council housing assets to councils. That programme was started by the previous Government, and I salute them for doing so. The Smith Institute said that £25 billion of real-terms investment will be made available for housing through that change. I have concerns, shared by the Chairman of the Select Committee, about debt caps, which we ought to re-examine, and the sharing of debt limits across councils. It seems to me that there is extra capacity in the system that could easily be brought into play, allowing us to build more social housing.

There are the new rules on right to buy, but care must be taken to replace not only one for one, but, if at all possible, like for like in the area in which property was sold, particularly in small rural villages. New council developments to be let at a discount on market values can also be very valuable. We took evidence that the affordable rent programme will make a contribution; it will be limited over time and geographically and there will be restrictions, but it will help in the end.

I will end there, but there is no doubt that we are at the end of the tail of an extraordinary debt crisis, which was left to us by the previous Labour Government. Essentially, that legacy of debt restricts the amount of capital available in the marketplace and the options available to the Government. I believe that they are doing all they can within the envelope for borrowing and I commend them for what they do.