Council and Social Housing

Heidi Alexander Excerpts

Tuesday 6th March 2012 Westminster Hall

[Heidi Alexander (Lewisham East) (Lab)]

I am grateful to be able to take part in the debate. Since I was elected to Parliament, I have probably spoken more about the need to increase the supply of genuinely affordable housing than about any other subject. I have done so not because I have any great expertise in that field, but because I know how desperate my constituents are to find homes that they can afford. Successive Governments have failed to appreciate the scale of the housing crisis. My fear is that the policies of the current Government will just make it worse.

Every fortnight, I sit in my advice surgery in south-east London and have the same conversation over and over again with families living in massively overcrowded accommodation who want me to help them find a home. Some will already have a council home or housing association property, but many more will be renting in the private sector. Most of the people who come to see me are in low-paid, often part-time work and juggling the pressures of bringing up their family while holding down a job.

I see mums who are on the edge of nervous breakdowns because their families are living in damp, depressing flats. I see dads who feel powerless to find their children a decent place to live. I often see children who are sharing a bed with their siblings, and sometimes I see children who have no bed at all. I also see families who live in a single room in a shared house. I say to myself that in 21st-century Britain, that cannot be right.

I often ask the constituents who come to see me what they do for a living. I ask them outright how much they earn. Obviously, their answers vary, but in the eight years for which I have been holding advice surgeries, first as a councillor and now as a Member of Parliament, not one of the families who have ever come to me for help with housing could afford to buy a property in London. For the vast majority of people who come to see me, even shared-ownership homes and part-rent, part-buy schemes are way out of their league. To access those homes, people need to be earning thousands of pounds more than many of my constituents.

Increasingly, people have been turning to the private sector to meet their housing needs and have been resorting to housing benefit to help them cover their rent. In Lewisham, private rents are basically double what social rents are, so for many of my constituents the private sector becomes an option only if the state pays money to their landlord. Yes, we have heard a lot about the housing benefit bill going up, but let us think about this. If private rents in my constituency are double the social rents, there is no surprise in that. Our failure to build adequate amounts of social housing has resulted in our lining the pockets of private landlords on an industrial scale—and make no mistake: the policies of the current Government will make that situation worse.

Social rented homes in my constituency are a hugely sought-after commodity. Demand massively outstrips supply. If I had a pound for every time I have explained that in my surgeries, I would be a rich woman. In London, 350,000 people are on waiting lists, yet only a tiny fraction of those people will actually be able to move each year. If we are to meet the housing needs of my constituents, we must dramatically increase the supply of social housing. I am relaxed about whether that is housing rented out by councils or housing associations, but I am clear that it needs to be genuinely affordable.

What are the current Government doing to build more social housing?

[Chris Williamson (Derby North) (Lab)]

Not a lot.

[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?

[Mr John Leech (Manchester, Withington) (LD)]

On that point, two-bedroom flats sold off in London should be replaced by larger properties to deal with the shortage of such properties in London. In the same way, there is a shortage of smaller properties in other parts of the country.

[Heidi Alexander]

I do not necessarily disagree with the hon. Gentleman, but building a larger property will probably cost more. There are real questions about how we get to a situation where we have the right sorts of properties in the right places. I just cannot see how an enhanced right-to-buy scheme will help to get people into homes at a price they can afford.

I have painted quite a bleak picture, but there are things the Government could and should be doing. They should level the playing field between councils and housing associations in respect of how they borrow money to invest in social housing. If we remove the cap on the borrowing that local authorities can invest, more money might go into new social rented housing. The Government should also be clear in the national planning policy framework that social rented housing is a priority, instead of leaving it to the whim of local authorities, as the current draft does. They should be clear and robust in their planning policy document.

Since the Government came to power, we have heard plenty from the Housing Minister, including lots of different initiatives and gimmicks. I have listened carefully to those announcements, waiting to hear something that will give hope to my constituents—the people I spoke about at the start of my contribution. To be honest, however, I have heard nothing in what the Government have said that will give them hope. We need a dramatic increase in the number of social rented homes being built, but nothing the Government are doing will bring that about.

[Mr John Leech (Manchester, Withington) (LD)]

I am pleased to speak under your chairmanship for the first time, Ms Clark. I, too, congratulate the hon. Member for Great Grimsby (Austin Mitchell) on securing the debate.

The contribution of the hon. Member for Lewisham East (Heidi Alexander) was somewhat unfair on the Government. I would just point her in the direction of the comments made by my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes), who noted the massive under-investment in social housing during the years of the previous Labour Government, when the economy was doing well. Throughout the previous Parliament, I, along with colleagues not only in the Liberal Democrats but across the House, argued for substantially more investment in social housing. Indeed, my hon. Friend the Member for Colchester (Sir Bob Russell) was arguing for that from 1997.

[Heidi Alexander]

One thing the previous Labour Government had to deal with when they came into office was the £19 billion backlog in repairs and maintenance investment in public housing, but they brought 1.5 million homes up to the decent homes standard. Does the hon. Gentleman not accept that that represented an incredible amount of investment in social housing, albeit it did not contribute to the number of new homes?

[Mr Leech]

I thank the hon. Lady for that intervention. I will not stand here and defend the ills of the Conservative Government pre-1997. However, the previous Labour Government could have done more at a time when the economy was doing well. As my right hon. Friend the Member for Bermondsey and Old Southwark said, the coalition Government have come to office at a time when there is not a lot of cash available.

Although I welcome the additional social housing that will be built over the next three to four years, I emphasise to my hon. Friend the Minister that we need to do more. I point him in the direction of the Department for Transport, where there has been significant capital investment in railway schemes at a time of significant budget cuts. Some capital investment in social housing schemes would be yet another way of helping to boost the construction industry and to deal with the massive shortage of social housing.

Governments cannot, however, be expected to do everything. Local authorities must play their part, and I want to make a few brief comments about that. My hon. Friend the Minister is aware of my concern about the changes to housing benefit regulations, and the prospect of tenants who under-occupy homes in my constituency losing housing benefit unless they choose to move to smaller properties. That policy has been widely criticised by housing associations and local authorities, including my own in Manchester, because of a lack of available smaller properties for tenants to move into. The hon. Member for Lewisham East mentioned a massive shortage of larger homes in London, but the problem in other parts of the country—certainly in Manchester, but also in other areas of the north of England—is a shortage of smaller properties for people to move into.

Manchester city council criticised that change in housing benefit regulations, but when it was given the opportunity to help to provide some additional, smaller social housing accommodation, it chose not to do so. Many local authorities—although London is an exception—have available land, which has been earmarked for housing development, and my constituency is no exception to that. In Chorlton, the former Oakwood high school site on Darley avenue has been earmarked for housing. However, Manchester city council says that there is already plenty of social housing in the area, so there is no need for more. It says so despite having argued that there are not enough available properties to allow under-occupying tenants to move to smaller accommodation. That seems to be a bit of a contradiction.

The council also argues that some homes will, by definition, be affordable, because some property will be available to buy on a shared ownership scheme. That is certainly true—and welcome—for people who are able to get on the housing ladder, but the harsh reality is that many people cannot get a mortgage in any circumstances; therefore, by definition, those homes are unaffordable for those people.

I return, therefore, to the point I made at the beginning, about local authorities taking on some of the responsibility. It cannot just be left to the Government to throw billions of pounds at housing development. Local authorities need to make land available—where they have it, because I recognise that some do not—for social housing.

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[Simon Hughes (Bermondsey and Old Southwark) (LD)]

I am grateful to the hon. Member for Great Grimsby (Austin Mitchell) for introducing this important debate. I want to make a few points. Having a constituency not very far from that of the hon. Member for Lewisham East (Heidi Alexander), we share many of the same analyses. Another London MP, the hon. Member for Leyton and Wanstead (John Cryer), has exactly the same sort of housing need pressure on him as I have had for every year since I have been a Member of this House. The pressure on me has not altered; it has been the same under Labour and Tory Governments and even under this Government. It is still 40% or more of the people who come to see me who ask for help with their housing. They may want new housing because they are living in overcrowded conditions, a first home at a cost they can afford, repairs to be done or whatever. The issue, therefore, remains hugely important.

A few months ago, the Halifax and Lloyds bank sent me—and probably many other Members—some key facts about my constituency. I think I knew them, but I will relay them to you, Mr Caton, for the purpose of the debate. The average house price in my constituency at the time this pamphlet was issued in December 2010 was £310,621. The average national house price was £164,310, which was nearly half the cost of a house in a seat such as mine, where most people come from a working-class background and where many have lived all of their lives, and generations before. The average earnings in a constituency such as mine were £52,755, while the average earnings across the UK were £32,178. Of course London earnings are higher, but they are not so high that they make up for the additional housing costs.

My first point is that for people in high-cost areas—it applies not just to London but to inner-city Leeds, Manchester and so on—the additional money that they earn does not make up for the additional cost of their housing. That is a challenge that can only be met by supported housing. By definition, if people do not have the wages to be able to buy into the private sector as owner-occupiers, social housing must be provided.

Secondly, we are required, therefore, to build as much as possible. All the evidence suggests that if we are to get people into work and keep them in work, we need construction projects, whether it is big infrastructure projects or housing. It is how we can get most people into work, doing skilled and productive jobs, and thus benefiting the local economy. It is a win-win situation: we house people and provide work for them.

Thirdly, I have a pre-Budget plea. The Chancellor could help this situation with some tax changes. If we taxed unused, undeveloped brownfield land as if it had been developed, we would incentivise the owners to use the land. They would realise that there was no point in sitting on undeveloped land because they would be paying the same tax as they would on developed land. Let me repeat publicly the plea that I have made to my colleagues in private. Site value rating—it can be called by another name—which the Liberal Democrats have espoused for many years, is really important. We must incentivise people to put their land on the market so that there is the space on which to construct our buildings. There are many unused sites in my constituency that still could and should be used for housing. We must have a tax system that incentivises proper development of property.

If there is new council housing, and there should be, we must change the rules over right to buy. The discount regime has been varied. It was much higher and was rightly brought down by the Labour Government, and it has been changed again under this Government. The incentive on councils to build new council housing is never going to be great if, immediately it is built, it is bought out of the council housing sector. There is an argument that different rules should apply to new-build council property and existing council property. I have never supported the discounts when they were high. There should always have been a regime in which the whole of the money went back to the council so that the stock could be replaced. For many years, though, the money went to the Government, leaving the council with only some of it.

I am in favour of mixed communities, but mixed use of blocks of properties, either flats or tower blocks, often does not work at all. There is the tenant who, in many cases, is there for life; the right-to-buy person, who will be there for life or a long time; and then the people who rent, either from people who have bought the flat or from people who have bought and sold on. They tend to be there for two minutes—I exaggerate slightly—and have no stake in the community. They are not naturally very good neighbours. They may not be inherently antisocial, but they may be students, visitors or here on holiday. Such a mix does not make for community cohesion, and we may need to have different rules in the future. I appeal to Ministers to think about how we manage multi-occupancy places—places that are not detached, semi-detached or terraced. The system does not work well at the moment. As any local authority will say, managing an estate with that mix of people is really difficult.

[Heidi Alexander]

The right hon. Gentleman is talking about the right to buy. Obviously, his Government have consulted on the enhanced right to buy. For the sake of clarity, I want to know whether he supports the proposed £50,000 limit on the discount that can be applied.

[Simon Hughes]

My instinct is to keep the limit where it is. There is such a need for social rented housing that we do not need to encourage people at the moment.

I have two final ideas. The hon. Member for Great Grimsby and I had an exchange earlier. It is important that we get out the message that it will be up to local authorities to decide whether all or some of their properties will be secure tenancies in the future. I worked very hard to ensure that that was the outcome. My colleagues will remember that in the summer of 2010, the Prime Minister floated the idea that it might be the policy of the Government to end secure tenancies in every local authority.

I was very clear about that from the beginning. I went to see the Minister for Housing and Local Government immediately and he helpfully allowed me to look at the housing policy paper. I was clear that we needed to have a policy that only allowed that if the local authority decided that that should be the policy. We must not frighten people, particularly older people, into thinking that they will lose their security of tenure where they are—that does not apply—or that it will follow that in future council tenancies in Southwark, Lewisham, Grimsby or anywhere else there will not be security of tenure. Councils can decide to keep every property, or 90% of properties or every estate bar one as secure tenancies if they wish. I support that as a principle of localism. I will fight to ensure that my local authority, whoever runs it—it has been run by us and by Labour over the years—retains the security of tenure for those who move into council properties unless there is an all-party consensus in a particular block that it should not be retained, for other management reasons.

Finally, I support the Housing Minister and my hon. Friend the Minister who will respond to this debate in saying that if there are people who end up with high incomes, it is wrong that as council tenants they do not pay for that property the market rent it would fetch on the open market. This is a difficult area. The Housing Minister has said that there should be a threshold of £100,000, which I support; that is an easy starting place. I cannot justify saying to my constituents who are knocking on my surgery door that there is not a place for them because someone with a family income of £50,000, £60,000, £70,000, £80,000, £90,000 or £100,000 is sitting in a council property paying a council house rent. We have to deal with that issue, because that is an inequity that was never intended to exist. These homes were intended to be for people on low incomes who could not afford to go elsewhere. At the moment, we have people in them who are on much higher incomes. I do not suggest that those people should be evicted—that would be inappropriate, because we want mixed communities—but they should pay the full whack.

In conclusion, I say to my hon. Friend the Minister that I am grateful for many of the initiatives that have been introduced, particularly the new homes bonus, which allows all authorities—including mine—to spend money on housing. I understand the difficulties that the Department for Communities and Local Government has had in trying to win the battle to get the money that it needs. I am pleased that the new affordable renting system does not mean that the properties concerned will all be at 80% of market rents; in London, I think the average is 64% of market rents, which is better than 80% of market rents. We must try to ensure that we have the maximum number of properties at lower rather than higher rents.

I will continue to urge my hon. Friend the Minister—as I know he would wish me to do—to argue within his Department and within Government as a whole that we should have more local authority housing wherever possible, or that we should give councils the freedom to build it, because we have a huge unmet need for such housing in many parts of our country. We need more local housing that is not all immediately swallowed up by being bought up and disappearing from the social housing sector. I hope that message is heard loud and clear within Government, and I hope that my colleagues within Government are arguing very strongly for it, so that at the end of five years the coalition can have a better record on housing than that of the Governments that have gone before; I know that that is my hon. Friend’s aspiration.

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[The Parliamentary Under-Secretary of State for Communities and Local Government (Andrew Stunell)]

I am pleased to have the opportunity to respond to a very important topic in a timely debate. It is a privilege to serve under your chairmanship, Mr Caton. I am delighted to have the opportunity to respond to the hon. Member for Great Grimsby (Austin Mitchell), who is a long-standing and passionate campaigner for council housing. In fact, I think he has got more passionate every year that I have heard him, which is from 1997 onwards. I think his passion increased as his despair with his Government’s performance grew. Of course, he is not simply an advocate of social housing. I hope that he will not take this amiss, but he is a fundamentalist who is in favour of council housing.

Several temptations have been offered to me in this debate—for instance, to trespass on the work of my right hon. Friends in the Department for Work and Pensions in relating to housing benefit. I will not go there. I have been tempted to trespass on the toes of the Chancellor of the Exchequer in relation to the Government’s approach to stabilising the finances of this country and writing a new Budget. I will not go there. In the limited time that I have, I will focus on the key points relating to council and social housing. I want to make it clear that we accept the analysis that it would be a good thing to have more investment in housing. That is why we are investing more in housing. We think that it is a good idea to have more social and affordable homes. That is why we are investing in social and affordable homes.

I want to put very clearly on the record the statistics for social rented homes—local authority and housing associations combined. They show that in the 18 years between 1979 and 1997—dates chosen not entirely arbitrarily—the number of social rented homes fell by 1,122,000. Between 1997 and 2010—13 years—the number of social rented homes fell by 420,000. The average loss per year under the Conservatives’ 18 years was 62,000 a year, and the average loss per year during Labour’s 13 years was 32,385—a net loss of local authority and housing association homes.

As a result of our investment programme, in the five years from 2010 to 2015, for the first time since 1979 there will be a net increase in social and local authority homes. Although I am ready to concede that it would be good if we could do more, it is important to recognise that this Government are outperforming their predecessors by a margin. The problem is large. We currently have 1,840,000 families on local authority waiting lists in England. As several hon. Members have noted, the Localism Act 2011 gives back to local authorities the flexibility to manage their housing stock without reference to national diktats.

One thing to emerge from this debate is that there are many different housing markets and many different social housing markets. As an example, my hon. Friend the Member for Manchester, Withington (Mr Leech) contrasted the situation in his constituency with the problems facing the hon. Member for Lewisham East (Heidi Alexander). It is surely right that local housing authorities should have the right and the duty to determine for themselves what their social housing strategy should be, and the Localism Act gives them that additional flexibility.

The hon. Member for Lewisham East made a point about the national planning policy framework perhaps dictating to councils what land they should allocate for social housing. That is surely a matter for them to carry out a proper study of the circumstances in their area and to make appropriate provision.

[Heidi Alexander]

Will the Minister give way?

[Andrew Stunell]

No, I have only two or three minutes left. I want to make a point regarding the reduced investment in housing alleged by the hon. Member for Lewisham East and by the hon. Member for Derby North (Chris Williamson). It is true that the amount of money that we are investing is lower, but of course the amount of subsidy needed is lower as well. Under the formula that we inherited, every social home built required a subsidy of £85,000 to be built. Under the affordable rents model, it requires a subsidy, on average, of £37,000. We produced a scheme that would invest £4.5 billion in social and affordable homes, and we told the House that we were confident it would deliver 150,000 new homes over the period to 2015.

We were mocked and scorned by the Opposition, who said that the model would not work; it could not possibly deliver. I have not yet received an apology now that we know that not 150,000, but 170,000 homes will be provided with the £4.5 billion injection. Contracts are being signed up all over the country by the Homes and Communities Agency. Indicative rent levels are in a range to fit local circumstances. The average affordable rents range from 65% in London to 79.5% in the north-west. In London, only 5% of the affordable rent homes are being offered at the 80% level. Those are in areas of comparatively low rental values in London.

I want to make a point about decent homes. If I can put it this way, Labour hoped that it had got a “get out of jail free” card for reducing the social housing stock. Of course, the Labour Government improved much of it. We are also improving 170,000 existing social homes to bring the remainder up to the decent homes standard. We are continuing that investment as rapidly as we can in all circumstances.

I will address points made by the hon. Gentlemen from the northern part of Lincolnshire: my hon. Friends the Members for Brigg and Goole (Andrew Percy) and for Cleethorpes (Martin Vickers) and, of course, the hon. Member for Great Grimsby. The new homes bonus does not simply apply to new homes, but to the reoccupation of empty homes. Indeed, the conversion of shops to homes would generate the new homes bonus via the empty homes route. I hope that those hon. Gentlemen will talk to their local authorities to see how best they can make sure that that is dealt with appropriately.

In my final moments, I will talk about right to buy. It seems to be generally agreed—certainly by the hon. Member for Great Grimsby and a number of others—that the problem with right to buy in the past was that there was no replacement policy. When the Prime Minister announced last September that the Government were reintroducing the right to buy policy, he made it explicitly clear that that was on a one-for-one replacement basis. [Interruption.] The hon. Member for Derby North disbelieves it. He disbelieved the 150,000, and we produced 170,000. No aspect of this Government’s policy has been taken at face value on Labour’s side of the road, and yet, every time, we have not simply delivered, we have exceeded. I ask the hon. Gentleman, just for once, to accept that the intentions of this Government are clear: to increase the social housing stock and to make sure that we maintain and deliver on the promises that we have made to the House.