Affordable Housing (London)

Helen Hayes Excerpts

Wednesday 9th September 2015 Westminster Hall

[Helen Hayes (Dulwich and West Norwood) (Lab)]

I thank the hon. Member for Croydon South (Chris Philp) for calling the debate. The housing crisis is, indeed, the biggest issue facing London. More people than ever are on the waiting list for a council home, huge numbers of people are in expensive, insecure private tenancies, and there is a whole generation of people for whom owning their own home is an unattainable aspiration.

People with housing issues fill my surgery every week. The impact of those issues is wide-ranging, stretching from health problems, to educational disadvantage as a result of a lack of space to do homework, to young people being unable to put down roots in their communities because they are constantly subject to eviction following the end of private tenancies.

Within London’s housing crisis as a whole, however, there is a sub-crisis—the availability of affordable housing. In that context, the Government are seeking to introduce policies that will make delivering affordable housing much harder unless additional mitigating measures are put in place.

I wrote to the Minister for Housing and Planning on 21 July about the proposal to reduce social rents by 1%, and I am disappointed that I have yet to receive a response. I therefore want to bring to the debate the issues raised in that letter and to press the Government on them.

The London borough of Southwark, of which I represent part, is one of the largest social landlords in the country, responsible for 39,000 council homes and 15,000 leasehold properties. It also has the single biggest commitment to council house building of any local authority in the country, with a 30-year plan to build 11,000 new council homes. The plan was developed following an independent housing commission, which explored in detail housing needs and housing stock in the borough and the ways in which the council could best address the condition of current council homes and the need for current and future housing.

In 2014, as part of the 2014 spending review, the Chancellor set rents for the next 10 years at consumer prices index plus 1%. That clear financial position formed the basis for Southwark’s long-term planning for current and future council homes. The announcement in the emergency Budget that social rents will now be reduced annually by 1% for four years will have significant consequences for Southwark Council’s housing revenue account if the Government take no steps to mitigate the proposal’s impact. The announcement was made without consultation with, or prior notice to, the housing sector, giving councils and housing associations no opportunity to evaluate its effects or to make representations to the Government.

The proposal represents a fundamental shift in Government policy and is the most profound of a number of changes that, cumulatively, undermine the principles of self-financing and the ability of councils and housing associations to meet their long-term investment needs and contribute to addressing the housing crisis. It removes previous resource certainty, which is a key factor for any organisation seeking to make investment plans, because rental stream is critical to the viability of social housing providers’ business plans. It removes all local discretion and introduces de facto rent control for social housing, at a time when the Government are not looking at any measures to curb rents in the private sector.

The proposal’s stated purpose is to curb the housing benefit bill, but impeding social housing providers’ ability to build new social homes will significantly increase it, not reduce it. The emergency Budget contains no equivalent measures on the level of private sector rent or the definition of affordable rent—up to 80% of market rent in London—which have played by far and away the most significant role in increasing the housing benefit bill.

The proposal’s compound effect over four years on Southwark Council alone will be an annual cut of more than £65 million from 2015-16 levels. In the long term, the loss of resources, which will be compounded over the business plan’s 30-year life, will be of the order of £1.1 billion. That will have a staggeringly large impact on council homes in Southwark.

During the last Parliament, the Government provided financial support to enable councils to freeze council tax. In a similar vein, I seek confirmation that they will provide additional funding to compensate for the impact that the proposal to reduce council rents by 1% will have on housing revenue accounts, to ensure the council can continue to deliver new council homes and invest in its current homes.

Taken together, the Government’s proposal on council rents and the proposal to extend the right to buy to housing associations—funded by the forced sale of high-value council properties—will mean a dramatic worsening of the housing crisis in London over the next five years, with no improvement whatever.

I am absolutely dismayed by the Government’s proposals, which fundamentally belie the suggestion that they have any understanding at all of housing finance or of the practical ways in which the housing sector delivers new homes and contributes to solving the housing crisis. I therefore hope I will get a response today to the points that I raised on 21 July.