Affordable Housing

James Gray Excerpts

Wednesday 4th March 2015 Westminster Hall

[Sir Hugh Bayley (York Central) (Lab)]

I want to start by talking about the people who have come to my surgeries, desperate—usually as a last resort—looking for somewhere to live. They are people whom, more often than not, I fail: the rough sleepers—[Interruption.]

[Mr James Gray (in the Chair)]

Order. The hon. Member for Cambridge (Dr Huppert) may not leave the Chamber immediately after making a speech. He must remain here and listen to the subsequent speech.

[Sir Hugh Bayley]

They are the rough sleepers, for example, whose numbers have increased by 55% under this Government; the homeless, whose numbers have increased by 26%; sofa surfers; adult children and grandchildren still living with their parents or grandparents; and families in grossly overcrowded conditions.

York has one of the strongest economies in the north of England. Under the Labour Government the number of jobs grew from 40,000 to 57,000, and that growth has continued, although slightly more slowly, since 2010. However, that has not been matched by housing growth, so a shortage of housing is driving up the cost of both renting and buying.

The problem is getting worse because the gap between top earners and low earners is increasing. Back in 1997, lower quartile housing prices were four times greater than lower quartile earnings, but now they are eight times lower quartile earnings. There are currently 717 homes for sale in York, with an average sale price of £290,000. Of course, that is less than in London, but wages are far less than in London, too. The average price for a one-bedroom, entry-level flat in York is £133,000. The annual income required to buy that is therefore £43,000. By comparison, elsewhere in the region, in Leeds the required income is £33,000, in Wakefield it is £26,000 and in Barnsley it is £20,000.

Who can afford to buy in Yorkshire? In York, a barrister, a GP or a mortgage adviser can afford a one-bedroom, entry-level flat on their wages, but a construction site manager or a police sergeant cannot. In Leeds, an estate agent or insurance broker can afford to buy, but a university lecturer cannot. In Wakefield, a police constable or a schoolteacher can afford to buy, but a paramedic cannot.

The thresholds for private renting are pretty much the same, although in York the construction site manager on £42,000 a year could rent, but the police sergeant on £37,000 could not. In Leeds, a class teacher could rent, but the police sergeant could not. Those are people whom every one of our communities needs: police officers, teachers, estate agents and lecturers.

--- Later in debate ---

[Lilian Greenwood]

My hon. Friend talks about some of the sorts of people who cannot afford to buy, but is the position not so much worse for so many vital public sector workers, such as home care workers and many others, who are trapped on insecure contracts, and increasingly on zero-hours contracts, and do not have any certainty about their long-term income, despite doing vital jobs?

[Mr James Gray (in the Chair)]

Order. Before the hon. Gentleman responds, he might bear in mind that I hope to call one more speaker before the Front-Bench Members at 20 minutes to 11.

[Sir Hugh Bayley]

My hon. Friend is right, although it is not only public sector workers who are on zero-hours contracts; such contracts affect a lot of people who provide essential services. Every time we go into a shop, we are buying something we need from a private sector worker.

During my time, York has never built enough affordable housing, and that is my biggest regret—I might say my biggest failure—during 23 years in this House. I say to my friend, the hon. Member for York Outer (Julian Sturdy), who is here, that unless he and my successor, the new Member for York Central, increase the amount of housing we build in York, we will snuff out the economic growth that has been so important to the city in recent decades.

The number of affordable housing completions in York is falling. In 2010-11 we had 282, but in the following year we had 151, then 127 and, in 2013-14, just 50. Why are those numbers falling? The Government have introduced five measures that have reduced the amount of affordable housing built. First, they raised the affordable housing threshold for rural developments, so that affordable housing is not provided on developments of 10 homes or fewer. Since that change, only one rural housing scheme of more than 10 homes has been proposed in York. In the previous 18 months, 11 such schemes were proposed, all of which made contributions towards affordable housing, but that has stopped.

Secondly, the vacant building credit will mean that there is not an affordable housing component when vacant buildings are converted, or razed to the ground and rebuilt, to provide housing. A large part of the Nestlé factory site is available for redevelopment. The plan was to provide a couple of hundred homes, of which a substantial proportion would have been affordable. Now, because of the Minister’s change of policy—will he look up from his phone for a minute?—those affordable homes may no longer be provided.

Thirdly, there is the exemption from the right to convert offices to residential use. That also used to generate a proportion of affordable housing but no longer has to. The council in York estimates that since that change 77 affordable homes in York have been lost. Fourthly, York has a healthy housing revenue account, but the cap on the council’s ability to convert the resources it has into further building is reducing the amount of affordable housing that is made available. Fifthly, of course, the Government have also cut their grant for affordable housing to £23,000 on average per property, which is roughly half of what it was. All these five policies need to change. Of course, the lack of affordable housing is pushing people into the private rented sector, so what the Government are doing is reducing their capital contribution to building housing and instead spending the same amount of money, or more, on subsidising private landlords, which cannot be a good use of public money.

There is a very special problem in York with the broad rental market area, which is used to set the local housing allowance. It is a problem because rents in York are much higher than in areas some 20 miles away that are deemed to be part of the same local market for determining the BRMA rate. For example, the average private rent in York for a one-bedroom property is £564 a month. The BRMA local housing allowance is £430 a month, leaving families to find £134 a month from their own resources. However, in Selby, which is just 12 miles away, the average rent is £391, nearly £40 lower than the local housing allowance. People on the periphery are getting what they need—their full rent is covered—whereas people in York are getting substantially less. There are similar figures for two and three-bedroom properties, but I will not give them now. However, there is a gap of £220 between the local housing allowance and the average rent for a three-bedroom property.

This problem of a single BRMA covering a high-cost city and a much lower-cost rural periphery affects just four places in Britain. One is Cambridge, and I have written to the hon. Member for Cambridge (Dr Huppert) about this; some months later, I am waiting for his reply, to find out whether we can do joint work on this issue. The other three are Oxford, York and, in Scotland, Edinburgh. If the Government do nothing else in those four cities, they should split those BRMAs, because then the BRMA would provide something closer to the real cost for people in the centre, and it would stop wasting public money by overpaying, if I might say so, on the periphery.