Housing (CSR)

Debate between James Gray and Nick Raynsford

Wednesday 27th October 2010 Westminster Hall

[Mr James Gray (in the Chair)]

In answer to a request from the Minister, it would be perfectly in order for gentlemen to remove their jackets. I was told to put you in order in relation to that, Mr Betts.

[Mr Nick Raynsford (Greenwich and Woolwich) (Lab)]

I am pleased that we are meeting under your chairmanship this morning, Mr Gray. At the outset, I wish to draw attention to my interests in the Register of Members’ Financial Interests. I am grateful to have this opportunity to raise an issue of huge importance and very real concern to our constituents and the whole country: the impact of Government policy and the comprehensive spending review on housing investment and supply.

I have been closely involved with housing for almost all my working life, during which I have seen a number of ups and downs. However, at no time during the past four decades can I recall there being a bleaker outlook for people looking for a new home or a solution to their housing problems. As MPs, all of us know from our constituency surgeries and our wider contacts in our communities how many people face housing difficulties, whether that expresses itself in the despair felt by many prospective home buyers who cannot find a home at prices they can afford or in relation to those people who think they have found a home at a price they can afford only to have their hopes dashed when they cannot obtain mortgage finance. Such despair might also be reflected in the anxiety of tenants and home owners, who fear that they will no longer be able to afford to stay in their home against a background of rising unemployment and harsh cuts in housing benefit. Alternatively, there is the desperation felt by families living in overcrowded or squalid conditions who have an urgent need for a move but see no prospect of getting an offer of a social tenancy and are nervous about whether they can afford the cost of a private one.

All those and many other problems are familiar to us, but what is particularly alarming is the prospect—I fear it is a very real prospect—of things getting much worse in the months and years ahead as a consequence of the coalition Government’s policies and the comprehensive spending review. We have just come through the most serious recession of my lifetime, and housing was inevitably badly affected. Private house building in England fell from just over 150,000 new starts in 2007 to just 60,000 in 2009. That clearly has had a serious impact on the situation, but things would have been far worse if the then Labour Government had not taken a series of bold measures to counter the downturn.

As a result of the fiscal stimulus and more specific policies targeted at the housing market, repossessions, which had been forecast to rise to similar levels to those seen in the recession of the early ’90s, peaked at around half that level. Investment was made through the Homes and Communities Agency in schemes such as Kickstart, the national affordable housing programme, and HomeBuy Direct, which meant that social and affordable housing programmes were maintained and confidence began to return to the market.

In the early months of this year, house builders were reporting month-on-month improvements in house sales and in the output of new homes; it appeared that we had turned the corner. Then came the general election and the formation of the coalition Government. Since then, a series of ill-considered, unco-ordinated, untested and, frankly, irresponsible policy initiatives and cuts have destroyed the prospect of recovery, brought the housing market to the verge of a double-dip recession and spread alarm and concern around almost every sector of the community that is in need of better housing.

Two weeks ago in this Chamber, my right hon. Friend the Member for Barking (Margaret Hodge) highlighted the disastrous consequences of the housing benefit cuts announced in the June Budget. As we had a full debate on that subject then, I will not go over the same ground again. However, I will reiterate her words on the spectre of rising homelessness, indebtedness, insecurity and forced migration, all of which have been prompted by the coalition Government’s policies. Of course, since then, the already bleak prospect has been compounded by the announcement of further benefit cuts and caps in the spending review. It is hardly surprising that fears for the future viability of the private rented market are being voiced by landlords and tenant representatives alike. The situation would be bad enough if that was the only policy change emanating from the Government, but there have been many more.

Confidence in the private house building industry has been severely damaged over the past five months by ill-thought-out changes to the planning regime, a continuing mortgage famine, fears about rising unemployment and severe cuts to the Homes and Communities Agency budget, which had been supporting many new housing and regeneration schemes. Last week, on 20 October, The Times reported that Bellway—Britain’s sixth largest house builder—had

“delivered what one analyst described as an ‘unremittingly bleak’ assessment of the housing market. The Newcastle-based company said that while it had enjoyed a strong spring selling season, consumer confidence had ‘slowly ebbed away’ after the general election and subsequent media discussion of how the Government planned to tackle Britain’s budget deficit.”

The Daily Telegraph reported last week on 22 October that the Bank of England is warning that home prices are likely to remain static or decline in 2011, as home loans become harder to secure after the spending cuts. The article goes on to state:

“The warning will add to growing fears about the fragility of the housing market after values dropped last month by the biggest monthly amount ever recorded.”

The Guardian also reported last week on 22 October that:

“Britain’s struggling housebuilding industry is ‘bewildered’ by government plans to radically change the financing of new council houses as experts warn the measures could have a ‘devastating impact’ on the future supply of social housing.”