Social Housing (England)

Jeremy Lefroy Excerpts

Tuesday 28th June 2011 Westminster Hall

[Jeremy Lefroy (Stafford) (Con)]

It is a pleasure to serve under your chairmanship, Mr Caton, for the first time.

I sought to have this debate for a number of reasons. The first is that housing, particularly social housing, is an important part of the lives of people in this country, so much so that it ought to be the subject of frequent debate in this House. I might be wrong, but I do not recall a full, major debate on housing in the main Chamber so far in this Parliament. The second reason is that housing, particularly social housing, affects and is affected by so many other areas of Government policy that it needs constant attention at a time when other policy is changing rapidly. The third reason is that I am a new Member, and as such housing forms a substantial part of my constituency case load.

I am no housing expert, but I am fortunate enough to have an excellent senior caseworker, Pauline Ingall, who has made it her business to work with my constituents and with local social housing providers to solve problems, bringing to my attention inconsistencies and unintended consequences of policy that cause distress in people’s lives. Some constituents, in particular John Turner whom I thank for his encouragement to seek this debate, have also pointed out anomalies, and I pay tribute to Karen Armitage, chief executive of Stafford and Rural Homes, for bringing a number of matters to my attention.

I know that other Members wish to contribute to the debate, and I will therefore seek to limit my remarks to certain areas of this vast subject. I am sure that they will be able to fill in the gaps and add much local detail from their own experience. I will not tackle the question of supported housing, not because it is unimportant—far from it—but in the hope that others will refer to it. However, I will make, as I am sure will others, a number of suggestions to the Minister for Housing and Local Government. I know that he will take them seriously in his usual generous manner.

It will continue to be the case that most people in this country will wish to, and be able to, buy their own homes, or rent them in the private sector. It is also clear, however, that increasing pressures will mean that demand for social and affordable rented housing will continue to rise. I say “continue to” rise because despite the relatively strong economic growth between 1997 and 2007, the numbers on council waiting lists rose from 1.02 million to 1.67 million, and by 31 March 2010 they had reached 1.75 million. Over the same period, social housing stock declined from 4.38 million to 4.03 million, so only half the increased demand was accounted for by a reduction in supply.

We live in tough economic times, and although I expect Britain to return to relatively strong growth within one or two years, this experience tells us that the rate of increase in demand is likely to slow rather than be reversed. Added to that, we have the pressures of an increasing population, estimated to be 65 million by 2018, and 70 million by 2028. We therefore have a serious imbalance in supply and demand, which is likely to increase in the coming years.

The Government’s approach is twofold: to encourage the increase of supply, and to help registered social providers and local authorities to take a more flexible approach to housing, so that this very valuable national asset can be put to best use. I welcome that general approach, but before I look at it more closely I wish to emphasise that housing can never be considered as just an asset. In fact, one of the main causes of the financial crisis around the world was the failure by financial institutions, Governments and property owners to recognise that viewing a home solely or substantially as a financial asset was very short-sighted.

A home is a vital aspect of someone’s place in the community. Understandably there is great emphasis these days on mobility, but people staying for a long period—perhaps their whole life—in the same place is just as valid a choice. My family lives in the house in which my wife grew up, and our children attended the same schools as she did. The big society is more likely to flourish in places where people stay put rather than where people move frequently and hardly know their neighbours, and that is why we need to be careful about making changes to social housing tenancies. We are dealing with not just bricks and mortar but with people’s lives, and I would like to hear the Minister’s comments on how he sees the balance between stable communities and the understandable need to make best use of social housing.

The Government recognise the need to build more social housing. The target of 150,000 new homes—37,500 a year over the next four years—is ambitious, and represents a substantial increase over anything achieved by the previous Government, under whom completions ranged from 14,000 to 26,000 a year. I welcome that target; the key is how it is to be achieved. I understand that because of the current financial circumstances capital funding has been reduced from £8.5 billion in the previous spending round to £4.5 billion, and that the difference is to be made up by allowing housing associations to introduce affordable rents of up to 80% of the market rent—recent figures show an average of 67%. Capital subsidy would be replaced by revenue funding from higher rents, combined with increased borrowing by housing associations against the value of their stock, and, of course, Government capital grants.

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

Does the hon. Gentleman agree that if rents are set at 80% of market rents they will simply be unaffordable for a lot of people in some areas?

[Jeremy Lefroy]

I do, and that is why the flexibility in the policy is very important.

Some people have asked whether the result of increased rents for new tenants will be to transfer capital subsidy to the cost of welfare because much of the increase will be covered by housing benefit. There is a clear difference of views here, with the Government saying that there is likely to be little or no increase in the cost of housing benefit, and others estimating the annual cost after four years to be up to £1.5 billion. This issue cannot be brushed under the carpet as a minor detail, and I ask the Minister to update the House regularly so that we can see the true consequences of the shift in funding new affordable rented housing more out of rental income and less out of capital grants. This is an important policy change, and we need to evaluate it.

In passing, I also wish to ask about the model used to calculate market rent. I understand that a model is being suggested that will cost housing associations some £40,000 to £50,000 a year to use. The main housing association in my constituency, Stafford and Rural Homes, says that it will perhaps be more straightforward and cheaper to use the local housing allowance as an indicator. I also ask the Minister to work closely with banks and housing associations to see how the obstacles to borrowing for building can be overcome. From anecdotal evidence I have heard, it is becoming more difficult for housing associations, especially the smaller, local ones, to borrow at reasonable rates from banks to build new properties.

With council housing, the proposals for self-financing are a continuation of the previous Government’s plans, and they make good sense. The figures from the past 10 years show that the current arrangements are complex and provide few incentives to increase housing stock. Some people have argued, however, that councils should be able to retain 100% of sales proceeds rather than the proposed 25%. It might be sensible to look at enabling councils to retain 100% for the medium term—or at least more than 25%—and to roll the money into new properties when demand is strong, in return for agreeing to release the funds to the Treasury at a later date. In effect, they would issue bonds to the Treasury, and I would welcome the Minister’s comments on those proposals.

There are strong arguments for local councils and housing associations looking more seriously at entering the bond market more substantially than at the moment. The central grip of the Treasury on the finance of public capital is too strong. Some housing associations, such as Places for People, have already taken that initiative, but there is surely scope for more. Local bonds issued by local bodies and taken up by local people would be a fine example of localism in practice.

Those who look back at the ’70s and ’80s and point to irresponsible local authorities, fail to take into account the great strides taken since. Local government, in my opinion as a former council cabinet member for finance—I declare that interest—is far more prudent than national Government, and council balance sheets are generally in reasonable health. I welcome the commitment to build 37,500 new social and affordable rented homes a year and urge the Government to set their sights even higher by working with councils and housing associations to tackle the financial and planning obstacles that stand in their way. Both sides need to be engaged in doing so day in, day out, rather than awaiting the next set of statistics. There is another important reason for encouraging construction: it will boost the economy and employment. Everybody will gain: more people will be properly housed, more income will go to housing associations and local authorities, more people will be in work and fewer will be on benefits.

The second arm of the Government’s approach is to encourage flexibility and ensure that social housing is available to those who need it. Allowing local authorities to increase rents for those on high incomes surely makes sense. It is hard to justify subsidising housing for someone earning £50,000 a year or more. Other measures are more problematic. It seems that 430,000 social homes are under-occupied, with two or more bedrooms in excess of requirements, but in practice there might be few opportunities to move to smaller accommodation within the same area. It is key to make it easier for people to move to smaller homes rather than penalising them. One main obstacle preventing people from moving is a shortage of suitable accommodation. There is a severe shortage of single-bedroom accommodation and homes designed for older or disabled people. Many local authorities and housing associations, including in my constituency, have recognised that and are responding with additional extra care and similar housing, but we are still well behind the demand posed by demographic trends in this country.

In a recent debate on food production and security, I said that agriculture is the business of the future. I believe that more people in rural areas will be employed in coming years, yet the shortage of affordable and social housing in rural areas is such that in parts of my constituency, they would have to commute from the nearest town to work. The solution lies not just with Government, whose planning reforms should make building such homes somewhat easier, but with local communities. I would be the first to oppose large and inappropriate developments in rural areas, but to oppose any development, especially of affordable and social housing, is wrong. People cannot complain on one hand about the loss of rural services such as post offices, village schools and public transport and, on the other, prevent the arrival of the very people whose presence would make those services more viable.

In each of our constituencies are hundreds of homes that have been empty for a long time. Whether they are in private hands or public—perhaps they were requisitioned as a result of road projects that are no longer live—they represent a waste of scarce resources. There are also commercial properties that have lain idle for several years as a result of a change in habits. Local authorities need to be able to take action to bring such properties back into use or change planning designations more easily to meet the need for more homes, particularly social housing. I welcome the Government’s proposals and initiatives on those matters and the Minister’s comments.

I have concentrated so far on social housing provided by councils and housing associations, but private rented property is a vital part of the mix and will be increasingly important as attitudes to home ownership change in the medium and long term after the experience of the past few years. I will not say more about that, as I am sure that other hon. Members want to contribute, but the key is to encourage responsible letting and tenancy.

It is clear that this country must provide more social and affordable rented housing. First, we must build at—and, I suggest, beyond—the increased rate forecast by the Government. Secondly, we must free up properties by enabling people to move to others that are more suitable or by bringing disused properties back into use. However, it is just as important to achieve the economic growth that will reduce the number of people who depend on social housing.

I conclude by considering some of the concerns brought to my attention by constituents. Problems arise when families break up and new partners, each with their own children, come together. Teenage boys and girls from different parents are sometimes expected to share rooms; indeed, a letter about such a case recently arrived in my constituency postbag. Although we cannot expect housing associations’ letting criteria to cover every eventuality, we must ensure that the heavy burden of waiting lists does not cause them to lose sight of the needs of individual families. That is particularly important for people with disabilities. Social housing providers make great efforts to meet the needs of those with disabilities, but the requirement to be fair and consistent due to concerns about being challenged must be balanced with the determination to tackle people’s real needs.

I also have concerns about how disputes between landlords and tenants are resolved. The Housing Ombudsman Service has an important role to play, but although its mission, according to its website, is to work

“with landlords and tenants to resolve disputes impartially, using processes that are fair, evidence-based, and free of bias and prejudice”,

it seems to see its role in resolving disputes in terms that I would regard as relatively narrow or legalistic. One person said to me:

“Housing associations have huge amounts of power. So if there are problems, you can only go to the ombudsman. However, the ombudsman only deals with things in a legal manner.”

I have sympathy with that comment.

What is needed is for the housing ombudsman or some other body to be involved in local arbitration between landlord and tenant at an earlier stage, when perhaps matters can be resolved before positions become entrenched. The relationship between landlord and tenant is sensitive, particularly when the tenant faces difficult circumstances. It is not simply a matter of being parties to a contract; it concerns the tenant’s home, family and community.

The structure and administration of housing associations are also an issue. They are not-for-profit organisations, often charities or industrial provident societies registered as charities. That gives them a certain status and some privileges, so one would expect restraint in remuneration, especially at the most senior levels, yet some executives have packages exceeding £150,000 or even £200,000 a year. I have always been mystified by how a small business that makes £20,000 or £25,000 in profit a year—effectively its owner’s income—can be described as for-profit, whereas a charity that pays an executive £200,000 a year has the elevated social and tax status of a not-for-profit organisation. Will the Minister and other colleagues consider whether it is appropriate for charitable bodies to retain that status if they pay excessive remuneration? Perhaps, as was the case with the bonus tax on banks, such organisations could be required to pay an additional levy on all remuneration above a certain level.

I have noticed that since stock transfers began, newly formed housing associations have tended to enter into takeovers or mergers. Although the need to come together for efficiency of scale is understandable, there is also a danger that contact with the local communities that they serve will be diluted. However good local staff are, tenants will be further removed from their landlord’s decision making. I do not wish to be prescriptive, but I welcome the Minister’s comments on how he believes social housing providers of all kinds can be more responsive to the needs of their tenants and communities.

I started by saying that social housing is affected by many other areas of Government policy. I will refer to one: the reform of housing benefit. I appreciate the need to control expenditure, but some of the proposed changes might have the opposite consequence. Deductions from housing benefit for non-dependants might cause tenants to ask their non-dependent children to leave. As a result, those children might end up on some perhaps more expensive form of housing benefit, or present themselves as homeless. I am also concerned about the extension of the shared accommodation rate to those aged 26 to 35. I have imagined myself in the shoes of someone of that age and in that situation. It is not a good place to be. What plans does the Minister have to encourage the building of decent accommodation for people in such circumstances?

I am most grateful for this opportunity to raise some of the questions that my constituents and others have put to me during my first year in the House. I come at the subject without previous experience, and I know that other colleagues with far more experience will wish to put their views, but I approach it with the desire for social housing that is both sufficient for needs and of a high standard throughout the country. I know that most providers do an excellent job, but not all do. I look forward to working with the Minister and all who wish to make such homes better for those who live in them and for the communities of which they are a part.