Affordable Housing

Julian Huppert Excerpts

Wednesday 4th March 2015 Westminster Hall

[Dr Julian Huppert (Cambridge) (LD)]

It is a pleasure to serve under your chairmanship, Mr Gray. I congratulate the hon. Member for Nottingham South (Lilian Greenwood) on securing this important debate, because there is a huge affordable housing problem. Whether in the social rented sector or the private rented sector, people are struggling. She and the hon. Member for Islington South and Finsbury (Emily Thornberry) are right that the problem is not new; there has been a problem for a long time. The previous Government did not build enough houses, which leaves us where we are now, and the current Government have not fixed the problem, either.

My constituency of Cambridge has an acute problem, partly because we are a success story. We have a booming local economy and very low unemployment, particularly youth unemployment, but we have not had the housing or infrastructure that are needed to keep up. In fact, in previous decades, there was a deliberate policy of not building houses in Cambridge but only building in the surrounding villages, which increased the cost of housing and worsened traffic congestion. That has now changed, but it takes a long time to catch up, so private sector prices are getting ever higher, whatever the category. Rent for a one-bedroom flat in Cambridge is the highest in the entire east of England. The average house costs 11 times the median salary, which prices many people whom we desperately need—researchers, teachers and nurses—out of the housing market.

We have a shortage of social and council housing. As of September 2014, 2,500 people were on the housing needs register. Many people are waiting two years or longer to find a place. There is huge demand. In November, there were 90 bids for a one-bedroom flat, and there were 152 bids for another property in December. We have a shortage, which is not a new thing. The previous Government managed to reduce the number of social and council houses by 421,000 across the country, which is a big problem—a huge indictment.

What hit us perhaps even worse in Cambridge was the ridiculous negative subsidy scheme, in which council tenants’ money was taken from Cambridge to be spent elsewhere. In Cambridge, £1,300 had been taken from every tenant by the time we got rid of the scheme. Over the 13 years of the Labour Government, the sum taken from Cambridge city council was £120 million. In our surrounding district, South Cambridgeshire district council lost £118 million to the scheme. The money was taken directly from council tenants.

Just think what we could have done with that money if we were allowed to keep it. We could have spent £5,000 doing up every council house and still have had enough money to build about 1,000 more. I am delighted to say that the Government have scrapped the scheme, so the city council has been able to build and improve council housing. When we ran the council, we started a programme to invest £286 million, partly from those savings, to build 2,000 council homes over the next decades. Free from negative subsidy, we can make that a reality: we built 146 council homes before the elections last year.

We got through an ambitious local plan, now being inspected, calling for 14,000 new homes by 2031, 40% of which would be affordable, and the Greater Cambridge city deal with a total of £1 billion of investment in affordable housing and transport. I want to go further and faster. Although we lost control of the city council last May, just last week at the budget meeting we pressed the new Labour administration to invest the council’s own money in housing, rather that speculate on commercial property as it wanted, because we think that people in Cambridge need those houses. We therefore argued for £12 million to be put into 100 affordable homes, but sadly Labour decided to stick with its rather more risky approach. That housing was needed locally and would have generated revenues for the council as well.

We will keep pressing, but we also need to do that nationally. My party has the most ambitious plan among the three parties: to build 300,000 homes a year, because the calculations show that replacement needs 225,000 homes as there are more households. If we do anything less than 300,000, we will not be keeping pace and the pressure will continue, albeit perhaps at a slower rate.

[Emma Reynolds]

Given that the Liberal Democrats are part of a Government who have presided over the lowest level of house building in peacetime since the 1920s, what is the hon. Gentleman’s party’s plan for those 300,000 homes a year?

[Dr Huppert]

I am sure that the hon. Lady has heard the discussions. Garden cities would be a large part of that plan, because they are a sustainable way to go ahead. It is no secret that we have wanted to see much more of this, but coalition government is not the same as a single-party, Liberal Democrat Government—I look forward to seeing that at some point.

The other thing we would like to do that we have set out in plans is to give local authorities the ability to suspend the right to buy and the right to acquire. They have played a useful role in many places, but they are incredibly damaging in other areas. They are depleting social housing in places such as Cambridge. A localist agenda would allow councils to decide what is best and ensure that all proceeds are used to build more social housing.

Since we have the Minister here, I would like to pick up another issue quickly.

[Mr Andrew Turner (Isle of Wight) (Con)]

Will the hon. Gentleman give way?

[Dr Huppert]

I will not, I am afraid, because other people wish to speak.

On 28 November, new guidance on housing developments and section 106 payments was issued for sites with small developments of fewer than 10 units. We need those section 106 payments. In Cambridge, a 10-unit site is substantial and incredibly valuable. That measure is already costing the city more than £200,000 and the figure is expected to reach £500,000 a year, and that is a mistake. That makes it harder for somewhere such as Cambridge to ensure that housing is available for people on low incomes and prevents the establishment of properly mixed communities, which are the most sustainable kind. I therefore urge the Minister to get rid of that proposal immediately because of the harm that it will do to Cambridge and elsewhere.

I also urge the Minister to look again at the vacant building credit, which is also causing problems, at least in its interpretation, because people can use it to avoid the contributions that they should make.

My last point is that the Treasury still places a tight cap on the amount that local councils can borrow from the housing revenue fund to build new houses. That was true under the previous Government, as well us under this one. Places such as Cambridge need to be able to keep pace, so we need those powers. I know that that is up to Treasury Ministers, not this Minister, but that cap should be got rid of, or at least lifted, so that councils can manage prudentially. For the council to borrow money to invest in housing in Cambridge would be a good investment financially and for the people of the city. Cambridge has been a success story and that has brought problems. We are growing and unemployment is down, but we therefore have more and more pressure on housing. We must deal with that urgently.

--- Later in debate ---

[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.

[Dr Huppert]

I am sorry that the hon. Gentleman has not received my response. I definitely sent one; in fact, I was surprised that he had not replied to me. Nevertheless, he is absolutely right: the BRMA, as introduced by the last Government, has been a calamity for places such as Cambridge, and I hope that that issue can be resolved.

[Sir Hugh Bayley]

Right: I will work with the hon. Gentleman in the few weeks that I have left as an MP, and with my right hon. Friend the Member for Oxford East (Mr Smith).

One thing that the Government and local authorities must deliver is more land for housing. Critically, York needs to agree a local plan to designate where development will be permitted. That has not happened for decades under successive Conservative, Labour and Liberal Democrat-led councils in York. The current Labour council has submitted a plan; it was rejected by the Government and the council was told to redraft it. Now, there is an argument between the parties. Labour and the Green party argue that the council should plan to build 850 homes a year; the Liberal Democrats and Conservatives are proposing something like 730 homes a year.

In York, 4,200 homes have been built in the last 10 years, which is 420 a year. That is 300 homes a year less than the Conservatives and Liberal Democrats are asking for, and 425 homes a year less than Labour and the Green party are asking for. I ask all those parties locally to stop shilly-shallying, to cut a deal and to get the plan approved, so that developers know where they can provide housing and where they cannot. If we do not do that, the housing that is so desperately needed simply will not be provided.