Social Housing

Karen Buck Excerpts

Thursday 13th June 2019 Commons Chamber

[Matt Western]

I thank the hon. Lady for her intervention and I hope that she will make a speech later. Her point is valid and I am sure there are huge pressures in her community and other parts of Cornwall. I have discussed this very issue with many of her colleagues on the Government Benches, and I know that the right hon. Member for West Dorset (Sir Oliver Letwin) and Members from Somerset reflect similar views. There is a lot of hardship in our rural communities related to access to and requirement for social housing. What is being done in her constituency is admirable, but it comes down to the ability to borrow and what can be done. She may be referring to provision by housing associations, but I am particularly keen that we should see a rapid ramp up in council housing provision if we are ever to achieve the 300,000-plus figures that everyone mentions.

As I was saying, the achievements of the post-war period were extraordinary, and under the Attlee Government an astonishing 80% of houses built were council houses. Materials were in short supply, but they achieved it. The boom continued under the incoming Conservative Government. In response to Churchill’s challenge, Macmillan who had been appointed Minister for Housing, delivered more than 750,000 council homes in just one year: things had never been so good.

The giddy heights of those years and new social housing developments ended abruptly at the end of the 1970s with the radical policy changes of the incoming Conservative Government, and one of their first moves was to cut public expenditure for housing. Giving council tenants the opportunity to buy the homes they were living in, at a generous discount, was one of the defining policies of the Thatcher era and more than 2 million council tenants took advantage of it.

[Ms Karen Buck (Westminster North) (Lab)]

Does my hon. Friend acknowledge that one of the first acts of the incoming Conservative Government was to shift housing subsidy away from bricks and mortar and into housing benefit? It was a conscious policy decision and the consequence was not a shortage of money, but the spending of £22 billion a year on personal subsidy instead. As lower-income people are increasingly trapped in the expensive private rented sector, that is set to explode still further. The collapse in social house building is an extremely false economy.

[Matt Western]

I thank my hon. Friend who is very learned on this topic, and I bow to her knowledge. She is right: what we have seen is a transfer of wealth from the public to the private sector. A big chunk of that budget has gone into private pockets, as opposed to into public assets. Changing that is the ambition behind my motion.

That period was a watershed: it developed our unhealthy obsession with housing and a dependence on the fortunes of the private sector to satisfy it. Rising house prices were all the talk in the pub and they became the nation’s conversation, fuelled by the press and an insatiable media seeking feel-good stories and helped along by the Government of the day. House prices seemed an impossibly good driver of the economy. Those who had capital and a good wage could buy a place and, through the sell-off of council houses, those fortunate enough to have access to money could bag a bargain. What was not to like?

Perhaps most striking was the impact on young people who rapidly realised the possibility of ownership was drifting away from them: data shows that at the age of 27, those born in the late 1980s had a home ownership rate of 25%, compared with 33% for those born five years earlier in the decade and 43% for those born 10 years earlier in the late 1970s. With hindsight—perhaps for some of us at the time—the excesses of the heady 1980s, 1990s and 2000s, when access to finance was unlimited and we saw the mass sell-off of council housing, were akin to financial ecstasy, but it would only be a matter of time before the market would go cold turkey. Of course it did, with the credit crunch and the global financial crash of 2007-08. At the core of that financial disaster was over-leveraged debt and bad property debt. Lending had reached unsustainable levels.

We reach the present day, and housing has become simply too expensive—ridiculously so against relatively flat incomes. The average house price in my constituency is £285,000, 20% more than the average in England and Wales. Supply has been constrained for decades, but now the wrong housing is being built in the wrong places, and it is unsustainable. People are increasingly being driven out of the communities that they work in, such as in my constituency of Warwick and Leamington, and that threatens the local economy. Though average salaries are greater than the average for England and Wales, they are only 10% higher, meaning an absolute differential of 10% against the average house price. Put another way, the ratio of house price to wage is 9.2; for England and Wales it is 8.0.

Despite all that, the council has built just eight social homes in the past four years. Soldier Y is not just an individual: he is the victim of a systemic problem in our housing provision—market is no longer the right word. That is why we need to re-set the sector. Yes, the Government have set an ambition of building 300,000 homes, but they are falling way short with just 223,300 built last year, even with the numbers being distorted by the permitted development of office blocks that are often wholly unsuitable to long-term or family accommodation. While 47,000 new affordable homes were delivered in 2017-18, 57% were homes for affordable rent, 23% for shared ownership and just 14% for social rent. For many people, affordable rents are no longer affordable, given that in reality they can be set at up to 80% of market rates.

Most concerning is that the Government have no target for social rented housing. As I said earlier, Shelter’s commission on social housing estimates that 3.1 million homes need to be built in the next 20 years if we are to arrest this crisis. That is an average of 155,000 a year, which would cost only £10.7 billion per year. Just 6,500 homes were built last year, and at that rate only 130,000 would get built over the next 20 years, or just 4%.

We could afford to build those homes. According to Shelter’s report and data provided by the New Economics Foundation, we currently spend £21 billion on housing benefit annually, money that more often than not is going to private landlords. Instead, what we have seen is a massive increase in the private rental sector, insecure tenancies, fees scandals, rogue landlords and too little agency involvement in enforcement among local authorities.

What needs to be done? I want to see a radical reconstruction of our communities. In Tuesday’s debate, the Minister suggested that it is a complicated landscape, but I am afraid I have to disagree. We have made it complicated by yielding to market interests and failing to regulate in the interests of our people and our communities. In my view, we need to urgently reform planning, adopting a model similar to that in Germany; resurrect a regional spatial strategy, including for new towns and villages; reform compulsory purchase; scrap the nonsense that is viability, which is a scam exploited by corporate house builders; and ensure a 50% minimum of social housing on all greenfield developments and 80% on all brownfield sites in towns and cities.

We can address the funding though redirecting housing benefit to investment in the assets that come from building new homes. We should stop the sell-off of 50,000 social rented homes a year, and I urge an end to the right to buy. There are so many things we could do. I have talked about funding, and there is also the possibility of using pension funds, whether local authority pension funds or new ones, to support building homes. Birmingham and Greater Manchester are leading the way. On land, we could do so much with the public estate rather than selling it off to the highest bidder.

I am conscious of time and I know that many Opposition Members wish to speak. As I have said, we face a crisis and, to paraphrase Macmillan, the housing market has never been so broken. Homelessness is now 277,000 and 1.1 million are on housing waiting lists, while rough sleeping has risen 165% since 2010. The Government could, and should, deliver 3.1 million social homes over the next 20 years. It is an explicit target of 155,000 social rented homes a year and it is critical that we focus minds on delivering it. That is what my motion seeks to do. Without it, the housing crisis will only get worse.