Housing: Affordability and the Underoccupancy Charge

Lord Morris of Handsworth Excerpts

Thursday 31st October 2013 Lords Chamber

[Lord Morris of Handsworth (Lab)]

My Lords, as we have heard, the House thanks the noble Baroness, Lady Quin, for her initiative in securing this important and timely debate. I declare an interest as chairman of Midland Heart Housing Association.

This debate is driven by two negative factors: the decreasing provision of affordable housing, measured against demand, and the impact of the spare room tax on both tenants and providers. It is common ground that in England the shortage of affordable housing is now over 100,000 per year, and at the current rate of growth will shortly exceed 150,000. Demand for extra homes in England is now estimated to be over 200,000 properties a year, which means that even if housebuilding output was increased by 4.5%, it would be 2022 before we got back to 2007 figures.

As we have heard, the issue of affordability is not confined to London and the south-east but is to be found across the length and breadth of the country. In 55% of local authority areas, fewer than one in 10 available properties are affordable to a working couple on average wages with, say, two children. The Help to Buy scheme is seen as an instrument that will fuel increased demand and put up house prices but not address the fundamental issue of lack of supply. It certainly is not doing that. That is a pretty unanimous view across the board. There is only one man in the United Kingdom who cannot see the problem and that is the Chancellor. Until recently, providers of affordable housing have been focusing on building family homes and moving away from smaller units, but the impact of the bedroom tax has now set that trend in reverse.

Let me now say a few words about the underoccupancy charge. It is fair to say that few policies have been more controversial in the current Parliament than the Government’s decision to reduce the amount of housing benefit available to social housing tenants who have one or more unoccupied bedrooms. Even the name invites controversy. Campaigners like me have labelled it the bedroom tax, which is what it is, while the Government have called it a spare room subsidy, which it is not.

One of the primary criticisms against this policy is that the measure will not achieve the so-called objective of freeing underoccupied properties. Tenants are downsizing in any event not because of the effectiveness of the policy but because of pure and simple unaffordability. Frankly, there is insufficient stock of the appropriate size in the social-rented sector to meet this demand. A survey of 51 housing associations around England, carried out by the National Housing Federation, found that 51% of residents affected by the bedroom tax have been unable to pay their rent between April and June. This situation is likely to get worse as discretionary payments provided to customers hit by large charges are withdrawn. There is concern among some of these groups, including those paying in full, as the impact on their ability to pay for other essentials, such as food and fuel, leaves them with the stark choice of eating or heating.

My organisation, Midland Heart, continues to see an increase in people leaving their homes following the introduction of the welfare reform programme. Demand for one-bedroomed homes has increased, and exceeded demand for two-bedroomed homes for the first time. It is now common to have more than 200 people applying for a one-bedroomed property in cities such as Birmingham in the West Midlands. There will be a price to be paid: families forced to live in overcrowded conditions with nowhere for children to do their homework and the dignity of family life undermined.

Clearly a tension arises as the current model for delivering new affordable homes is predicated on providers increasing rents to 80% of the market rate, and that in turn puts pressure on the housing benefit bill at a time when such charges are under huge pressures. Individuals face major difficulties as they seek to make the necessary underoccupancy adjustments. The challenge is therefore to fulfil the desire to provide much needed housing while ensuring that it is affordable to the most vulnerable in our society. That is a challenge to government and to society.