Housing: Spending Review

Lord Taylor of Goss Moor Excerpts

Thursday 4th November 2010 Lords Chamber

[Lord Taylor of Goss Moor]

My Lords, I share with others my thanks to the noble Baroness, Lady Hollis, for introducing this timely and important debate. I declare an interest as chair of the National Housing Federation.

I shall speak from a slightly different angle to previous speakers because I shall concentrate not on housing benefit in its own right but on the impacts that the proposed changes may have on the Government’s ability to deliver their targets for affordable housing. Contrary to what the noble Baroness, Lady Dean, said, the National Housing Federation’s briefing to its members states that it believes that the numbers can be delivered by a shift to a revenue-based system—that is, higher rents—from a capital grant system. Fundamentally, such a shift seems to underlie the Government’s decision to move away from the previous practice of a grant-based system to one in which higher rents are paid and more affordable housing is delivered.

However, that moves us immediately to the questions surrounding housing benefit. The truth of the equation is that previous Governments shied away from such a shift because of what they believed about how the long-term revenue support costs through housing benefit weighed against the short-run capital benefits. One reason for that was that the different way in which capital was accounted for made it more attractive for them to go down a capital route for reasons that might not have had a bearing on the real cost to Governments and individuals—not least because of the way in which that limited the likely number of affordable homes that could be delivered.

The core to understanding what is now happening is the conversations that took place—I certainly hope that they took place—between CLG and the Department for Work and Pensions on the underlying guarantee that housing benefit would be available to those who go into these new homes at 80 per cent of market rent. In the review of affordable rural housing that I conducted for the Government a couple of years ago, one of my recommendations was that the Government should examine the opportunities to deliver more intermediate housing because that would come at less cost in grant and meet the needs of many working people in rural communities. Such people cannot afford homes on the open market because of the very high prices but do not necessarily need social housing at low rentals. Intermediate housing to rent or to buy would perfectly address many of those needs and more housing could be delivered for less money. That recommendation received a broad welcome but no action. This Government have taken up the notion but, instead of trialling it or running it alongside a social housing programme, they have put all their eggs in the one basket in deciding to go down that route.

This begs the question whether this is intended for the people that I envisaged it for—working people who need little or no housing benefit support but who would be underpinned by the guarantee of housing benefit if they need it. Do the Government intend to introduce a nominations process that will target these new homes to those who can at least expect to afford them, or will there be an open nominations process in which many people on housing benefit who are likely to struggle to get work, or likely never to get work, will go into housing where they will have to retain access to housing benefit? That would then lead to the question about whether housing benefit will be available. The nominations process is key. Who is this housing intended for?

On the backstop of housing benefit, I would not encourage someone in my part of the world to go into a home on 80 per cent of rent if they are in a low-income job but can just about afford it. Many of those people would be at risk because they are in temporary employment, such as in tourism-based employment or in small businesses, and cannot be sure that in a year or two they will be able to afford such rents. Many of those people—perhaps with young children—could not be sure that housing benefit would protect them.

I chair the rural coalition—the position is unpaid but is another interest—and I have carried out work on the rental position in rural communities, where I hope the Government will conduct rural proofing. We have heard a great deal about London and the known issues around high rents, but what about rural communities? Local housing rental assessments take into account urban communities, where there is quite a lot of relatively cheap rented accommodation. However, rent is much more expensive in rural villages. How will working people be able to find a rented property in rural villages if restricting housing benefit to 30 per cent of median rent levels means 30 per cent or even 40 per cent in urban communities but nothing at all in rural communities where there is work to be done and people need to live close to their work on the farm and so on?

There also appears to have been no proofing of the impact in northern areas, where social rents are already 80 per cent or more of private sector rents. No money will be released to housing associations through this mechanism of higher rental incomes, so no housing is likely to be delivered by housing associations operating in these areas. There appears to have been a move to embrace only an intermediate affordable housing programme—which I always envisaged running alongside a social rented programme—and no work seems to have been done on the specific localised impacts on rural communities, London and the north.

Therein lies my hope that there may be an opportunity for the Government to respond to the concerns expressed today, some which are not about the principle. I believe that the proposed move can deliver the housing numbers. For my review I worked with Shelter, which also shared the point of view that more intermediate housing would reduce pressure on the social housing already in place and would be a good thing to deliver. I hope the Government can respond to the concerns expressed in the debate. If they do not, the high hopes for this housing scheme that they have—even if they are not shared around the Chamber—cannot be delivered.