Lord True
Main Page: Lord True (Conservative - Life peer)Housing: Affordability and the Underoccupancy Charge
Lord True Excerpts
Lord True (Con)
My Lords, I declare an interest as leader of a London borough council and join others in thanking the noble Baroness, Lady Quin, for bringing what is a very important debate to this House. I add my congratulations to my noble friend Lady Bakewell of Hardington Mandeville on a very distinguished maiden speech. I look forward to working with her and my other noble friends on those Benches in supporting our coalition Government—sometimes with modified degrees of rapture, but we have managed.
Many factors contribute to housing pressures, and we have heard of many of them, including population growth, immigration, changing expectations about household formation, some related to past benefit policies, and factors limiting supply to the market. I should like to follow up a few of the points made by the noble Baroness, Lady Blackstone, about the London area. Heaven knows, in London, we understand the cry for affordable housing, whether for sale or rent. It may be that we have to ask ourselves whether we can overcome those difficulties without major policy changes. We all want to sustain mixed populations, but in many areas, embedded land values and limited development land mean that the prospect of providing large-scale affordable housing for sale or rent for all who might want it is slight. My local authority has raised affordable housing performance a little above that of our Liberal Democrat predecessors, but the numbers are still small, because of the factors that I described.
In some areas, we have to ask whether it is axiomatically correct that everyone should necessarily expect to find a home in the place in which they grew up. That may have been so in the past in, say, the close fishing communities, where my ancestors lived. They cast their nets on the cold North Sea and, many, sadly, drowned but, fortunately, not before producing children—at least, fortunate for me. However, in a more varied modern economy, that will not always be the case. Some areas will always be more accessible and affordable than others. In my case, I did not form a household in the place where I was brought up. Nor did my father; nor did my grandfather; nor, it seems, will my son. The same is true in the case of my wife’s family and, no doubt, that of many other families. It is a reality in a healthy economy that as localities evolve and change people will have to travel to find convenient homes that they can rent or afford to buy. This we should facilitate.
Too many policies work the other way. I should like to touch on something not yet referred to in this country, which is the cruel impact—we have heard the word cruel—of stamp duty in south-east England. That was something piled on by Gordon Brown from his very first Budget and not yet relieved by the coalition Government, although I welcome the action of the Chancellor to address the abuse of very expensive homes being bought by corporate bodies, which is distorting the London market. In London, and not just in the wealthier parts of London, a young, first-time buyer can be asked to pay close on £10,000 in stamp duty to buy a basement flat. I hope that my right honourable friend the Chancellor will find time when he can to address that.
Points have been made about the need for varying approaches in different areas. We may need in time to look at that. Like other noble Lords, I believe that local councils have a role in that. Lower tax is a good old-fashioned benefit, as the coalition Government showed by taking low-paid households out of the income tax that they used to pay under Labour. I would be looking to break down more of the barriers that cramp both construction and investment in the housing market.
Fewer people will downsize. We have heard about the importance of downsizing. I have to say that it is not only the fault of the Government if social landlords do not have smaller homes available. Investors must choose in what size of property to invest. In the private market, few will downsize electively, liberating more affordable homes to buy for growing families, when in many areas of the south-east, stamp duty will take £30,000 or £50,000 out of their accumulated capital. Few families will trade up to a larger home, liberating smaller homes, when the £60,000 or £70,000 they would have to pay in stamp duty could go on an extension. In some areas, the young family looking to move from a one-bedroomed home to a two or three-bedroomed home to buy finds nowhere to go. The behavioural impact of reducing stamp duty is clear from recent peaks and troughs in the statistics. Excessive taxation on housing transactions has an impact at every level, including a knock-on effect on the demand for social housing.
Turning to the social housing sector, it follows from what I have said about mobility that I welcome schemes supported by the Government, local councils, including Labour ones, and social landlords to promote the exchange of homes. I am glad that we have moved on from the initial dismissal of that by Mr Dromey. Indeed, I find much that is confusing about the Opposition’s position on the policy. They have admitted that they presided over an unsustainable growth in benefit. They claim to accept the need to address it, but, as we have heard today, they oppose the means, or at least this means.
No doubt the noble Lord, Lord McKenzie of Luton, who is always so admirably clear in his remarks in this House, will say in his wind-up whether a Labour Government would commit hundreds of millions of pounds to restoring the subsidies in housing benefit for spare rooms, which have been abated by this Government as part of one of their most popular programmes, tackling the benefit bill.
As others have said, through the local housing allowance and other policies, the previous Government were ready to attack underoccupancy in the private sector. Indeed, they took pride in the action that they were taking. Why should that be a taboo subject in the social sector? Much of the rhetoric about the spare room subsidy is, of course, based on genuine concerns—we have heard some good, strong arguments in this House—but some of it is also political rhetoric. It is called the bedroom tax, although it is neither a tax nor a levy specifically on bedrooms. My noble friends on the Front Bench should not neglect the battle of language that is always so well understood on the left in politics but less readily by my own party, as the rather terrible story of the community charge—aka poll tax—demonstrates.
It is agreed across the House that there are almost 1 million underoccupied rooms being paid for under housing benefit. Yet there are over a quarter of a million households living in overcrowded accommodation who need more space, and 1.8 million in England and Wales on the waiting list. Meanwhile, our country is still borrowing £13 million an hour and is short of public finance. Can underoccupancy be ignored in such circumstances?
Like most local authorities, my own has set up systems to monitor carefully the cumulative impact of benefit changes. So far, in our case, that impact is relatively small. Out of many hundreds of households which our officers contacted in a programme to help tenants, only 15 have so far left as a direct result of changes to the local housing allowance, although we will have to wait as tenancies run out to see the full effect. In terms of the underoccupancy rules, we were offered more than £400,000 to support discretionary payments. So far, we have had to pay down only £136,000, although the second six-monthly round will provide further evidence. The number of households in receipt of housing benefit remains almost constant.
To conclude, I accept that my authority is not a bog-standard authority and that we need to see more evidence but this does not bear out the more apocalyptic statements we have heard. The coalition Government are surely right to seek to bring fairness back to the system and make better use of social housing stock. I hope that my noble friend Lady Stowell, whom I, too, warmly welcome to debates on local government matters, will stick to her course.
Lord McKenzie of Luton (Lab)
My Lords, like other noble Lords I will start by thanking my noble friend Lady Quin for leading on this first-class debate, the focus of which is the availability of affordable housing and the impact of what—the noble Lord, Lord True, notwithstanding—I shall continue to call the bedroom tax. I offer my congratulations to the noble Baroness, Lady Bakewell of Hardington Mandeville, on a very impressive maiden speech and I have no doubt that her expertise in local government will be put to good use in this House. I am sure that she is disappointed at having just missed the Local Audit and Accountability Bill, but I can promise her much more excitement in the future.
We should acknowledge, as have most noble Lords today, that we face the biggest housing crisis in a generation because of the long-term failure of successive Governments to build enough housing to meet a growing need. That issue will not go away. For many, the desire to own their own home has shifted from being difficult to being frankly impossible, with home ownership falling for the first time in a century. There are now nearly 9 million people in private rented accommodation—a largely unregulated sector—who spend on average 41% of their income on rent. There are 5 million people on the list for social housing and we know that there is an increase in homelessness and rough sleeping.
We can only begin to tackle this crisis if we build more homes of all tenures. As the noble Lord, Lord Stoneham, said, this means a long-term effort. In the past three years the number of houses built has reached its lowest level in peacetime since the 1920s, but it is welcome news that new building is picking up, albeit from a low ebb. However, we are still starting to build less than half the number of homes we need to build each year. Can the Minister say whether the Government are still guided by the 2008 household projections, which imply an overall need for new homes—affordable or otherwise—of 230,000 each year until 2033? If not, what is the new projection and what level of annual new homes provision are the Government working to?
Given the demise of regional spatial strategies, the determination of housing needs is to be driven by a bottom-up approach. Can the Minister also say how current local plans underpin the Government’s affordable housing programme, and how many local authorities have in place a strategic housing market assessment and a strategic housing land availability assessment? How do these correspond to the overall numbers the Government propose for this and the next spending round?
As we have heard, the programme for affordable housing comprises some 170,000 new homes for the period to March 2015, although 70,000 of those were commissioned by the previous Government and 165,000 back-end loaded for the period to March 2018. We will have to see what gets delivered, but that is not a step change on what has gone before.
We have heard about the previous Government’s record. They were faced with significant competing priorities for housing investment. They had in particular to deal with the stock of social rented housing which had generally been starved of funding. Rotting windows, outside toilets and poor or non-existent insulation could not have been ignored. Had we done so, the consequences today, especially with soaring energy costs, would have been distressing indeed. In 1997 the Labour Government inherited a £19 billion backlog in repairs, but brought 1.5 million social homes up to a decent standard through the Decent Homes programme. Notwithstanding that, we still built 500,000 more affordable homes during our time in office and delivered 256,000 additional affordable homes in our last five years. Between 1997 and 2010, nearly 2 million more homes were built in England.
So far as this Government are concerned, we have seen the switch in the funding model—my noble friend Lord Whitty in particular referred to this—for the provision of affordable housing from capital to revenue with the halving of grant funding, and we heard about the initial negative impact of that on delivery. Can the Minister give us any information about the numbers and spread of properties now let at “affordable” or intermediate rents, and any figures for the estimated increase in housing benefit payable as a result of social rents being payable at this higher affordable rent level?
For us, Ed Miliband has set out the ambition of building 200,000 homes a year by the end of the next Parliament—which is just a start. He and Hilary Benn have asked Sir Michael Lyons, supported by a panel of experts, to lead a new housing commission to look at the policy solutions needed to deliver the step change required to close the gap between housing demand and current levels of delivery.
At present, we know that some areas want to grow to meet local housing need but do not have the land within their local authority boundary to do so. Neighbouring authorities too often block the building of badly needed homes, particularly affordable homes. That is why we propose that local authorities should have a new “right to grow”, with bids to the Planning Inspectorate leading to the requirement that neighbouring authorities are required to draw up a joint plan. We would also like to see local authorities given strengthened compulsory powers so they can buy and assemble land which is being hoarded and is holding back development. There should be powers to charge developers who sit on land with planning permission.
The last time we faced such a big need for housing, new towns and garden cities played a big part in meeting it. We need to build new institutions and incentives to help deliver this, and we look to local authorities to engage and take this forward. Given the need for more social housing, it is surely time to look again to local councils to play a larger role. Many would welcome this and some—mostly Labour—councils are already beginning to build on a scale not seen for a generation. Of course, that would involve looking at the financing arrangements for local authorities. There is much else to say on that but time does not permit me to go into it.
There must be a fair basis for supporting those who need help with housing obligations. At the very time when there is a switch to funding affordable housing by revenue support rather than capital, we see attempts to cut back housing benefit through the bedroom tax. Working-age renters of affordable housing are the direct targets of this draconian measure. Let me be clear: we consider this a cruel, misguided attempt at behavioural economics which has already caused great hardship and distress to the vulnerable and disabled. We have heard some individual stories today and there are doubtless many more. This measure is already putting people into debt and leaving them with impossible choices regarding how they spend meagre budgets. We know that it is distorting the allocation of properties, with larger properties lying empty and pressure on rents for single-bedroomed accommodation.
As usual, Ministers have sought to justify this policy by setting one group against another—underoccupiers against those who live in overcrowded accommodation and those in the private rented sector against those in social housing. Then we get the small pot of extra discretionary money, which is supposed to cover all the problems that might arise but, of course, never does—the “loaves and fishes” money in the terms of my noble friend Lady Lister.
Noble Lords will be aware that the Government expect to save some £450 million, gross of DHP, in the first year of this programme, but this is on the assumption that tenants caught by the provisions will generally sit tight and take the hit—a cynical approach to policy-making, as my noble friend Lady Hollis touched on. However, the Centre for Housing Policy, referred to by my noble friend Lady Quin, has worked with four significant housing providers, looking at the early data to test some of the DWP assumptions on savings, and has concluded that the suggested savings are likely to be substantially lower than the impact assessment suggests. In particular, it suggests there has been an underestimate of the proportion of those underoccupying by one bedroom who will move, and of the proportion of those who move who will go to the private sector. It suggests that for some who move to housing associations at so-called affordable rents the housing benefit bill will rise, and some vacated homes will be taken up by new households claiming housing benefit for the first time.
This early study suggests that savings might be between 26% and 39% less than originally predicted—a very substantial difference. This is before taking account of the additional challenges the policy presents to providers. RSLs will doubtless invest to support their tenants and will also carry an increased burden of tenant debt which they have to manage; and this at the same time that universal credit is coming down the track, albeit slowly.
We are absolutely clear that we will abolish the bedroom tax and have given detail of how we would fund that commitment. That includes taking away some tax breaks from hedge funds and the nonsense of selling employment rights for shares. If, in doing so, we are joined by the noble Lord, Lord Shipley, and other Liberal Democrats, we would very much welcome that. However, the challenge in the mean time, before we get to do this, is for providers, support services and families to help those affected through the misery it is creating.
Lord McKenzie of Luton
I think there is great confusion in that regard, although I am not sure that there is confusion in the noble Lord’s mind. However, confusion has been spread about trying to equate those two tenures. They are completely different so the argument does not follow through to the LHA arrangements.