Housing

Lord Whitty Excerpts

Thursday 19th January 2012 Lords Chamber

[Lord Whitty]

My Lords, I, too, congratulate the noble Lord, Lord Stoneham, on securing this debate and on the care and breadth of his presentation, although I should point out that he was perhaps slightly overenthusiastic about this document. Nevertheless, he described the size and immense difficulty of the housing crisis in all forms of tenure, and pretty much all parts of the country.

I declare an interest as I am chair of the campaign Housing Voice, which is looking at ways of increasing the flow of affordable housing. We are conducting an inquiry, and had our very first public session just before Christmas in the noble Lord’s own part of the country, and mine too these days—the south-west. This session in Exeter spelt out some of the difficulties in the south-west.

As noble Lords will know, the south-west has some special features in relation to housing: it has the highest ratio of house prices to average income, with a significant number of seasonal tourist homes, second homes, empty homes and retirement homes. However, in essence, the problems are the same in that the cost of housing in that area, as in large parts of London, is out of the reach of even relatively well paid first-time buyers. Social housing is under stress, and rents are going up in the private rented sector, which puts it out of the reach of a lot of people. Although some more property is coming on to the market and some improvement has been made in the quality of private rented-sector housing, as the noble Lord, Lord Stoneham, said, there is also, at the margin, some very difficult property coming on to the market in which people are forced to live. It is also very difficult to get a mortgage, of course, even if the arithmetic works out.

Unlike previous housing crises, which have usually been confined to one or other of those tenures, we now have dysfunction and crisis in all forms of tenure. The difficulties in one form have a knock-on effect on the others. We have a perfect storm in the housing market, so it is important that we take a holistic approach and debate this subject outside the traditional silos of housing policy and expertise, and look at the totality.

I was therefore extremely pleased when I heard, round about October, that the Government were going to come forward with a new strategy that puts all aspects of housing together in a new document. I was glad to hear that and I am pleased that they have attempted it, but having now read about 88 pages of the document I have to ask the Minister whether it is in one document because it does not face the size of the crisis with which we are confronted.

There are a lot of little policies, some of which I approve and some of which I have doubts, but they do not add up to anything like tackling the central problem, which is, as the noble Lord, Lord Stoneham, has said and as has been repeated many times, that the rate of new household formation is running at twice the rate of housing dwellings of any sort coming on to the market. What is the aggregate of all the policies in this document? Even if they were all to work, they would come well short of meeting that rate over the period of a Parliament.

The reality is that the Government started out by going backwards. I am the first to admit that they did not have a great inheritance on this front. Indeed, during the period of the previous Administration, in government and outside, I was quite critical of their failure to come to grips with the size of the problem. Nevertheless, the new Government’s first act was to make matters significantly worse by cutting social housing provision by nearly two-thirds, but they have made up for that with affordable housing in general. Although they have made up for some of it, they have not made up for the cut in the initial stages of the public spending review.

Therefore, we need to take a step back from this, to go beyond what is in the document before us today and to look at a new and more ambitious approach. Regrettably, the Government’s approach has been piecemeal. Not only are the schemes relatively small in this document—although some of them might help a few families—but the legislation that has just gone through Parliament compounds the problem by dealing with this in a piecemeal way.

The Welfare Reform Bill, which is still before this House, deals with social housing. We have probably reached the point where we should ask ourselves whether the main subsidy for housing should be in the housing benefit budget or whether we should, as we used to until about 20 years ago, invest more in the provision of housing on the capital and supply side than on the demand side. The Welfare Reform Bill is solely concerned with bringing housing benefit and other housing subsidies into the universal credit system.

That may be desirable in the long term, but in the short term it is leading the Government down a lot of blind alleys. It is an attempt to exclude certain people from social housing. It is an admirable aim to attempt to move people within social housing to more appropriate accommodation, but in doing so it will move people, to their detriment, out of areas where the cost of social housing is too high to be met under the new benefit cap into other areas. It will attempt to move others out of what is called “underoccupancy” into smaller accommodation, but in many parts of the country that is not available for such people, who are often in old age or infirm. On the face of it, it should be more appropriate, but in many parts of the country, including large parts of central London, smaller accommodation will not be available for them to move into. In any case, all those moves simply move the problem around. They move it out of social housing into the private-rented system or from one part of social housing into another. In some cases, they move it into homelessness. That does not in aggregate solve the problem.

In a different part of the legislative timetable, the Localism Bill, which has now gone through, includes two parts on housing. There are provisions to ensure that more housing is available and that the planning system is modified. I am afraid that in many areas, including many small towns and rural areas, those two will negate each other. There are provisions under the housing Bill to allow local authorities rather than any more regional or central determination of housing targets to decide what housing will be built.

Over and above that, even if the local authority, the district council or whoever has approved the new development, it could theoretically at least be overridden by other provisions for localism in local referenda. I hesitate to use the word “NIMBY”, because their arguments are sometimes quite good and I have some sympathy with those in rural areas who do not want to see parts of agricultural land taken over by housing, but the net effect will be that if we allow objections to all forms of housing in areas that are currently not scheduled for housing, or where no housing is being built, we will not meet the problems of rural areas and small towns in the next, let alone the current, generation of housing.

I have recently seen a study of Devon and Cornwall that shows that local people will not approve of additional housing where they currently live unless it can be shown that it will benefit local people and their families. The problem with most developments is that those people will not occupy those houses because, in the vast majority of new developments that are proposed under the planning system, they will either be sold on the open market—in which case they will be beyond the reach of the sons and daughters of those who already live there—or be social housing, where the local authority priority systems may well bring people in from elsewhere.

In most, but not all, cases, sensible propositions for increasing the housing supply in our rural and small-town areas are going to be made more difficult by the provisions under the Localism Bill and the planning guidance. I accept that the regional targets did not work to great effect, but replacing them with highly localised responsibility will not work either.

The noble Baroness, Lady Gardner of Parkes, spelt out some of the difficulties in a region at the other end of the price and income scales: London. Some of the changes under the Welfare Reform Bill and the Localism Bill will even drive out relatively low or medium-income families from areas within two or three miles of this place, where there has been a positive and healthy mix of tenure, housing types and families in the past. Next to the good and well utilised provision of social housing and other forms of affordable housing, a few streets away from where the only first-time buyers are Russian oligarchs, we see that that mix has worked. If we drive out from those areas the kind of people who are living in what was initially, and in many cases still is, social housing, the totality of the community suffers.

These examples could be multiplied in almost all areas of the country. The legislation that the Government have put before us in bits and pieces to address this does not amount to a strategy. Indeed, it is difficult to devise a strategy. I have some sympathy with the Government in this respect. Are we at the end of the period when the growth of home ownership is the natural conclusion of all housing policy? It has actually gone backwards over the past few years, but increasing home ownership, and seeing housing as a bit of a hierarchy, is still in every political party’s ambitions. This is not the case in many other countries.

There are other forms of tenure. The noble Baroness referred back to commonhold, which was in the first Bill that I was responsible for, which fell at the 2001 general election. It was a useful idea, but it has not taken off. There may be other forms of commonhold, or movement from rent to ownership, that we should address. The clear division between owner-occupation, private rented-sector and social housing needs to be readdressed. There need to be new ideas about the legal structure and the landlord/tenant relationship, and about how to promote investment.

The noble Baroness and her colleagues have a big problem before them that is frankly not addressed in the White Paper that was issued before Christmas. The noble Lord referred to Harold Macmillan and Dame Evelyn Sharp. Where are they today? I hope that the Minister can reassure me but, on the evidence so far, I fear that they are not actually in DCLG just now.