Housing: Affordability and the Underoccupancy Charge

Lord Whitty Excerpts

Thursday 31st October 2013 Lords Chamber

[Lord Whitty (Lab)]

My Lords, I thank my noble friend Lady Quin for initiating this debate. I will dwell largely on the broader housing side, as did the noble Lord, Lord Shipley, but wanted to say something first about the bedroom tax, spare room charge or whatever we care to call it. Some evidence that I do not think has yet been cited comes from the National Federation of ALMOs, which has done a survey of council and ALMO-run properties. It found that arrears among those affected have already almost doubled—there has been an increase of almost 27 percentage points in the numbers in arrears. Of those affected, only 13% were prepared to consider moving and only 2% have actually done so. In other words, for a policy that is supposed to free up property for more appropriate use, a very low level of achievement has been recorded. As other noble Lords have said, and as the noble Baroness, Lady Maddock, said during Question Time—I am afraid that the Minister did not give her an adequate reply—the reality is that there is no alternative accommodation for these people to move into in most parts of our country. Of those surveyed by the federation, some said it would take up to 14 years to put people in appropriate housing.

However, this is not only about the nonsense of the bedroom tax. Behind all this, there are chronic problems with housing and with affordable housing in particular. The term “affordable” is of course difficult to define. I declare an interest in that, last year, I chaired an inquiry for an organisation called Housing Voice, which produced a report to try to push housing up the political agenda. I think that we, along with others, have succeeded in doing that. The definition that we used then was,

“comfortable, secure homes in sound condition that are available to rent or buy without leaving households unable to afford their other basic needs”.

Others have been more specific, saying that it should not cost the household on median earnings more than one-third of their income.

However, the Government and the powers that be have used the word “affordable” in an entirely different way. In an affront to the meaning of the English language, the term “affordable housing” in the social housing sector is used, in Newspeak, to mean charging what are, for many social tenants, totally unaffordable rents. In more general usage, there is a chronic lack of affordability not just in the social housing sector but across all tenures of housing. Rents and prices are rising in all housing sectors and in all parts of the country—the issue affects our inner cities and our rural areas, young families seeking a mortgage for the first time, leaseholders, private tenants and those in social housing. Above all, it affects the young and those who are in the wrong kind of housing because of family circumstances.

The situation reflects a long-term failure to build housing, which as the noble Lord, Lord Shipley, said, has continued under successive Governments for many years, with new housebuilding running at less than half the rate of household formation. It is particularly acute towards the affordable end of the market and was, I am afraid to say, greatly aggravated in the early days of the coalition Government when they deliberately slashed government support for affordable social housing by nearly two-thirds. They have belatedly introduced policies to offset that, but it was a severe blow, which has meant that recovery and improvement in the total level of housebuilding is even further off.

I have to say to noble Lords opposite that, to some extent, among their ranks and in some of the coverage in the newspapers that support them, there is a deep prejudice against tenants of social housing. That has led to measures that are hitting social housing and, in particular but not exclusively, those who are on benefits. That has been compounded by aggravating and detailed interventions such as the bedroom tax. This combination of factors has already led, as noble Lords have said, to severe distress and threatens serious social and communal dislocation. Other things have affected the situation and will, in future, affect it even more, such as the move to the default position of payment to tenants rather than to landlords. Although there is some justification for that, particularly in the private rented sector, it means that housing associations’ income and creditworthiness is less assured and they are therefore less able to raise money to build new homes. In the private rented sector, the refusal to regulate private landlords is leading to soaring rents and inadequate conditions in large parts of the burgeoning private rented sector, not least here in London.

All this is, naturally, leading more people to claim housing benefit and more people to claim a larger amount of housing benefit, reflecting their housing costs. The Government are right to point to this escalating cost of housing benefit as being a major problem in the welfare bill. However, that has led them to the wrong conclusion. Instead of tackling the increase in housing benefit expenditure as a reflection of dysfunction in the housing market, they have treated it as a dysfunction of the welfare system. That has led them down exactly the opposite road to the one which they should be going down. Part of the real solution, which I have been advocating for some time in this House and elsewhere, would be for housing in central government to be placed in the hands of one Minister and the resources available for housing benefit to be put together with those available in CLG. That way, we could have a strategic approach to housing demand and supply and match them more substantially. As the noble Lord, Lord Shipley, said, the other part of this would be to give councils and local authorities the responsibility for strategic delivery of housing right across the board in their areas.

Although the Government have recognised the need to build more houses and have introduced some policies that they say are going to lead to that, nothing has yet been seen. The Public Accounts Committee, in its assessment of the new homes bonus, effectively said, “Case completely unproven”. In its actual text, there are harsher words than that. Although the Help to Buy policy has helped a number of people into the housing market, and has undoubtedly had the political effect of reassuring existing homeowners that the market value of their property is going up and giving them a warm feeling about that, there is no point pouring money into the demand side if you do not match it with policies to deliver the supply to meet that demand. All that will happen—particularly in the high-stress areas, but right across the country, as we have already seen—is that house prices will increase but there will not be an increase of any great significance in housebuilding.

Those measures are probably misplaced and they are certainly not working. We need further measures. On the planning side, we need to ensure that new housing developments include a minimum proportion of affordable housing, in whatever form of tenancy we decide should apply. Instead, councils are having their arms twisted by developers and going back on the previous policy. We must ensure, in so far as there are new right-to-buy deals, that there is a genuine one-for-one replacement of anything that goes out of the social housing system. The arithmetic that the Government have come up with on that is completely phoney.

Above all, we need to ensure, as the noble Lord, Lord Shipley, said, that housing associations and councils are able to go to the market and obtain money to build and improve housing, whether through traditional council housing, housing association stock or joint ventures with the private sector. As the noble Lord said, we are the only country in the world, or at least in Europe, which counts expenditure by municipalities and provinces to buy housing—a clear asset—as part of public expenditure generally and puts a cap on it. If that cap were raised, and preferably removed entirely, councils’ ability to borrow would go some considerable way, even if it takes us 10 years to get there, to replacing and improving the amount of housing stock available to our people. I hope that the Government take a grip on this area and come up with a strategy which will deliver just that.