Cost of Living: Energy and Housing

Debate between Margaret Hodge and Hilary Benn

Thursday 5th June 2014 Commons Chamber

[Hilary Benn (Leeds Central) (Lab)]

I draw the House’s attention to my indirect interest, as previously recorded in Hansard. We have had a wide-ranging debate that was opened by the Secretary of State for Energy and Climate Change, who made the Liberal Democrat case for the coalition. Were he here, I would gently point out to him that there has not been a council tax freeze for about 2.2 million people on the very lowest incomes who have been hit by the changes in council tax benefit. The most passionate part of his speech was when he talked about energy bills, but I would remind him that energy bills went down when my right hon. Friend the Leader of the Opposition was Energy Secretary, whereas they have gone up during his tenure.

My right hon. Friend the Member for Don Valley (Caroline Flint) then made what I think was a forensic speech, making the case for what could have been done in the Gracious Speech to do something about markets that do not work in the interests of consumers, which has dominated this afternoon’s debate. The hon. and learned Member for Harborough (Sir Edward Garnier) gave what I would describe as an hon. and learned master-class—one with which I was not familiar before—on heroic negligence. [Interruption.] The Secretary of State for Communities and Local Government assures me across the Dispatch Box that he will further enlighten us on the subject when he replies.

My hon. Friend the Member for Sheffield South East (Mr Betts), who chairs the Communities and Local Government Committee, in a typically thoughtful and well-informed speech, made important points about brownfield land, viability, the impact of migration and the importance of devolving power to answer the English question—a point reinforced by my hon. Friend the Member for Birmingham, Edgbaston (Ms Stuart).

Several Members—led by the right hon. Member for Meriden (Mrs Spelman) and supported by the right hon. Member for Uxbridge and South Ruislip (Sir John Randall), my hon. Friends the Members for Ynys Môn (Albert Owen) and for Brent North (Barry Gardiner) and the right hon. Member for Hazel Grove (Sir Andrew Stunell)—spoke passionately in support of the Bill to tackle modern-day slavery. There is not a single Member of the House who does not look forward to the day when that Bill reaches the statute book.

We also heard contributions from the hon. Members for Angus (Mr Weir), for South Basildon and East Thurrock (Stephen Metcalfe), for Fareham (Mr Hoban), for North Dorset (Mr Walter), for Brentford and Isleworth (Mary Macleod), for Stafford (Jeremy Lefroy) and for Northampton North (Michael Ellis),

A number of Members, including the Chair of the Select Committee and my hon. Friends the Members for Islington North (Jeremy Corbyn) and for Stretford and Urmston (Kate Green), raised the problem of the insecurity and expense faced by the 9 million people who now rent from private landlords, including a growing number of families. We know that many of them would like to buy their own homes but cannot afford to do so and that private renting is the most expensive form of tenure. On average, people renting privately spend 41% of their income on housing. For those in the social rented sector the figure is 30%, and for owner-occupiers it is 19%.

We also know that renting privately can mean insecurity—the point made yesterday by my right hon. Friend the Leader of the Opposition. How can parents of children starting school this September, for example, feel confident about a stable future family life when, with 12-month tenancies being the norm—that is a fact—they do not know for sure whether they will still be in their family home a year from now? Landlords can tell their tenants, “Of course I will renew your tenancy, but I want to increase the rent by 10%.” How can a family plan their future finances, and have a sense of future stability, when there is that degree of uncertainty about both their tenancy and their rent?

We also know that very frequent turnover in properties is not very good for landlords, because properties lie empty and they lose out on rent during that period. It is not very good for tenants, as I have just explained. The one group of people it is good for, of course, is the letting agents, who can charge fees every time there is turnover, both to landlords and tenants. I think that the House will agree that the industry has been poorly regulated. Parts of it have developed some very bad habits, including charging hidden fees for having pets and dealing with inventories and references, all of which are on top of the large amounts of money that people have to find for rent in advance and for a deposit. Many people have to borrow to meet that bill in order to get a home, which is why we would stop lettings agents from charging fees to tenants—as is now the case in Scotland. After all, when we buy a house, it is the seller who pays the estate agent, and not the buyer; that is the parallel. I welcome what the Government propose to do in relation to transparency, but it does not tackle the root of the problem.

To be fair to Ministers for a moment—[Interruption.] I shall be fair; I am always fair. They claim to get the problem of insecurity and uncertainty in the private rented sector judging by the “Better tenancies for families in rental homes” document. It talks about longer tenancies to enable greater stability and rent review clauses that are index- linked to inflation, and yet when we recently announced that we would give greater security by offering three-year tenancies as the norm and peace of mind that any subsequent rent increases would not be excessive, what happened? The former Housing Minister, and now the Chairman of the Conservative party, instantly denounced them as Venezuelan-style rent control.

Then somebody in No. 10 Downing street suddenly thought, “Hang on a minute, didn’t we say something vaguely positive about this in that CLG document?” Lo and behold, the Prime Minister came to the Dispatch Box and said that he was in favour of longer-term tenancies. So, Venezuela, having hoved into view, then disappeared off the scene, but the Prime Minister denounced the idea of rent control.

Then something very curious happened. The hon. Member for West Suffolk (Matthew Hancock), who is a Minister in the Department for Business, Innovation and Skills, went on the “Daily Politics” show, and said

“on the rents issue, we put forward that policy at our conference last year.”

We have three different Members of the Government and three different positions, at least two of which fully support our policy. I say to the hon. Member for Esher and Walton (Mr Raab), if he is still in his place, what is really a riddle wrapped in a mystery inside an enigma is tenants wondering what the Government really think on this question of greater security for tenants. The only possible explanation, in the absence of any legislation in the Queen’s Speech to give people that security and greater certainty about rent increases in years two or three of what we have proposed in the three-year tenancies, is that the Government are willing to concede the point, but are unwilling to lift a single legislative finger to give tenants that greater security and peace of mind.

The only conclusion I can draw is that the Government are ideologically averse to the state using its power on behalf of those for whom markets do not work, and it is exactly the same issue in relation to the energy market. I simply say that it is not much use to all those tenants who find themselves in that position. It is the difference between us and the Government. We will give tenants greater security as of right, and the Government will not.

On building the homes that we need, I welcome the proposal in the Gracious Speech for an urban development corporation to support the building of the Ebbsfleet garden city. However, I say to the Secretary of State that the statement from his Planning Minister, the hon. Member for Grantham and Stamford (Nick Boles), that he would not require a particular level of affordable housing in Ebbsfleet—he said that in answer to my hon. Friend the Member for City of Durham (Roberta Blackman-Woods) in the House recently—is frankly astonishing. Are Ministers saying that in all the garden cities that all of us from all parts of the House want to see built, there will be no requirement for affordable housing? What will that do to the housing benefit bill given that there has been a staggering 60% increase in the number of working people claiming housing benefit since the coalition took office? As my hon. Friend the Member for Llanelli (Nia Griffith) said, we are talking about 400,000 more people. If that does not reinforce the point that was made yesterday by my right hon. Friend the Leader of the Opposition that for many people in this country work does not seem to pay or reward them, then what does?

My hon. Friends the Members for Bolton West (Julie Hilling), for Ogmore (Huw Irranca-Davies) and for Brent North all spoke eloquently in their own way about the effects of insecurity and low pay on people’s sense that they lack liberty and equality, and on how as a result they do not feel a sense of fraternity in our society.

We want to see the details of the housing and planning measures announced in the Gracious Speech, but after four years of announcements and headlines, the truth is that the Government’s record is not much to shout about. Four years in, the number of homes completed has been lower in every single year that the Secretary of State has occupied his post than it was in any of the 13 years of the previous Labour Government. We built more homes than the coalition. The number of social homes completed last year was the lowest for at least 20 years—the Government’s own figures. That is not surprising. Why? The first act of the Secretary of State on housing was to say, “I have a good idea. Let’s cut the capital budget for affordable housing by 60%”—surprise, surprise, the lowest figure for at least 20 years.

Far from having the “self-build revolution” promised by the then Housing Minister, the right hon. Member for Welwyn Hatfield (Grant Shapps)—he said that the Government would double the size of the sector—the number of self-built homes is at its lowest level for 30 years. For people who want to get a foot on the housing ladder, it now takes a lot longer to save for a deposit, but even when they get to that point, they find that house prices are now rising nationally at 8% a year and in London at 17% a year. No wonder that the Governor of the Bank of England recently said that Britain’s housing market has deep structural problems and that the failure to build enough homes and rising house prices are the biggest risks to financial stability.

As I have said before from the Dispatch Box to the Secretary of State, we support help for people to realise their dream of home ownership, especially first-time buyers. But, if the Government simply increase housing demand without increasing housing supply, which they have not, all that happens—and indeed it is happening—is that prices continue to rise out of the reach of people who want to get their foot on the ladder. That is what is missing from the Queen’s Speech—a recognition of the structural problems in the land market and the house building market.

Much of the focus has been on planning, and there is more to come, but as my right hon. Friend the Member for Barking (Margaret Hodge) pointed out, there is planning permission for 20,000 homes in her borough, but I think she said that fewer than 1,000 of them—

[Margaret Hodge]

Five hundred.

[Hilary Benn]

Only 500 of those homes have been built. The problem is not the planning permission, because more than 19,000 houses with planning permission are waiting to be built; they are simply not being built. What is the structural problem? In part, it is because 30 or 40 years ago two thirds of houses in this country were built by small and medium-sized builders, but by 2012 that figure had fallen to a third. That is a profound change in the structure of the house building market. As the number of small builders has declined and as the big firms have grown even bigger, it has become easier for the dominant firms to buy up land. As Kate Barker found in her report 10 years ago—many Members know that this is true—it is not always in the interests of those big builders to build out the sites on which they have got planning permission as quickly as possible or as quickly as the nation needs.

The truth is that to get the number of houses we require to be built, there has to be a change in how the housing market works—something that Ministers have simply failed to acknowledge. We have to get more firms into house building to build homes and to provide competition, because the high cost of housing is driven by the high cost of land. That is why, compared with the rest of Europe, we have really expensive homes with really small rooms in this country. Not enough land has been released for housing development and, by the time land is given planning permission, it is often prohibitively expensive. That creates an incentive to bank land rather than to build on it.

Those who argue that land banking is not a problem forget what the Office of Fair Trading found in 2008. It said that strategic land banks bought with options, which accounted for 83% of land banks, were worth 14.3 years of production, and that that would be enough to build 1.4 million homes, which would be a welcome addition. What is more, under the current system there is very little that local authorities can do about land banking. Compulsory purchase order powers are little used because they are complex, legalistic, difficult and so on, so authorities, on behalf of the communities that they represent, have no effective way of bringing land forward to the market. That is why we would create greater transparency by ensuring that developers register the land they own and have options on—[Interruption.] The Secretary of State is chuntering, but he is in favour of transparency, so will he support that measure?

We want to give councils and communities the power to charge developers escalating fees for sitting on land with planning permission to incentivise them to build and, if they do not, to release the land. The Secretary of State has denounced the idea, but of course it was supported by the hon. Member for Grantham and Stamford before he was given the job of Planning Minister. As a last resort, we would give local authorities the power compulsorily to purchase land and to assemble land so that we could make progress. The purpose of all those measures is to address the imbalance of power between local communities and developers. I say to Ministers that the land market and the housing market are not working and that is why there is this fundamental problem. There is not enough competition and I do not understand why a Government that includes a party that prides itself on being an apostle for competition is doing nothing about that.

My final point is about how we can get consent and get the houses built in the right place. I congratulate the local authority of the hon. Member for Fareham on the leadership it has shown—he outlined that for the House this afternoon—in recognising that there is a need for more housing and saying where it would like it to go. That is the essence of the deal. We have a much better chance of getting communities to come forward and take responsibility for meeting housing need in their area if they think that the sites they identify are where the housing will go. As we have heard in debates in this House on many occasions over the past two or three years—this is the reason the Planning Minister sometimes gets a tough time—it does not work like that. Developers say that the land is brownfield and too expensive, that they cannot build a lot there and that they want to go for a greenfield site. That has to change.

The fundamental problem with the Gracious Speech is that it does not get why so many people voted the way they did or did not vote at all on 22 May. It does not get the costs and insecurity that many people have to live with, whether they are caused by zero-hours contracts, the bedroom tax, high energy bills, insecure tenancies, unaffordable house prices or having to go to a complete stranger and say, “Can you help me because I can’t feed my family this weekend?” That is the truth. The Government are unwilling to use the power of this House to help people in those circumstances. In the end, the public will judge, but if we want to restore faith in democracy we must use our democracy to help people who find themselves in that position.