Council Housing

Matt Rodda Excerpts

Tuesday 27th March 2018 Commons Chamber

[Matt Western]

I thank my hon. Friend for his timely intervention. He is of course absolutely correct. One issue we have had over recent decades is that so much of this property has fallen into the hands of landlords and others, the investment has not been made, and they are now charging extortionate rents. Had it been left to local authority provision, those renting would be able to afford the properties more readily.

Organisations that bid for Government grants were told to re-let homes for low-cost social rent at the new so-called “affordable rent”. It is now estimated that 150,000 homes for social rent have been lost in the past five years. More recently, the Government proposed to add to the sell-off by extending the right to buy to housing association tenants, funded by an extraordinary forced sell-off of council housing to the highest bidder.

[Matt Rodda (Reading East) (Lab)]

I associate myself with my hon. Friend’s points and the genuine and deep concern that he shows for the needs of tenants throughout the country, many of whom are struggling with high housing costs, as indeed they are in my constituency. Does he agree that it was an outrageous mistake and serious error by the Conservative Government to stop many local authorities building council houses when they had fully costed schemes that were ready to go and, indeed, shovel-ready? Reading had a plan for 1,000 new council houses, but unfortunately it was stopped by George Osborne in 2015.

[Matt Western]

My hon. Friend is, of course, absolutely correct. There is a suppression of building low-cost rental properties by local authorities. Those local authorities know that there is a need, and we must allow them to have that responsibility. Preventing them from supplying that housing has had a huge social and economic cost in our communities.

[Matt Western]

I thank my hon. Friend once again. Not only is she very well informed, but she is very experienced in this matter. She is absolutely right. The high levels of housing that we have needed over the decades have been delivered by a mix of providers. The crucial element that is now missing is the housing that is provided by local authorities. In its absence, we will never achieve the objective that has been set by the current Government. If we look through the decades, we can see how, in the post-war periods of the 20s and then the 50s and 60s, the local authorities were allowed to ensure a good supply of housing, which they recognised was needed because of the constraints in the private sector.

It is worth looking at this matter in the round. Over the past 10 years, the overall supply of new homes has seen an under-delivery of at least 80,000 to 100,000 homes a year. The result is that the UK faces a desperate shortage of at least 1 million homes. The Royal Institution of Chartered Surveyors now forecasts that we will reach a shortage of 1.8 million low-cost rental properties—that is just low-cost rental properties—by 2022.

All areas of the UK need housing, both public and private, but there is particular and desperate need for low-cost housing for rent. In my constituency there are more than 2,400 people on the housing waiting list. Homes are being built, but not enough are under construction to satisfy this social need. Once again, it is the wrong mix of housing that is being delivered. So, what is the answer? Of course, opinions vary, and the solutions presented to the electorate in last year’s election showed clear blue water between the main parties.

Recognising the critical importance of the housing shortage in its 2017 manifesto, Labour committed to the creation of a new department for housing. Importantly, on house building, we promised at least 1 million new homes over the next Parliament, which, as we now know, can be a very short time, and a new target of 250,000 new homes a year being built by 2022. Of those, at least 100,000 per year, or 40% minimum, would be genuinely affordable homes to rent and buy per year, including the biggest council house building programme in more than 30 years. If I am honest, I would personally like to see a lot more.

Subsequently, at the autumn party conferences, much time and debate were given over to this challenge, and the Prime Minister announced that she was committed to delivering 300.000 new homes. Specifically, she stated that £2 billion would be committed to helping the delivery of affordable housing, but, of course, that equates to just 25,000 properties. Clearly, housing is rising up the political agenda, and it is now one of the biggest domestic issues that we face.

My contention is that we now face a social crisis that is without precedent in the past 50 years. We have thousands of families without their own homes, waiting desperately for accommodation. We have record numbers of people rough sleeping. In my constituency of Warwick and Leamington, we have the highest number in terms of people per 1,000 of the population in the whole of the west midlands. Over the decades, the overall supply of housing has not delivered. Now must be the time to change that.

I am convinced that council housing was, is and will be the answer to our housing crisis. The Government need to release local authorities from the bounds of their borrowing cap and allow them to use their pension funds to invest in their communities. The use of public land holds the key to unlocking the potential to deliver this. Simply selling public land to the highest bidder will not solve anything. Land is the fundamental denominator in the cost equation of UK housing, and the planning process surrounding it needs urgent, radical reform.

Building more council housing solves at least two key problems: first, the lack of genuinely affordable housing for those who cannot afford market rents; and secondly, the chronic under-supply of housing that is the root cause of our housing crisis. As I said, there is a lack of genuinely affordable housing, with historically high waiting lists of 1.16 million households nationally. The easiest way to help those in need is to provide council housing. If we fail to do this, the result will be increasing homelessness, which we have witnessed more than doubling nationally since 2010. Another, less frequently made, argument is that building more council housing is the key to boosting overall supply, thereby addressing the root cause of the UK’s housing crisis.

The Government’s own target is to build 300,000 new homes each year, but the number of additional homes delivered in 2016-17 was 217,000, falling well short of their target. Although last year was the first year since the financial crisis in which over 200,000 homes were added—and I do applaud that—it was not enough, and the wrong mix of homes is being built. It is now stated that 300,000 houses would just about keep up with demand. Even if the Government hit this target, it is unlikely to bring down house prices and rents significantly. Also, in order to deliver those 300,000 houses, we need all providers to be supplying into the process.

History provides important lessons. It is no coincidence that house building rates reached their post-war peak during the 1950s and ’60s, when successive Governments were committed both to private sector and public sector house building. At the time, housing was plentiful and house prices stayed low, so that many on low to average incomes could afford to rent or buy their own homes. The success of the ’50s and ’60s shows that prioritising council housing need not be a partisan issue. Harold Macmillan, the Conservative Housing Minister from 1951 to 1954, initiated some of the greatest council house building programmes in order to meet his target of building 300,000 homes a year. During those Macmillan years, local authority housing made up 87%, 84%, 77% and 69% of completed dwellings per year respectively. This compares with just 1% in each of the past four years under this Government—or about 20% each year if we include housing associations as well as councils. Importantly, as I have illustrated elsewhere—I want to give credit where it is due—post-war Conservatives recognised that the public sector must build the homes that the private sector will not build during a housing crisis, which is where we find ourselves.

So why will this Government not do that? I would like to believe that it is not simply ideology that says that the state is bad while the private sector is good and will solve all our problems, because this crisis is holding back our country socially and—I cannot stress this enough—economically. I believe that there is a duty on one-nation Conservatives to come forward and urge the Government to commit to a mass council house building programme if they are serious about solving our housing crisis. In this light, I have recently relaunched, with my hon. Friend the Member for Stroud (Dr Drew), the parliamentary campaign for council housing. I invite all MPs to get involved with this cross-party initiative that aims to see more council houses being built.

Central Government policy currently acts as a disincentive for councils to build more council homes: first, because, there is next to no funding from central Government for the provision of council housing; and secondly, because there has been just £5.9 billion gross investment in social housing in 2015-16 compared with £10 billion in 2009-10, and the vast majority of this will be directed to housing associations.

This compares with the £22 billion forecast to be spent on housing benefit in the 2017-18 financial year, which is a direct result of not building the housing we need. Is that not ironic? Surely the Government would rather not line the pockets of landlords in the private sector, but prefer to invest long term in the council housing that we need. Is that not pragmatic? The additional £2 billion investment announced by the Prime Minister at the conference was welcome, but it will only provide a few thousand homes by 2021, including the affordable homes that can be anything up to 80% of the market rent. The money is not ring-fenced for genuinely affordable social rents.

As I said earlier, the borrowing cap stifles a council’s ability to build where councils can currently only borrow up to a certain amount to invest in council housing. I welcome the announcement in the Budget that the Government will raise the cap by a total of £1 billion for areas under high affordability pressures, but more needs to be done. If the Government accept that the cap stifles building, why will they not lift it entirely for all areas, as has been done in Scotland?

[Matt Rodda]

Does my hon. Friend agree that there is a considerable need for greater house building in high-cost areas, and that there is actually a lot of available land in many of those areas? There certainly is in Reading. In our case, it is brownfield land from our light industrial past, and I assume that that may also be the case in Warwick and Leamington. Does he agree that urgent Government action is needed to free up that land in order to support the local economy in those areas and to support local public services? There is a particular pressure on local schools and the NHS in my constituency, as people move to lower-cost areas. Will he endorse my points?

[Matt Western]

I thank my hon. Friend for his informed and relevant intervention. He is of course absolutely right that this essentially leads to what may be described as social cleansing. We may actually be creating ghettoes of particular types of community, when we should be striving for sustainable, balanced communities for our economic and social good. I totally endorse my hon. Friend’s points.

It is estimated that lifting the cap would allow £7 billion to be injected over five years, providing an additional 60,000 council homes. Even the Treasury Committee, chaired by the right hon. Member for Loughborough (Nicky Morgan), has called for this and stated:

“raising the cap would have no material impact on the national debt, but could result in a substantial increase in the supply of housing.”

The Local Government Association agrees. In my view, we should lift the cap entirely and take borrowing to invest in council housing off the country’s balance sheet, as is standard in other European countries. Why not?

Returning to the use of land and its availability, there is clearly much land available, but it is questionable in terms of its efficient use. As my hon. Friend the Member for Reading East just alluded to, there is land—including public sector and brownfield land—but it is all about the planning process and how that land is brought into the equation in order to deliver affordable housing. The current planning policy framework makes it prohibitively expensive for this to happen. The whole process needs radical reform.

Councils are currently incentivised to sell off the overpriced land that they own to highest bidder, rather than to use it for the common good. This needs to be reconsidered urgently. I am calling for us to recognise this national crisis in housing by legislating for all unused local authority and public sector land to be used exclusively for council housing. That is the nature of the crisis we face.

The inflated land prices across the country are preventing local authorities from being able to assemble the land to build on. Land is currently priced at its potential future development value, rather than at its existing use value, as is done in other countries. This pushes up the cost of undeveloped land that would be suitable for housing development, making investment in council housing more expensive. Bizarrely, it also rewards landowners for housing and infrastructure developments to which they do not contribute.

The homelessness charity Shelter has argued that a few small reforms to the Land Compensation Act 1961 and associated legislation on compulsory purchase orders would enable local authorities to purchase land at a fair market value—one that reflects both the current value of the land and reasonable compensation, and allows for the delivery of high-quality, affordable developments. This is not rocket science; it is not complicated. That is what they do in other countries in Europe and elsewhere. It is just about changing the planning approach so that it favours the local authorities.