Housing and Planning Bill (Twelfth sitting)

Matthew Pennycook Excerpts

Thursday 3rd December 2015 Public Bill Committees

[Mr Jackson]

I will not give way for the time being. I have already been very kind to the hon. Gentleman and I will let him in in a minute.

The Labour party was quite courageous when it was last in government. For instance, it started to challenge lifelong tenancies, which was really important. That was about fairness, equity and sharing resources. That was absolutely right and I pay tribute to the right hon. Member for Don Valley (Caroline Flint), who was responsible for that when she was Housing Minister.

However, the principal reason that I oppose the amendment is that it is overly bureaucratic. It does not take into account that, in the vast bulk of local authority areas where there is social housing administered by housing associations, the differential is reasonably low and the number of people who will be impacted is low. Savills says that the figure will be around 6% but I think it is probably even lower than that. Nevertheless, it is a strong message to working people in social housing accommodation that there is an element of social equity and fairness in this process. If someone is working hard and has done well, no one is complaining, but resources are scarce and we all have a duty and responsibility to ensure that the people who need help most get it.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

Does the hon. Gentleman share any of my concerns that the policy will change the social mix of areas? One problem on housing estates in my constituency is that they are already residualised—they already contain a large number of vulnerable people with high levels of need. If we move out those who have done well, who get a better job and who save—putting pressure on them to move—will that further residualise those estates?

[Mr Jackson]

No. A mix of shared equity, social rent, starter homes and owner-occupation will happen across the country organically as a result of the process. Let me just give the hon. Gentleman a statistic. In 1970, about one in four people in social housing were in workless households. It was quite normal for people in places such as Barking and Dagenham—people working at Ford—to live in a council house. There was no social stigma. Decent, working people lived in council houses, and if they were lucky they bought their homes. That figure is now much higher: about 50% of people in social housing are in workless households. There has been an element of ghettoisation already. None of us supports that and everyone wants a mix of people. Some people need specialist help, including people who are elderly, people with mental health problems and people who need supported housing. We have to have that variety. The legislation will not do anything other than drive through that variety, depending on each local area.

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[Mr Jackson]

I take your admonition in the spirit in which it was given, Mr Gray. I conclude by saying that amendment 199 is a wrecking amendment that would create an enormous bureaucratic burden for housing associations. For that reason, I ask the Committee respectfully to reject it.

[Matthew Pennycook]

It is a pleasure, Mr Gray, to serve under your chairmanship again. I rise to support the amendment in the name of my hon. Friend the Member for City of Durham. The stated intention of this part of the Bill—to remove an unfair subsidy—is highly questionable. The hon. Member for Thirsk and Malton has called social housing taxpayer-funded housing, but it is erroneous to suggest that social rents are an economic subsidy merely because there is a difference between social rents and market rents. Since the abolition of housing revenue account subsidy and the move to self-financing in April 2012, housing revenue accounts have brought in an overall surplus to the Exchequer. Councils and HRAs can set lower rents because of the subsidy gained in previous years.

[Chris Philp]

I believe that there is a subsidy, for two reasons. First, many housing association properties were built historically using Government grants. Secondly, many housing association properties were built as a requirement of planning permission and, at the time of construction, were subsidised by the private housing in the same scheme. For those two reasons, I categorically disagree with the hon. Gentleman’s assertion that there is no implied subsidy.

[Matthew Pennycook]

I disagree with the hon. Gentleman. He is right to say that there was an historical subsidy in the form of construction debt, but that has been paid off in most circumstances. HRAs are self-financing and most have made a profit since 2008. That is not a direct economic subsidy, as the Conservative party would have us believe. There may be other reasons why Conservative Members think that the policy we are discussing is the right one, but I disagree with them. It is bad policy making.

[Chris Philp]

Will the hon. Gentleman answer my second point about the implied subsidy via the planning system? When planning permission is granted and 20% or 30% of the units in the development are designated as social, they are effectively being subsidised by the private units in the same development. That is a subsidy.

[Matthew Pennycook]

That is not a public subsidy and the hon. Gentleman misunderstands my point. HRAs are self-financing. We are not talking about the two thirds of tenants in council housing who claim housing benefit, but there are problems in that regard. That is an economic subsidy from Government.

[Helen Hayes (Dulwich and West Norwood) (Lab)]

I want to make a similar point. The procurement of affordable housing through the planning system is not public subsidy, but the use of the democratic planning system to ensure that development provides what local communities need.

[Matthew Pennycook]

My hon. Friend makes a very good point, and I agree wholeheartedly. I served as a councillor before being elected to this place, and I give the Government credit for reforming the council house financing system. However, it is misleading and highly questionable to state that the rationale for the policy is an economic subsidy. That point needs to be made for the record. I will, for the reasons that I have stated, support the amendment, because the proposal represents bad policy making. There is a risk that it will lead to increased homelessness and increase the housing benefit bill. There is a risk that it will undermine the social mix on many estates, including those in my constituency.

The Government, incidentally, acknowledged that the discretionary threshold of £60,000 would have an impact on the income mix in areas but said the impact would be minor because of the threshold level. Bringing that threshold down would have a far bigger impact. Knowing the estates in my constituency and the problems they have as I do, I know that the last thing they need is for pressure to be put on people who do well, who aspire to get on and who get a better job to move out of those communities. This is bad policy making. For those reasons, I oppose the measure and support my hon. Friend’s amendment.

[The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)]

It is a pleasure to serve under your chairmanship, Mr Gray. This has been a wide-ranging debate, and a number of points have been raised that I am confident will be covered when we consider other amendments to the clause. I will therefore keep narrowly to the amendments in question, which seek to include a substantial amount of detail in the Bill on who the policy should and should not apply to. That is unnecessary as we have the power to make regulations for that purpose if they are required.

I assure the hon. Member for City of Durham that we are giving careful thought to how the policy should treat certain benefits, including the state pension, housing benefit, and employment and support allowance. With regard to carers, as I said before, exemptions can be made and we will consider carers carefully. We recognise that, in certain circumstances, exemptions may well be needed, and we are thinking through that process carefully. We will provide more detail as we approach the making of the regulations and will continue to engage with the sector as we develop the policy.

--- Later in debate ---

[Dr Blackman-Woods]

My hon. Friend makes an interesting point.

I would direct all members of the Committee to the detailed briefing we received from Tower Hamlets Council. I should have said before that it is just one example of the many briefings we have received demonstrating the impact that these measures will have on housing stock and tenants. It is worth Members reading that evidence, because it shows that many people, in many areas of London, will be plunged immediately into poverty levels of income if the scheme is applied as currently outlined. Indeed, that will happen not only in London but in any area with fairly high market rents, which means most of our cities. It also means some of our more rural areas, because there is such a dearth of social housing that there is real pressure on housing stock, so market rents are quite high. It is important, therefore, that we take time to look at the impact of these measures.

We have also had an important briefing from the Joseph Rowntree Foundation, which says:

“The threshold at which ‘high income’ is reached will be…important.”

It also says that its research shows

“that this proposed threshold may be too blunt to accurately reflect the differing needs of households. Each year, we ask members of the public to help us define a Minimum Income Standard, showing how much money people need, so that they can buy things that members of the public think that everyone in the UK should be able to afford. The results of this exercise for 2015 show that a couple with two children would need to earn at least £20,000 each to achieve a basic standard of living.”

Yet here we have people earning much less than that having a lot more of their income taken up by housing costs. The foundation says that the measure will plunge more people into poverty.

[Matthew Pennycook]

Does my hon. Friend agree that equivalised resources are a thorny issue that the Government have encountered before with child benefit and the household benefit cap level? A blunt gross household income threshold does not take into account the needs of different-sized families.

[Dr Blackman-Woods]

I absolutely agree. The Joseph Rowntree Foundation emphases the point about not having a cliff edge and notes that schemes can be carefully tapered. That has happened to a degree with universal credit, so a model that could be applied is already in place. The other point it makes strongly is:

“The threshold for ‘pay-to-stay’ requires sensitive definition, and a taper for rent increases should be included to avoid work disincentives.”

To counter the point made by Conservative Members earlier, there could be huge work disincentives if we do not get the thresholds and tapers correct. Otherwise, if someone were to move from a social rent of £90 a week to a market rent of £200 a week and get only a marginal increase in their income, they would have to think twice about taking on additional hours or a promotion at work. It is therefore important that the detail of the scheme is right.