Council and Social Housing

Simon Hughes Excerpts

Tuesday 6th March 2012 Westminster Hall

[Austin Mitchell]

Of course I welcome the statistic that the hon. Gentleman read so brilliantly from the brief, but those are hypothetical houses not yet built, and the problem is now. The situation now is that starts are at their lowest level since 1923, and that is what we need to deal with.

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

May I join in the tributes? The hon. Gentleman has a great record on the issue. However, we all understand the difficult position that the country and the Government are in. The previous Government were hopeless when it came to new council housing build; as he knows, they had the worst figures of any Administration since the war. Can he accept that, given the depth of the recession, the Government’s initiatives are moving in the right direction? We should unite at least in encouraging them to ensure that we have more council and social housing, certainly including at rents that his constituents and mine can always afford.

[Austin Mitchell]

I will come to that point, which is wrong. Hopes are not houses. The Government might have the intention to build an increased number of houses, but the problem is now, and it is getting worse. A crisis is building, to which the only answer is to build more public housing for rent now. That is not being done; it has not even been started. House building is so low that the tragedy will become worse in the next months and years. The right hon. Gentleman is correct in that the Labour Government’s record was pathetic. At the end, we managed to persuade the then Prime Minister—often a difficult job—that we had to build council houses and had to have a building programme. That was initiated by my right hon. Friend the Member for Wentworth and Dearne (John Healey). That was responsible for growth, and for jobs in the recovery from recession, but it was immediately cut by the incoming coalition Government, who had initially promised to maintain that building programme. They stopped it, and began a deliberate policy of diminishing, demeaning, draining and dumping social housing and those who live in it.

I say “diminishing” because of the 60% cut in funding for building social housing. Even that spending is predicated on higher rents providing revenue. That meant that areas such as Grimsby and north-east Lincolnshire got nothing, which is unprecedented. We wanted to build, but we could not, because no money was available as our rents were too low. I say “diminishing” because of the cuts in housing benefit, the cost of which is high only because the building rates have been so low. If we had built social houses over the long term and on a sufficient scale, we would not need to pay housing benefit to the homeless and to move them into expensive accommodation, and would not have the kind of abuses that are serialised every day by the Daily Mail. It is failure to build that has made the housing benefit bill so high.

Other cuts are already affecting new claimants and, from April, they will start to affect those who renew their housing benefit. First, there was a cut for adult dependants at home, which was designed to force kids—adult children—out of the household and into a single person housing market that is not there. The bedroom tax, which comes in in April next year, is a cut in housing benefit of 15% for those with a spare room, and of 25% for those with two spare rooms, to force tenants to move to smaller accommodation, which is not there, or into the private rented sector.

There is the renewal rate for under-35s from April next year, who will be getting the shared-room rate for single people. Then universal credit and caps will come in, which will produce even more difficulties, not so much in Grimsby but certainly in London and the big cities. That is the “diminishing” part of the argument.

The demonisation part is that council tenants are being treated and regarded as subsidised scroungers living on state subsidy. In fact, the Localism Act 2011 ends secure and assured tenancies, which are the basis of establishing a settled community and a good life on a council or housing association estate. It replaces them with short-term tenures. That means that if the family get better off—if the head of the household or members of the family get jobs—and income increases, the tenancy will not be renewed.

[Austin Mitchell]

I am a grateful for that point. I am also grateful that, for a period, in Humberside, we have agreed on the issue of short-term tenancies. I hope that the measure will not be enforced by councils, but several are already making arrangements to enforce it, and others are being campaigned against by tenants who wish to persuade them not to enforce it. We will have a patchwork quilt over the country, but the net effect will be that in many cases, people are forced out, and are forced into accommodation in the private rented sector that is not there.

[Simon Hughes]

rose—

[Austin Mitchell]

I give way to the right hon. Gentleman, who is a member of the council housing group, and has worked on the issue for a long time.

[Simon Hughes]

I want to ensure, following the last intervention, that anybody who reads this debate is clear about the position. It will be up to every council to decide whether all or some of its properties do not have secure tenancies. Southwark council—one of the largest social housing landlords in the country—should, in my view and that of my colleagues, keep the policy that everybody in Southwark council housing should have a secure tenancy in future. If it wants to do that, there will be no risk to any of those people. The scandal is people who have salaries or incomes of £100,000 and are in council properties; some of them are not very far away from the hon. Gentleman and from me.

[Austin Mitchell]

There are problems and abuses in any system; in the tax system, for instance, there are myriad abuses that are not being dealt with effectively. The general principle should be that tenancies should be either secure for council house tenants, or assured for residents in housing associations. It is up to councils, as the right hon. Gentleman says, to decide. I hope that they will decide to maintain secure tenancies; that is the only basis on which one can have a safe, secure, settled community of people who are assured that they will be able to stay in their houses and that their kids will not have change schools.

--- Later in debate ---

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

I am grateful to the hon. Member for Great Grimsby (Austin Mitchell) for introducing this important debate. I want to make a few points. Having a constituency not very far from that of the hon. Member for Lewisham East (Heidi Alexander), we share many of the same analyses. Another London MP, the hon. Member for Leyton and Wanstead (John Cryer), has exactly the same sort of housing need pressure on him as I have had for every year since I have been a Member of this House. The pressure on me has not altered; it has been the same under Labour and Tory Governments and even under this Government. It is still 40% or more of the people who come to see me who ask for help with their housing. They may want new housing because they are living in overcrowded conditions, a first home at a cost they can afford, repairs to be done or whatever. The issue, therefore, remains hugely important.

A few months ago, the Halifax and Lloyds bank sent me—and probably many other Members—some key facts about my constituency. I think I knew them, but I will relay them to you, Mr Caton, for the purpose of the debate. The average house price in my constituency at the time this pamphlet was issued in December 2010 was £310,621. The average national house price was £164,310, which was nearly half the cost of a house in a seat such as mine, where most people come from a working-class background and where many have lived all of their lives, and generations before. The average earnings in a constituency such as mine were £52,755, while the average earnings across the UK were £32,178. Of course London earnings are higher, but they are not so high that they make up for the additional housing costs.

My first point is that for people in high-cost areas—it applies not just to London but to inner-city Leeds, Manchester and so on—the additional money that they earn does not make up for the additional cost of their housing. That is a challenge that can only be met by supported housing. By definition, if people do not have the wages to be able to buy into the private sector as owner-occupiers, social housing must be provided.

Secondly, we are required, therefore, to build as much as possible. All the evidence suggests that if we are to get people into work and keep them in work, we need construction projects, whether it is big infrastructure projects or housing. It is how we can get most people into work, doing skilled and productive jobs, and thus benefiting the local economy. It is a win-win situation: we house people and provide work for them.

Thirdly, I have a pre-Budget plea. The Chancellor could help this situation with some tax changes. If we taxed unused, undeveloped brownfield land as if it had been developed, we would incentivise the owners to use the land. They would realise that there was no point in sitting on undeveloped land because they would be paying the same tax as they would on developed land. Let me repeat publicly the plea that I have made to my colleagues in private. Site value rating—it can be called by another name—which the Liberal Democrats have espoused for many years, is really important. We must incentivise people to put their land on the market so that there is the space on which to construct our buildings. There are many unused sites in my constituency that still could and should be used for housing. We must have a tax system that incentivises proper development of property.

If there is new council housing, and there should be, we must change the rules over right to buy. The discount regime has been varied. It was much higher and was rightly brought down by the Labour Government, and it has been changed again under this Government. The incentive on councils to build new council housing is never going to be great if, immediately it is built, it is bought out of the council housing sector. There is an argument that different rules should apply to new-build council property and existing council property. I have never supported the discounts when they were high. There should always have been a regime in which the whole of the money went back to the council so that the stock could be replaced. For many years, though, the money went to the Government, leaving the council with only some of it.

I am in favour of mixed communities, but mixed use of blocks of properties, either flats or tower blocks, often does not work at all. There is the tenant who, in many cases, is there for life; the right-to-buy person, who will be there for life or a long time; and then the people who rent, either from people who have bought the flat or from people who have bought and sold on. They tend to be there for two minutes—I exaggerate slightly—and have no stake in the community. They are not naturally very good neighbours. They may not be inherently antisocial, but they may be students, visitors or here on holiday. Such a mix does not make for community cohesion, and we may need to have different rules in the future. I appeal to Ministers to think about how we manage multi-occupancy places—places that are not detached, semi-detached or terraced. The system does not work well at the moment. As any local authority will say, managing an estate with that mix of people is really difficult.

[Heidi Alexander]

The right hon. Gentleman is talking about the right to buy. Obviously, his Government have consulted on the enhanced right to buy. For the sake of clarity, I want to know whether he supports the proposed £50,000 limit on the discount that can be applied.

[Simon Hughes]

My instinct is to keep the limit where it is. There is such a need for social rented housing that we do not need to encourage people at the moment.

I have two final ideas. The hon. Member for Great Grimsby and I had an exchange earlier. It is important that we get out the message that it will be up to local authorities to decide whether all or some of their properties will be secure tenancies in the future. I worked very hard to ensure that that was the outcome. My colleagues will remember that in the summer of 2010, the Prime Minister floated the idea that it might be the policy of the Government to end secure tenancies in every local authority.

I was very clear about that from the beginning. I went to see the Minister for Housing and Local Government immediately and he helpfully allowed me to look at the housing policy paper. I was clear that we needed to have a policy that only allowed that if the local authority decided that that should be the policy. We must not frighten people, particularly older people, into thinking that they will lose their security of tenure where they are—that does not apply—or that it will follow that in future council tenancies in Southwark, Lewisham, Grimsby or anywhere else there will not be security of tenure. Councils can decide to keep every property, or 90% of properties or every estate bar one as secure tenancies if they wish. I support that as a principle of localism. I will fight to ensure that my local authority, whoever runs it—it has been run by us and by Labour over the years—retains the security of tenure for those who move into council properties unless there is an all-party consensus in a particular block that it should not be retained, for other management reasons.

Finally, I support the Housing Minister and my hon. Friend the Minister who will respond to this debate in saying that if there are people who end up with high incomes, it is wrong that as council tenants they do not pay for that property the market rent it would fetch on the open market. This is a difficult area. The Housing Minister has said that there should be a threshold of £100,000, which I support; that is an easy starting place. I cannot justify saying to my constituents who are knocking on my surgery door that there is not a place for them because someone with a family income of £50,000, £60,000, £70,000, £80,000, £90,000 or £100,000 is sitting in a council property paying a council house rent. We have to deal with that issue, because that is an inequity that was never intended to exist. These homes were intended to be for people on low incomes who could not afford to go elsewhere. At the moment, we have people in them who are on much higher incomes. I do not suggest that those people should be evicted—that would be inappropriate, because we want mixed communities—but they should pay the full whack.

In conclusion, I say to my hon. Friend the Minister that I am grateful for many of the initiatives that have been introduced, particularly the new homes bonus, which allows all authorities—including mine—to spend money on housing. I understand the difficulties that the Department for Communities and Local Government has had in trying to win the battle to get the money that it needs. I am pleased that the new affordable renting system does not mean that the properties concerned will all be at 80% of market rents; in London, I think the average is 64% of market rents, which is better than 80% of market rents. We must try to ensure that we have the maximum number of properties at lower rather than higher rents.

I will continue to urge my hon. Friend the Minister—as I know he would wish me to do—to argue within his Department and within Government as a whole that we should have more local authority housing wherever possible, or that we should give councils the freedom to build it, because we have a huge unmet need for such housing in many parts of our country. We need more local housing that is not all immediately swallowed up by being bought up and disappearing from the social housing sector. I hope that message is heard loud and clear within Government, and I hope that my colleagues within Government are arguing very strongly for it, so that at the end of five years the coalition can have a better record on housing than that of the Governments that have gone before; I know that that is my hon. Friend’s aspiration.