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Column 824

Oakes, Rt Hon Gordon

O'Brien, Michael (N W'kshire)

O'Brien, William (Normanton)

O'Hara, Edward

Olner, William

O'Neill, Martin

Orme, Rt Hon Stanley

Parry, Robert

Pendry, Tom

Pickthall, Colin

Pike, Peter L.

Pope, Greg

Powell, Ray (Ogmore)

Prentice, Ms Bridget (Lew'm E)

Prentice, Gordon (Pendle)

Prescott, John

Primarolo, Dawn

Purchase, Ken

Quin, Ms Joyce

Radice, Giles

Randall, Stuart

Rathbone, Tim

Raynsford, Nick

Redmond, Martin

Reid, Dr John

Robertson, George (Hamilton)

Robinson, Geoffrey (Co'try NW)

Roche, Mrs. Barbara

Rogers, Allan

Rooker, Jeff

Rooney, Terry

Ross, Ernie (Dundee W)

Rowlands, Ted

Ruddock, Joan

Salmond, Alex

Sedgemore, Brian

Sheerman, Barry

Sheldon, Rt Hon Robert

Short, Clare

Simpson, Alan

Skinner, Dennis

Smith, Andrew (Oxford E)

Smith, C. (Isl'ton S & F'sbury)

Smith, Rt Hon John (M'kl'ds E)

Smith, Llew (Blaenau Gwent)

Snape, Peter

Soley, Clive

Spearing, Nigel

Spellar, John

Steel, Rt Hon Sir David

Steinberg, Gerry

Stevenson, George

Stott, Roger

Strang, Dr. Gavin

Taylor, Mrs Ann (Dewsbury)

Taylor, Rt Hon John D. (Strgfd)

Taylor, Matthew (Truro)

Thompson, Jack (Wansbeck)

Tipping, Paddy

Turner, Dennis

Tyler, Paul

Vaz, Keith

Walker, Rt Hon Sir Harold

Walley, Joan

Wardell, Gareth (Gower)

Wareing, Robert N

Watson, Mike

Welsh, Andrew

Wicks, Malcolm

Wigley, Dafydd

Williams, Rt Hon Alan (Sw'n W)

Williams, Alan W (Carmarthen)

Winnick, David

Worthington, Tony

Wray, Jimmy

Wright, Dr Tony

Young, David (Bolton SE)

Tellers for the Noes :

Mr. Jon Owen Jones and

Mr. Alan Meale.

Question accordingly agreed to.

Bill read a Second time.

Ordered,

That Clauses 42, 48, 52, 67, 115 and 183 be committed to a Committee of the whole House ;

That the remainder of the Bill be committed to a Standing Committee ;

That, when the provisions of the Bill considered, respectively, by the Committee of the whole House and by the Standing Committee have been reported to the House, the Bill be proceeded with as if the Bill had been reported as a whole to the House from the Standing Committee.-- [Mr. Dorrell.]

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Column 825

Affordable Housing

Motion made, and Question proposed, That this House do now adjourn.-- [Mr. Chapman.]

10.20 pm

Sir Fergus Montgomery (Altrincham and Sale) : I am grateful for the opportunity to have an Adjournment debate. Usually when I have such debates, they come in the early hours of the morning, so I am pleased to have one at a civilised hour.

I hope that my hon. Friend the Under-Secretary will take note of the points that I shall make. In a perfect world, we would not have a problem about affordable housing. If the housing stock of the country were shared out carefully-- [Interruption.]

Madam Speaker : Order. Could the door be closed? It is far too noisy and I cannot hear the hon. Gentleman.

Sir Fergus Montgomery : Thank you, Madam Speaker.

In a perfect world, we would not have a problem about affordable housing. However, problems such as the terrible increase in divorce, with the result that where one home sufficed now we need two, and the increase in the number of young people leaving home and gravitating to big cities have all led to an increase in housing problems. Housing associations are now the main providers of new homes for people with low incomes. I have to declare an interest, as my wife is chairman of a housing association and a member of the Housing Corporation. It might be better if she were making the speech tonight instead of me, because she knows a great deal more about housing than I do. Some would say that she knows a great deal more about everything than I do, but naturally I would not accept that. The purpose of the Adjournment debate is to highlight the concerns of housing associations over the proposed cuts in grant rates. As my hon. Friend the Minister knows, the Government provide an average of 72 per cent. of the capital cost of new housing association homes. That is due to drop to 67 per cent. in 1993-94, and the Government have announced the objective of reducing the levels of subsidy to an average--I underline "average"--60 per cent. in 1994-95 and down to an average of 55 per cent. in 1995-96. I emphasise the word "average" because it is an average for the country as a whole. In the north-west, where my constituency is, the figures would be 45 and 37 per cent. respectively.

If those figures materialised, rents on new homes built with a 55 per cent. subsidy would, on average, be 75 per cent. higher than they were last year. To put that into simple language that people understand, it would mean that a rent of £48 now would rocket to £84 a week. If that happened, it would adversely affect tenants who were working but who would find it difficult to pay such an increase in rent.

It is accepted that housing associations should be concentrating on housing for those in greatest need, which usually means the poorest families. Consequently, the high percentage of new tenants who are eligible for housing benefit is proof that housing associations are being successful in their target. However, there is concern about the cost to the Exchequer of housing benefit, and it is felt that maintaining housing association grants would reduce future housing association benehousing, and who is regarded as knowing more about housing than just about any other hon. Member, gave a lecture on 4 March in which he emphasised benefit tapers and work incentives. The combination of withdrawal rates for housing benefit, family credit and community charge benefits means that households in benefit need to earn about £25 a week more just to have £1 a week in disposable income. That is a horrifying figure.

The rent levels that housing associations are increasingly having to charge their tenants, especially those with children, require a higher income than the majority could ever earn to escape the severe effect of the tapers. I am told that, at current rent levels, 46 per cent. of working tenant couples with three children would need to earn £100 a week more in order to escape. At the same time, the poorest people are being put in the newest social housing at rents that make it even more difficult for them to get out of the poverty trap and to better themselves.

If the proposed cuts in housing association grants are implemented, working households would face massive rent increases. On average, in the year 1996, that group will spend 39 per cent. of their income on rent, compared with 29 per cent. last year. The percentage of new working tenants spending more than one third of their income on rent would rise from 27 per cent. last year to a massive 76 per cent. in 1996. If that happens, could the new rents to be charged be considered to be even remotely affordable?

There is also the question of housing benefit. I am glad to see my hon. Friend the Member for Bury, North (Mr. Burt)--the Under-Secretary of State for Social Security--in the Chamber, as I am glad that he is taking an interest in this matter. The National Federation of Housing Associations estimates that, if the average grant rate goes down to 55 per cent. in 1995 -96, 89 per cent. of all new housing association tenants moving into new homes will be on housing benefit. The federation makes three valid points. The first is that the percentage of all working households dependent on housing benefits would rise from 47 per cent. last year to 66 per cent. in 1996. Secondly, on average that group would qualify for just over £30 in weekly housing benefit in 1996, compared with just over £13 last year. Thirdly, the weekly income that that group would need to earn to escape any dependency on housing benefit would rise from £160 in 1992 to £224 in 1996. We come to the crunch question--in those circumstances, would it be worth new tenants having a job? I would have thought that the Government would want to encourage people to work, rather than have them stay in the benefits system.

Housing benefit is a complicated business. An article in the Financial Times on 21 April suggested that there were rumours that housing benefit may be the focus of attempts to make savings in the social security budget. One estimate was given of savings resulting from a steepening of the taper in the rate at which housing benefit is withdrawn as income increases, from the present 65 per cent. to 80 per cent. That would increase the maximum marginal deduction rate to 100 per cent. As a consequence, thousands more people would find themselves in a crippling poverty trap.

I shall give an example. If that happened, a single person who had a £1 increase in gross income would find that, with income tax of 25p, national insurance of 9p,

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