Select Committee on Transport, Local Government and the Regions Minutes of Evidence

Examination of Witnesses (Questions 210-219)




  210. Good morning. Can I welcome you to the third session on affordable housing. Can I just make it clear that we are a little bit late, but we now have all the evidence on affordable housing published and it is also available on the web for anyone who wants it. Can I ask you to introduce yourselves for the record, please?

  (Mr Ben Jackson) My name is Ben Jackson. I am Director of External Affairs at Shelter.
  (Mr Alastair Jackson) I am Alastair Jackson. I am Director of Policy at Shelter.

  211. Are you happy for us to go straight to questions or do you want to make a brief statement first?
  (Mr Alastair Jackson) If we could start with a brief statement first. Thank you very much for the invitation to be with you this morning and also for the inquiry that you are conducting. The most recent Government figures show that about 82,000 households were in temporary accommodation and in bed and breakfast at the end of March 2002, and in particular 12,000 of that 82,000 households are in bed and breakfast. Shelter also estimates that somewhere between 83,000 and 99,000 affordable homes a year are needed each year from now until the year 2016. That estimates is consistent with the estimates produced by other organisations and we believe it would be the conclusion that the Government came to if it chose to publish its own official estimates. What we see as a solution to these two problems is a significant and sustained increase in Government expenditure in order to meet this outstanding affordable housing need. At the moment Government expenditure in this area is about £1.4 billion a year, the forecast for 2003/4. Shelter estimates that we need an additional £1.7 billion if we are to start producing the kind of affordable housing need that we are talking about. It also means confronting some difficult issues, particularly where the housing is to be built. Clearly new housing developments, Shelter believes, should be sustainable but we believe that housing need is an important first principle to be met. We have made some specific proposals around the Right to Buy and the potential role of the private rented sector in meeting this housing need. But essentially Shelter is concerned for the health, the education, the transport implications of the level of housing need that we are confronting. We believe there are severe costs to individuals but also to society associated with not meeting affordable housing needs which is why we are advocating that this level of expenditure is necessary in order to meet those needs.

Mr Betts

  212. I would like to get the figures sorted out to begin with. I think you are suggesting we need to spend about £1.7 billion extra to meet the proper housing needs of the country. Is that right? If so, how do you arrive at the figure?
  (Mr Alastair Jackson) It is £1.7 billion extra that we are arguing needs to be spent. Those are based on our demographic forecasts of emerging housing need. Also to catch up with some of the backlog of housing need represented by households in temporary accommodation and in bed and breakfast. We estimate the emerging housing need to be 67,000 to 73,000 households each year in the future. We are adding to that 16,000 to reduce the backlog. If you take those kind of figures and then look at what the Housing Corporation needs to spend per unit in order to provide affordable housing, if you then combine them you get to that figure of about £1.7 billion on top of what the Government is currently spending from the Housing Corporation's budget.

  213. That is £1.7 billion for additional units, not to sustain in a better way existing units.
  (Mr Alastair Jackson) That is correct, yes.

  214. If the Chancellor was to be that benevolent in his next spending statement what do you think the priorities for that spending should be and what should be done if it did not produce £1.7 billion?
  (Mr Alastair Jackson) For example, we can talk about affordable housing for rent versus perhaps shared ownership, shared equity, starter home initiatives. What we see at the moment is the Housing Corporation's programme which is driven by what local authorities tell the Housing Corporation they want at the local level. The Housing Corporation programme is split roughly 80 per cent housing for rent 20 per cent low cost home ownership initiatives of different kinds. We see that being the appropriate split going on into the future.
  (Mr Ben Jackson) I think the key point we want to make to the Committee is that fundamentally we cannot address and resolve this issue unless there is additional expenditure. While we make a number of suggestions in our evidence to do with the private rented sector—we have been involved in a commission developing proposals about the Right to Buy and so on—at the end of the day we think that unless there is that additional expenditure we are not really going to grapple with the scale of the problem that we face in this country in terms of affordable housing. The short answer is that if the Chancellor does not come up with that, relatively marginal impact can be made in resolving the problem. That is our view.

  215. The £1.7 billion is going to go to the Housing Corporation, not to local authorities?
  (Mr Alastair Jackson) We are assuming the current framework for investing in additional affordable housing will continue which is very much dominated, as you know, by investment through the Housing Corporation.

  216. Is that your preference?
  (Mr Alastair Jackson) We have not looked into that particular issue in detail. We have to work with the mechanisms we have—I am not sure we would get more housing for the money by doing it in a different way. Clearly there are ways of switching investment streams either through the Corporation or through local authorities, but we need that level of expenditure in order to get that level of output.


  217. You have made it clear that you think the Chancellor should come up with the money. If he does not, is there not an argument that the private sector ought to be looking at coming up with housing for some of their key workers?
  (Mr Alastair Jackson) Again, the overwhelming need that we are highlighting to the Committee is about affordable housing for people with either no income of their own at all or at the very bottom end of the income scale, and I think it is unrealistic to say that the private sector is going to put up wages sufficiently that those groups of people will actually be able to afford to compete in the market that we see in the south east and in London in particular. I think there is an argument to say that for some intermediate, slightly higher income groups, the market should actually be paying higher wages. But I think we need to be realistic about the extent to which that happens and if it will not happen then we cannot say, if you like: "That's your bad luck, you must suffer poor housing conditions". I think we need to set them up in homes.

  218. Putting up wages means that you have to put up everyone's. If you actually provide tied accommodation then you can earmark it for particular groups of workers that you want to keep and attract, can you not?
  (Mr Alastair Jackson) That is correct. I believe that Boots, for example, have been talking recently about their inability to recruit and they are looking at some of those options. But fundamentally—I am sorry to keep coming back to this point time and time again—I think that would potentially make some marginal difference in some places with special schemes that a particular employer brings forward, but I think the numbers are such and the scale of the need is such that if someone could come up with such a scheme it would be to be encouraged but it is not going to make the difference that we need to see to affect the real problem.

Ms King

  219. Just to get clarity on the figures, you said £1.7 billion for extra units, so when you also talk about £19 billion pounds required for the backlog of repairs for social housing, where is that going to come from? You are saying £1.7 billion extra annually plus £19 billion when and where?
  (Mr Alastair Jackson) At the moment the Government is funding its decent homes targets in a variety of ways with existing commitments both to encourage local authorities to transfer their stock and get housing repairs undertaken as that stock transfer takes places but also through investment—for example Arms Length Management Company—and those kinds of ideas. That investment is taking place at the moment. There are debates as to whether it has been timed in the right way and will there be enough in the end, but that was a clear Government priority (after the previous election and the last one) which is underway at the moment. What we are saying is that relatively speaking the supply of additional affordable housing units has been relatively neglected compared to the attention and the investment that is taking place.

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