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Affordable Housing

2.10 pm

Mr. Edward O'Hara (in the Chair): I apologise to the House for the delay in starting the debate; I had a domestic emergency.

Andrew George (St. Ives) (LD): I am pleased to have the opportunity to lead the debate on affordable housing. I was becoming concerned that Members on the Government Benches were so worried about the case that I was going to make that they nobbled you, Mr. Deputy Speaker, to disable us from going ahead. Once I had secured the debate, I apologised in advance to the Under-Secretary of State, Office of the Deputy Prime Minister, the hon. Member for Corby (Mr. Hope), in case I need to attend the fisheries debate in the main Chamber later, although I hope that that circumstance will not arise.

The purpose of the debate is to address perhaps the greatest social crisis facing communities in constituencies in many, albeit not all, parts of the country. My constituency in west Cornwall is certainly affected, as are the Isles of Scilly. Some 10 or 15 years ago, the issue would undoubtedly have been high unemployment. There has always been the residual problem of a large mismatch between earnings and house prices in the area owing to high second home ownership and low private and rented sector accommodation, but that has never been the case to the current extent.

To be fair, the Government are not in complete control of the way in which the housing market operates; that is not in their gift, but they can pull on some fiscal and policy levers to influence how the market works and the private rented sector operates to ensure the availability of social public rented accommodation.

I want to raise several issues, but I know that many other hon. Members want to contribute, so I shall try to be brief. The first issue is housing need and how it is assessed. The second—high levels of second home ownership—has a significant impact on my area. I will then talk about some of the initiatives that have been introduced in recent years, and their impact on housing availability.

I am aware that the Government considered housing need and, through their starter home initiative for key workers, which was announced in September 2001, identified housing need in the south-east of England as their primary concern. A three-year, £250 million programme was announced, 63 per cent. of which money was to be spent in London and 28 per cent. in the south-east with the remaining 9 per cent. to be divided between the eastern and south-western Government zones. In September 2002, the right hon. Lord Rooker announced the challenge fund—a fund of £200 million—which is intended to deliver 4,000 new homes for rented and low-cost ownership in the south-east.

I am in no way diminishing the very serious housing problems in London and the south-east, but there are equally severe housing problems in many communities in other parts of the country. The impression is that the Government have been blinkered; they have focused largely on the south-east of England and seem to have

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turned their back on some of the serious problems affecting many other parts of the country, particularly the rest of the south of Britain where house prices are very high.

The housing problems in my constituency are as severe as ever. There is a significant mismatch between very low earnings—people in my constituency have been on the bottom of the earnings ladder pretty much since records began—and very high house prices. The arrangements are clearly inadequate for families in my area whom public authorities cannot house. I appreciate that the Government have targets for ending the practice of putting people in bed-and-breakfast accommodation next April, but such families will inevitably live often in very cramped and entirely inadequate temporary accommodation, away from where the main income earner works and where the children go to school.

Mr. David Drew (Stroud) (Lab/Co-op): The hon. Gentleman and I have discussed housing numerous times. Does he accept that one way of dealing with the problem is to examine the structure of housing? Older people often live in houses that are larger than they want. We seem to have lost sight of the fact that the market no longer wants to build bungalows or appropriate accommodation for older people. If such accommodation were provided, however, that could free up family housing in our communities.

Andrew George : That is true. The hon. Gentleman takes great interest in the issue, and I am grateful to him for making that important point. Incentives can be provided, particularly in the public sector. Some housing associations and local authorities try to use incentives to attract single, older people out of very large family housing that is no longer appropriate to them and into single-person bungalow accommodation with one or two bedrooms, where available. Such properties need to be available.

My part of the world has seen high rises in house prices in the past seven or eight years, as exposed in recent editions of the Western Morning News. One study showed that in the past eight years, house prices in many communities in Cornwall have risen by more than 250 per cent.—faster than they have in London during the same period. Many people in London and the south-east complain about, and are shocked by, the house prices and the rate at which they have increased. However, house prices have increased at a much faster rate in Cornwall, and most properties on the market are simply well out of the reach of local people on local wages. In addition, we must recognise that the proportion of public sector housing in Cornwall has historically been very low—between 10 and 12 per cent., depending on the district. In most urban and metropolitan areas, the proportion is significantly higher—in the upper teens and even over 20 per cent. The public rented sector is also significantly lower; it is sometimes as low as 8 to 14 per cent. in many districts, although, again, the proportion is much higher in many urban areas.

There is a very large waiting list on the Isles of Scilly, in Kerrier and in Penwith. Penwith has 28,500 homes, but 1,359 households are registered as being in need,

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which is close to 5 per cent. of households in that district. Many people have taken a strange view of house price increases. For example, yesterday, a Cheltenham and Gloucester press release entitled, "How Much Have You Made?" celebrated the fact that house prices are still increasing. If one is moving between properties, the money is toy-town money, but in many areas the bottom rung of the ladder is being taken away from local people.

I said that I would mention second home ownership. It is at a high level in my part of Cornwall, and it seems to be increasing as a proportion of stock ownership. That is understandable: partly because of the failure of many pensions schemes, those who have spare cash want to invest in an appreciating asset, which gives them a recreational benefit and, whether or not they stick entirely to the 120-day rule for letting, can make them a tidy annual rental income as well. One can see the attraction for those with the money of buying a second home in west Cornwall or the Isles of Scilly. In Penwith alone, 10 per cent. of the housing stock is second homes, and in the Isles of Scilly the figure is above 25 per cent. All the indications are that those proportions are growing.

With 1,300 or more families in need on waiting lists, that level of second home ownership and the fact that the opportunity to buy second homes in the west of Cornwall and the Isles of Scilly is celebrated and promoted in the Sunday supplements of some of the heavier newspapers are seen by many as an obscenity. They are deeply offended by it.

To be fair to the Government, when I was elected in 1997, I brought to their attention the arguments against the use of taxpayers' money to subsidise the second homes of the wealthy. Even now, 50 per cent. of the council tax of those with second homes is met by the taxpayer, so those people are subsidised to enjoy the advantage of the income and investment and the recreational benefit of their second homes. Various parliamentary questions have demonstrated that although it is difficult to identify the exact sum—perhaps the Minister can advise us—if we extract those properties that are used as second homes, as opposed to charitable and other uses that are entitled to 50 per cent. subsidy, some £200 million of taxpayers' money is used to subsidise wealthy people's ownership of second homes, while many thousands of people on very low incomes in areas such as mine cannot afford to have a first home. I argued that point with various Ministers, by letter and in meetings and debates, and I am pleased to say that the Under-Secretary of State for Foreign and Commonwealth Affairs, the hon. Member for Sunderland, South (Mr. Mullin), who was the responsible Minister at the time, accepted in a debate on 9 February 2000 that the situation was no longer acceptable, and agreed to review it. To the credit of the Government, they produced the rural White Paper and have, in the Local Government Bill, introduced measures to reduce the subsidy by 40 percentage points or more.

That is welcome, but there is a great deal more to do. Certainly, the Government should do a great deal more than they are doing about the 40 per cent. additional council tax that local authorities can levy from second home owners. In my area, the district councils have clearly made the case—as I did with Ministers—that the main consequence of high levels of second home

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ownership is lack of affordable housing for local people. If local authorities are to take advantage of their ability to levy further council tax, they should use the majority of the money that they raise to address that problem, so that local people can benefit. The problem is that in places such as Cornwall, the levying bodies—the district councils—receive only 14 or 15 per cent. of council tax income. They are arguing with the higher-tier authorities—the county councils—that they should receive a higher proportion. It would be helpful to have an indication of the Government's view. When I have asked Ministers previously, they have refused to intervene and have left it to local authorities to sort themselves out. At the moment we are close to a squabble between the district councils and county councils. I hope that they can resolve the issue amicably, but some kind of intervention from the Minister would be welcome.

Mr. Simon Thomas (Ceredigion) (PC): As the hon. Gentleman knows, in Wales, council tax has been levied at 100 per cent. on second homes for a long time. He has fought valiantly for a similar arrangement in England. Would he go even further and support what is being talked about in Wales, where it is acknowledged that, as he has just said, second homes not only receive a subsidy if they are not charged 100 per cent. council tax but are a cost to the community in that they make communities less sustainable in terms of schools, shops, post offices and so forth? He has made an argument for using some of that money for housing; we would suggest that there is also an argument for empowering local authorities to increase council tax beyond 100 per cent. on second homes, rather than fixing it at the 90 per cent. or 100 per cent. that he has long advocated.

Andrew George : I am grateful to the hon. Gentleman for raising an interesting point. It is one of the arguments that the county council in Cornwall is constructing. The lack of people living in some of its communities during many of the autumn, winter and spring months undermines the viability of a number of rural services, such as schools, shops and village halls, so one could make a case for using some of that income for other purposes.

The primary result of the high level of second home ownership is the lack of affordable housing for local people. I have made proposals to previous Ministers, and I hope that this Minister will listen to me, as his predecessor did, on the issue of council tax and second home ownership. I do not believe that just because I have been rebuffed once by a Minister, I will always be so rebuffed on the possibility of using the order on planning use classes to define the distinction between permanent residents and non-permanent residential use. Local planning authorities should be given the tools not to outlaw all second homes but to outlaw excessive second home ownership in many parts of the country. I am thinking of communities in west Cornwall such as Helford, Cadgwith, Sennen, Mousehole, St. Ives and Porthleven, where levels of second home ownership sometimes exceed 50 per cent. I would like local planning authorities to be given the power to stipulate

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the number of second homes that they are prepared to tolerate in the local community, thus constraining people's ability to purchase second homes there.

Mr. John Hayes (South Holland and The Deepings) (Con): It is unusual for me to have the opportunity to be more liberal than the hon. Gentleman—I do not really have a liberal bone in my body. Is he suggesting that we tell people whether they can sell their house to the person of their choice or buy a house in the place of their choice? That would require an extraordinary imposition on people's freedom and choice, things in which I thought the Liberal Democrats at least pretended to believe. While the hon. Gentleman is talking about such issues, perhaps he can comment on the idea of local income tax, which his party advocates. If a young couple were to buy a small house to get on the housing ladder, they might pay considerably more in local income tax than they would in council tax.

Andrew George : I shall resist the temptation to extend the debate and talk about the clear, strong case for local income tax, although perhaps my hon. Friend the Member for Kingston and Surbiton (Mr. Davey) will take that up later.

The hon. Member for South Holland and The Deepings (Mr. Hayes) says that my proposal would constrain people's liberties. However, local people on low incomes are already having their liberties and choices constrained, and it is their liberties and opportunities that we should address. Of course anyone can sell any property to anyone, and they would continue to be able to do so under the change in the use of planning orders that I have suggested. The use to which a property is put is the important thing. In other words, the hon. Member for South Holland and The Deepings could come down and buy a property, but if he rented it to local people, he would benefit from the investment in that property, local people would use it and a local need would thereby be met. That is not the same as using a property for recreational purposes, which is a significantly different use of a valuable resource. Such properties are a limited commodity in areas such as mine. The planning system cannot allow properties to be built absolutely everywhere or the very landscape and environment that many people come down to enjoy will be spoilt. The supply is limited, so there must inevitably be rationing. The question is how we provide it.

Mr. Edward Davey (Kingston and Surbiton) (LD): If I have understood my hon. Friend's argument correctly, he is talking about the notion of saturation in the planning use order system. I note that New York uses such a concept with respect to excess licensed premises, for instance. Has my hon. Friend considered whether we as legislators could play with the concept of saturation to develop planning use orders in that regard?

Andrew George : My hon. Friend is absolutely right. I do not say that people should not have second homes. My point is simply that the relevant mechanism should be available to local authorities that can prove to the Government that using it would be a prudent and appropriate way of tackling high levels of housing need.

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In some communities, the rate of second home ownership would be so high as to be beyond saturation. That needs to be addressed.

The Minister's predecessor, the Under-Secretary of State for Transport, the hon. Member for Harrow, East (Mr. McNulty), responded to me following an offer that the local authority on the Isles of Scilly made to test the initiative there. Within the existing legislation, the Minister could pilot a new planning policy on the Isles of Scilly, establishing a use class order for second homes, without setting a precedent for anywhere else in the country. I urge the Minister to consider that offer carefully. On many of the islands, the rate of second home ownership is at least 20 per cent., and sometimes 25 per cent. or more. Allowing the authority to implement the policy would demonstrate whether it works. The policy could then be rolled out across the country—a favourite Government expression, I believe.

I realise that time is marching on, so I should like to make some brief general points about the planning system. Many people see the planning system as a means of delivering private wealth rather than public goods. To be fair to the Government, there is a debate in the Chamber today about matters relating to PPG3 exception sites and so on. However, the Government could further strengthen policy by enabling registered social landlords to bring forward exception sites in rural areas, or even market towns, where the planning policy has been drawn up tightly and the planning committee sticks to it tightly. In those circumstances, an exception could be made on the edge of the town or village to meet a local housing need, which, in many cases, would be managed by a registered social landlord in the long term. That would help to deliver land at significantly below market value, which is essential to develop affordable housing for local people. Otherwise, registered social landlords end up buying land at £500,000 or more an acre, which puts affordable housing out of reach.

There should be support from the Government for developing a new intermediate market, particularly for shared equity and leasehold properties. Intermediate markets are necessary in rural areas such as mine, which have low wages and high house prices. People on local incomes recognise that the availability of rented accommodation is limited. Shared equity accommodation should be developed and perhaps managed by registered social landlords. At present, however, people who want to move on from a property where they own, say, 50 per cent., cannot take advantage of other shared equity properties, because there is an insufficient supply. Also, many people who purchase such properties have difficulties raising mortgages, so intervention from the Government on that would be helpful as well.

In previous debates the Government said that they had established regional housing boards, which are quangos and are established over surreal planning areas. Although the boards are supposed to match planning priorities with housing priorities, they have prioritised principal urban areas in the south-west Government zone. The secondary areas relate to Government targets to deliver rural housing in

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communities of less than 3,000. Many small market towns have been left out altogether, which is a matter of concern.

Time is moving on, so I shall not take up any more of it. I have written to the Minister with questions that I have not had a chance to raise today. I look forward to the rest of the debate.

2.39 pm

Ms Oona King (Bethnal Green and Bow) (Lab): I am pleased to contribute to such an important debate. I want to raise two key issues: how we deal with overcrowding as part of the Government's strategy both to create more affordable housing units and to reach the decent homes standard, and how we free up more units for affordable housing. I would also like to consider the future of council housing, which in many areas will be through stock transfer.

In my constituency, the council has carried out a detailed review of its housing stock, using PricewaterhouseCoopers to do an option appraisal. In trying to determine how best to bring our housing stock up to a decent standard, the council has determined that the only realistic way forward is through partial stock transfer. However, the problem is that, although money is attached to the other means available to councils to bring their stock up to standard—such as arm's length management companies and the private funding initiative—there is no clarity as yet about how we would deal with gap funding to bring houses up to a decent standard. Might the Minister be able to talk briefly about how we can deal with that problem?

Many tenants in Tower Hamlets have backed a review and further consideration of stock transfer. However, if registered social landlords are unable to engage in the programme because the risk appears too great, we will obviously not be able to move that programme forward. We will be unable either to bring our housing stock up to a decent standard or to guarantee the numbers of affordable housing units that we would wish to see reaching that standard.

I am pleased that we have reversed the £19 billion backlog on housing in the affordable housing sector since we came to power, and that some authorities will be able to reach the decent homes target when dealing with their affordable housing stock through their own resources. That is not the case, however, in areas with significant negative values. Tower Hamlets is one of those areas. Following a recent intervention in a debate on overcrowding, I was pleased that the Minister undertook to write to me about the moves that the Government will make to deal with the issue.

I am glad that the Government have decided to undertake research into overcrowding. It is a huge problem in Tower Hamlets, and it affects everything about a child's upbringing. It affects their health, education and employment prospects. Research by Shelter has shown, as one would expect, that if a child is brought up in overcrowded accommodation, they are more likely to have respiratory tract infections. There are other simple consequences; they are more likely to be prone to accidents and less likely to do well in their education.

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On a personal note, I see many families every week who are either unable to access decent homes or feel that they cannot afford to enter the private market to look to access decent homes there.

Mr. Andrew Love (Edmonton) (Lab/Co-op): I apologise for arriving late for this important debate. Does my hon. Friend agree that since the Government have set a standard of halving child poverty within the next 10 years, not addressing overcrowding would make it much more difficult to achieve that target?

Ms King : I agree wholeheartedly. That is why I raised the issue of overcrowding within the scope of the Government's target on the decent homes standard. The definition of decent homes should be widened to include overcrowding and the issues that local people in areas such as my own get upset about, such as lack of security and maintenance of communal areas. If we do not expand that definition, we will risk missing an opportunity of achieving the target that my hon. Friend mentioned. Reducing the numbers of children living in poverty is a key plank of Government policy.

Specifically, will the Minister say whether the new regional housing boards will be directed to take the problem of overcrowding into account, especially when determining how they are going to allocate their resources? Supplementary to that, and to the issue of child poverty, we should recognise that the 2001 census showed that 1.5 million children live in overcrowded conditions. The vast majority of those live in families under the poverty threshold. I know that everybody assumes that the streets of London are paved with gold, and Londoners are not the first to win sympathy when we talk about problems relating to poverty. However, 48 per cent. of the children in England who live beneath the poverty threshold live in inner London—children whose lives are crippled by poverty. I would be particularly grateful if the Minister might elaborate on what the Government will do to ensure that overcrowding, which affects £1.5 million of the poorest children, is dealt with.

I will end by returning to stock transfer. It is important that tenants understand what the process involves. They need to be engaged in the decisions and options. It is important that they understand that housing transfer is not privatisation and that if stock is transferred to registered social landlords, at least one third of the housing association board members would have to be tenants. Could the Minister outline what other assurances residents can have about stock transfer? I was speaking to someone recently, for example, who wanted to know what the worst-case scenario was, and what would happen if the RSLs went bankrupt. I explained that that was not a likely scenario, and that I was unaware of any circumstances in which it had taken place in the past. However, I could be wrong and would be grateful if the Minister could outline the pitfalls as the Government see them?

I hope that the Government will continue to ensure that increasing the number of affordable housing units is at the top of their agenda and that money follows housing need.

Mr. Edward O'Hara (in the Chair): Order. For clarification, the debate will last a full one and a half hours and the wind-up speeches will start at ten past three.

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2.49 pm

Mr. Mark Hoban (Fareham) (Con): I congratulate the hon. Member for St. Ives (Andrew George) on securing this debate. We have heard from him and from the hon. Member for Bethnal Green and Bow (Ms King) about the housing issues that affect their parts of the country.

I want to talk about affordable housing in the context of my own constituency, which is on the south coast of England. There is a lack of social housing, because of the structure of the housing stock in the constituency. Even a relatively small one or two-bedroom flat will cost a six-figure sum. With an average wage across the country of £24,000, that sort of flat becomes difficult for a single person to afford. In the constituency, because of the relative expense of private housing stock, there is a relatively small and expensive private rental sector.

When I talk to constituents about trying to find private rented housing, they often tell me that they cannot afford it in their circumstances. Consequently, affordable housing in Fareham tends to be social housing. That is the main source of properties in that category. Fareham district council has 2,450 council houses and has nomination rights to 900 housing association properties across its area and just outside it. At the end of September, the housing waiting list, which includes people waiting for a transfer to a larger property, was more than 2,100. In the last year, only 170 vacancies arose from the total housing stock of 3,500—taking into account the properties for which the council has a nomination right.

There are 123 families in temporary accommodation, 23 of whom are in bed-and-breakfast properties. The council is well aware that its priority over the next few months is to reduce to zero the number of families in bed and breakfasts. However, it also expects that by the end of March 2004, some 25 families will become homeless and will end up in bed and breakfasts, and that they too will need permanent accommodation. Therefore, it needs to rehouse just under 60 families and move them out of bed-and-breakfast accommodation in order to meet the Government's deadline.

The council is taking steps to tackle the issue. It is considering leasing properties from the private sector in Fareham and adjacent areas to house some of those homeless families. It provides rent deposits and rent guarantees to help families find accommodation in the private rented sector, but the expense of such housing makes it difficult for those families to afford that. Some 18 units, which are being built by the Portsmouth housing association, will come on stream in March 2004. The priority for nomination rights for those properties will go to those families who are currently homeless.

The council is making progress towards tackling the bed-and-breakfast problem, but it considers it a difficult issue and is looking at how other forms of social housing can be provided. It identified a scheme to create more social housing on the site of an existing homeless shelter in Fareham, but the application for funds for the replacement shelter was turned down by the Office of the Deputy Prime Minister for three reasons. The first reason was that the site was privately owned, although that was rectified in 2002. The second reason was that the commercial occupants were still in residence, but

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they moved out in December 2002 and the site is now clear. Thirdly, the ODPM said that the scheme did not have planning permission and that there were likely to be local objections. Indeed, there were local objections, but they have been resolved, and the planning committee has voted to accept the homelessness scheme. Of course, there has still been no money from the ODPM, so the existing homeless shelter, which I have visited and which is in dire need of replacement, is still there, occupying a site that could be used for social housing, and the site for the new shelter remains vacant. That site is being cleared, but the money to fund the new shelter is not available. I ask the Minister to consider that scheme in particular. I have corresponded with his colleague, the Minister for Housing and Planning, and I await a further response from him. We need long-term imaginative schemes such as that to tackle the shortage of affordable housing in my constituency.

I now move on to the role of the development of large sites in resolving some of the social housing problems in my area. Fareham has undergone rapid expansion in recent years. Where there is large-scale development, there is benefit to the local community, given that the developer will contribute towards the building of social housing. However, the Department's guidance of recent years, which has focused development on brownfield sites—in Fareham that means focusing development on relatively small brownfield sites—has meant that that dividend does not emerge any more. Very few new houses are built on large sites, so relatively little social housing is being funded through planning gain. Applications for development on greenfield sites have often been called in by the ODPM. As a consequence of the call-in process and the wait for a response from the inspector, provision of social housing has been further delayed. Where sites have been identified for social housing, the size of those sites and the number of dwellings to be built that have been forced on those sites is an issue.

A scheme is currently proposed for Laburnum road in the centre of Fareham, in the midst of a residential area where there are many two-storey houses. In order to try to accommodate the number of people on the housing waiting list, the developer, Portsmouth housing association, has been forced to consider building a three-storey block of flats. Flats are not ideal for families, and I would rather that families could be accommodated in houses with a garden, but I appreciate that the pressure on land and finances is such that they sometimes have to be accommodated in flats. The scale of the development in relation to the surrounding housing has caused a great deal of concern among local people.

Underpinning a lot of this issue is the funding available from central Government for affordable housing in my constituency. The council is concerned that the abolition of local authority social housing grants and the transfer resources to the regional housing board will penalise places such as Fareham, where there is moderate affluence but pockets of deprivation. It believes that resources will be sent either to older urban areas or to the new housing developments that are projected for Ashford and places such as Milton Keynes.

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Will places such as Fareham receive a fair allocation of the moneys that are being made available to the regional housing board by the Department? I would welcome the Minister's assurance that places such as Fareham will not miss out on a share of those funds, because it is difficult to see how the council will continue to meet the Government's housing targets without those funds, or how it will meet the deadline for the clearance of families from bed-and breakfast accommodation by the end of March 2004.

Fareham district council has made tremendous strides towards coping with the problem of homelessness and affordable housing in my constituency, but it is aware—as am I—that there is much to do to tackle the problem. I hope that the Government will think again about the impact of their policies on development and on the funding of social housing in areas such as mine, and that they will consider what contribution they can make to resolve some of the problems that affect my community and those of hon. Members who have spoken today.

2.58 pm

Ms Candy Atherton (Falmouth and Camborne) (Lab): I congratulate the hon. Member for St. Ives (Andrew George) on securing this debate, and I remind him that we have the honour of sharing west Cornwall.

As I am unsure how long I have to speak, I will speak briefly on an issue relating to my constituency. When it comes to affordable housing, money is important. I welcome press reports that the Chancellor may make housing a priority in tomorrow's pre-Budget report. Imbalances in the housing market need to be addressed, and money helps. I am glad about restrictions on the right to buy and that the Government are tackling the much maligned second homes council tax discount.

As the hon. Member for St. Ives said, there are more second homes than first homes in some parts of Cornwall. Recently, I asked local town and parish councils if they wanted money gained from the abolition of the second homes discount to be earmarked specifically for affordable housing. Every single one that replied said that it did. I ask the Minister to send a strong message to Cornwall and to the town and parish councils that the Government strongly support their corner and that the county council should not use the money that it raises from the abolition of the discount for other parts of its budget, but to put the money back into affordable housing to tackle that great problem.

Getting rid of the discount is not the answer to the problem; it is one answer, but it is not the complete answer. Those who can afford a second home can usually pay the tax, and it will be interesting to explore ways to influence the market. Perhaps we could think about utility bills and higher standing charges for people with second homes. If they can afford a second home, they can afford to pay a higher charge. Currently, the rest of the community subsidises them.

We all know the age-old problem of the nimby. In the Camborne, Poole and Redruth area, there is an urban regeneration company. We are planning for 2,000 homes of mixed tenure, but we need Government support. I do not have time to explore this issue as I wanted to, but I hope that Ministers come and see our plans, because we have brownfield sites, and we can

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build on them. There is no nimby factor. The attitude is, "Yes—in our backyard", because we need the housing: 1,500 people are on the housing list in the Camborne, Poole and Redruth area alone. I strongly urge my hon. Friend the Minister to come and see what we are doing and give us a hand, because our area has a "Yes, can do" attitude.

3.1 pm

Mr. Edward Davey (Kingston and Surbiton) (LD): I congratulate my hon. Friend the Member for St. Ives (Andrew George) on securing the debate and on the way in which he has championed in Parliament the policy of removing council tax discounts for second homes. I do not think that the Government would have taken such a measure were it not for his dogged persistence and determination. Although he was modest enough to praise the Government, he, too, should take hon. Members' praise for the work that he has done for his constituents in Cornwall and for the rest of the country.

This is a timely debate, not least because it is taking place on the eve of publication of the interim report of Professor Barker's review of the supply of housing, which was commissioned by Her Majesty's Treasury. There is a bizarre aspect to housing in this country. We have high house prices, but often the market does not respond to them quickly by producing new houses. That is why the Government set up the review, and many of us are waiting to see Kate Barker's conclusions.

According to various stories in the press, there will be changes to the planning system. It is rather ironic that the Planning and Compulsory Purchase Bill is taking an awfully long time to go through Parliament. Whether the new ideas that we are about to hear will run counter to current ideas or build on them, we have yet to see.

One idea that has been leaked in the press—whether the Barker review will come up with it, we do not know—is that we should adopt the proposal from the review by Lord Rogers several years ago for equalisation between VAT on repairing existing homes or homes that are in disrepair, and VAT on new build. Currently, no VAT is paid in respect of houses on greenfield sites. Liberal Democrat Members have argued that there should be equalisation between VAT on new build and VAT on repair, not to generate extra revenue for the Treasury, but to remove the perverse distortion against reusing and recycling existing homes. It will be interesting to see whether the Barker review makes that proposal.

When one considers the numbers, one wonders whether the Treasury was right to focus so much on this issue. Let us consider the numbers being produced by the private sector in respect of new build. Over several decades, the numbers have been pretty constant. There has not been a massive increase or a massive trough in private sector house building at any time over that period. The reduction in the number of new homes being built really comes from the social sector and the fact that Governments of differing political hues have taken a lot of money out of that sector over a number of years. I simply question whether the Barker review will be able to find a solution, given the true macro picture of funding of that sector.

I hope that the review will consider real reforms on the planning side. Local authorities must be far more proactive in the way in which they use the planning

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system. They must encourage developers to build more homes that are affordable for people in their communities. We need to consider pre-application consultation, so that developers learn about the community's needs from the community. There is no reason why the private sector will not meet those needs. Sometimes the issue is poor communication.

Lembit Öpik (Montgomeryshire) (LD): Is my hon. Friend aware of the work of Mick Bates, a Liberal Democrat Member of the Welsh Assembly? He has been promoting four things: a definition of affordability; accurate assessment of housing needs; greater rural exemptions where appropriate; and community housing trusts. That ensures that there is joined-up thinking about supplying affordable housing, especially in rural areas.

Mr. Davey : I am grateful to my hon. Friend for that intervention. I was not aware of the excellent work being done by our colleague, but I will certainly get hold of a paper on it.

When we consider affordable housing—perhaps this is similar to the work happening in Wales—we decide that one size does not fit all in respect of the needs of different areas and communities and of different groups of people. Many of the key workers in London whom we are discussing are young professionals who want to rent only for a time. They want affordable rents for high-quality, well maintained apartment blocks—one might call them condominiums. If we can encourage that type of building, the private sector will go into that market, because it can make a commercial return on it, and we will be able to deliver the types of property that those key workers want. Once they have saved enough to move on and buy their own home, they can meet their own needs, so we must try to persuade the private developers to consider the needs of particular groups.

Mr. Love : The hon. Gentleman mentions professional groups in the private rented sector, but I argue about whether that is affordable according to the current definition. He also mentioned owner occupation and the social sector. Of course, the private rented sector has a great role to play. Does he expect the Barker review to say something about how the private rented sector can provide affordable accommodation for those in need?

Mr. Davey : I certainly hope that it will. I hope that the hon. Gentleman does not misunderstand my use of the word "professionals". I was talking about health care professionals, police officers and teachers. They are professional people who need housing, but because of the current structure of the private rented sector—certainly in my constituency, and I imagine that the same is true in the hon. Gentleman's constituency, given that he is a London Member—sometimes they cannot afford private sector rents. The proposal that I was trying to back, which comes from research by the Joseph Rowntree Foundation, says that if we think about the issue more imaginatively than developers have done in the past, we can meet that need through the market, but pointers and encouragement are needed from Government.

The really difficult sector in terms of affordable housing is those very low-income workers who will never move on. They may be elderly. They may be in

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jobs that mean they will never move up the scale. The Government need to produce subsidies in that area, as is currently the case, through housing associations and housing authorities.

One issue on which the Government have been dragging their feet and could take immediate action is empty homes. There are many empty homes in the public and private sectors in areas of high housing demand. In London, more than 100,000 properties have been empty for a considerable time, 83 per cent. of which are in the private sector.

In my constituency, several streets have empty homes that have been sitting idle, unused and unoccupied, for years. If one goes off the A3 at the Hook junction to Gladstone road, Haycroft road and Brook road, one will find 29 family properties that have been empty for more than a year. Indeed, some have been empty for several years. I have been working with the local councils to see whether we can persuade the owner of those properties to bring them back on to the market. The gentleman happens to be very elderly and seems not to take the advice of some of his advisers, so there are difficult problems. However, when more than 1,000 families are in temporary accommodation in the royal borough of Kingston while 29 large family homes sit empty, people can see the need to act on this issue.

What have the Government done? In a debate in Westminster Hall on 19 June, I urged them to have a consultation on new compulsory leasing powers for local authorities. The Government reacted to that and, just before the summer recess, or perhaps during it, they published a consultation paper, which I welcome. The problem is that they are being slow on the consultation. The Housing Bill contains provisions for orders that will allow local authorities to make quite severe interventions in their local communities to try to ensure that some of their problems are dealt with. However, the Government are not minded at the moment to bring into the Housing Bill some of the empty property management orders in the consultation paper.

When will the Government get another chance to legislate on the issue? Given that the Select Committee was sympathetic to the proposal, I hope that the Minister will give us some explanation of why the Government are failing to act, even though they have the chance to do so and the ideas are ready to go. I hope that they will consider that again.

Time is short, so I will bring my remarks to a close. The Government have been slow to react to the affordable housing crisis. In previous parliamentary Sessions, my hon. Friends and I, particularly those with constituencies in London, have talked about the problem time and again. The Liberal Democrats have warned the Government that they are undermining their public service reform agenda because of the skills shortage in public services in London and elsewhere. I am glad that they are addressing it at long last, but they must be far more imaginative and ambitious if they are going to make an immediate impact.

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3.10 pm

Mr. John Hayes (South Holland and The Deepings) (Con): This has been a wide-ranging and useful debate, and I hope that the Minister will draw on all his expertise to deal with it in as wide ranging a response.

It is important to note that a broad-minded approach is required. The issue of affordable homes is not just about the simple matter of outright home ownership, but about the possibilities of shared or part ownership and the rented sector. Affording to rent, let alone being able to afford to buy, is a big issue for many of our countrymen. In large parts of Britain, people cannot get on to the first rung of the housing ladder even though they want to.

Addressing the problem requires the kind of innovative schemes mentioned by my hon. Friend the Member for Fareham (Mr. Hoban), who talked about some of the experiences of his constituency, and the Government need to reflect that in their policy approach. We need to be more creative in bringing affordability back into the marketplace, and we hope that the Barker report and the proposals that will follow from it will reflect a broad-minded approach.

The problem is not universal. It is felt strongly in particular areas—certain types of areas and certain parts of the country. In rural communities, affordability is a massive problem, as I know from my constituency. It is profoundly felt since many young people are unable to stay in the communities in which they were born and bred and in which they work because of the prices of local housing and the lack of rented housing from either local authorities, housing associations or the private sector. That is driving them into having to travel long distances to see their families, go to work and engage in all the normal things that people do in their social lives. It is fragmenting communities in an unacceptable way.

There are also problems in particular parts of the country. We know that there are massive problems for key workers and people who need to live close to their work, especially in the south of England. Ironically, in some other parts of the country, supply outstrips demand. That irony lies at the heart of the debate, and it must be addressed by a policy that is sufficiently targeted to tackle differing problems in different parts of the country and in different types of area.

As we know from what has already been said, the Barker review will undoubtedly focus heavily on that. Before I came to the debate, I was looking at the Chartered Institute of Housing submission to that review. It tries to answer the question posed by the review, which is why the private housing sector has not expanded to replace the provision of social housing. That is partly about housing for rent, but also about the building of private housing at prices that people can afford. The Government can do something about that, and I shall shortly ask the Minister some specific questions to elicit the Government's intentions.

The Chartered Institute of Housing submission suggests that there are real problems concerning the demographic profile of tenants. It states that there is strong evidence that young social housing tenants often aspire to leave the sector at some point to become private home owners or private tenants but cannot because of a series of problems. One problem is mortgage eligibility, as people have problems getting on

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the ladder because they cannot afford to borrow. The second is that the mismatch between supply and demand means that people often want to buy a house where they can least afford to do so. There are also concerns about housing benefit rules and the private rented sector, to which the hon. Member for St. Ives (Andrew George) referred. Problems of security of tenure also particularly affect young people.

As well as the Barker review, it would be remiss of me not to pay attention to both the Planning and Compulsory Purchase Bill, which is being debated in the main Chamber as we speak, and the Housing Bill, which was published yesterday. There are worries that the changes to section 106 agreements in the Planning and Compulsory Purchase Bill may make the building of affordable housing even less likely. Much of the affordable housing now available, especially the social housing, has been built through planning gain and as a result of negotiations that have taken place around section 106 agreements when a developer applies for planning permission from his local council. If the changes in the regime prevent sufficient opportunity to insist on specific types of developments, they may dry up the supply of affordable housing to an even greater degree. I will be interested to hear the Minister's comments on that.

On the Housing Bill, will the Minister comment on the effect of the seller's pack on the market? Some groups, including estate agents, representative bodies and, to a lesser extent, the Royal Institution of Chartered Surveyors, claim that the seller's pack will slow down the market and reduce the number of houses on it at any one time. That would affect the people who want to get on to the ladder, move into a house for the first time and fulfil their dream of becoming home owners.

We must also consider the standard of housing, which the hon. Member for Bethnal Green and Bow (Ms King) rightly mentioned. That will be covered in the Housing Bill, and we will have more chance to debate it at length at a later stage, but it should not be ignored in debates about affordable housing or policy for it. It is no use taking an approach on affordable housing if we do not simultaneously look at its quality. I am sure that the Government will want to pay proper attention to that when the Bill comes before the House.

Given the necessity for brevity, I will sum up by posing a series of questions to the Minister. What aspects of mortgage eligibility have the Government examined, and how do they fit into future policy? What role will changes to and Government influence on mortgage eligibility play in making housing more affordable, particularly for young people?

What planning guidance have the Government considered for mixed developments? They have said that they are in favour of mixed developments, but one problem is that the instruments that local authorities have to bring that to bear are relatively slight. They have to rely on housing needs assessments, which are not always specific enough in terms of the sites that might be considered for mixed development and affordable housing.

What will the Government do for the special needs of disabled people in relation to affordable housing? That point has not been raised today, and time does not permit me to elaborate, but it is an important issue.

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What specific ideas do the Government have on shared and part ownership? One important way of making progress on affordable housing would be to be much more creative in considering the ways that people can get on to the ladder through shared or part ownership, perhaps working with a housing association or local authority.

What is the Government's strategy for empty homes? It is nonsense that there are 720,000 empty homes throughout England and Wales yet that resource is not being developed. Those empty homes provide an opportunity for many people to afford a home for the first time, but there is no financial incentive to encourage it. Local authorities do not fully understand their powers and have not had sufficient training for their role as financial institutions. The housing benefit proposals may do even more damage. The Government's empty homes strategy will be critical and I want to hear from the Minister precisely how he intends to take it forward.

3.21 pm

The Parliamentary Under-Secretary of State, Office of the Deputy Prime Minister (Phil Hope) : We have had a stimulating and full debate this afternoon and during the nine or 10 minutes remaining, I may not be able to do justice to all the contributions that have been made.

Andrew George : On a point of order, Mr. O'Hara. I seek your guidance on whether the debate will finish at 3.40 pm because of the late start.

Mr. Deputy Speaker : I stand corrected. The debate will finish at 3.30 pm, which is why I advanced the wind-up speeches to start at 3 pm.

Phil Hope : My hon. Friend the Member for Bethnal Green and Bow (Ms King), the hon. Member for Fareham (Mr. Hoban) and my hon. Friend the Member for Falmouth and Camborne (Ms Atherton) raised concerns that came from the heart. Different concerns were raised by Members from the furthest parts of the south-west, Wales, London and the south-east. We have had a tour of the country's housing needs and problems and some good debate on the solutions with interventions from the hon. Members for Montgomeryshire (Lembit Öpik) and for Ceredigion (Mr. Thomas)—I apologise if I pronounced that wrongly—and my hon. Friends the Members for Edmonton (Mr. Love) and for Stroud (Mr. Drew).

A major aim of Government policy is to tackle social exclusion and to provide increased quality of life. The provision of good-quality housing is a key element in that, but, as my hon. Friend the Member for Bethnal Green and Bow said, it is about the impact on people's health and educational attainment.

We have made good progress. Public funding to address the problem is, inevitably, limited and difficult choices must be made, but around £4 billion has been allocated for mainstream housing investment in 2003–04. That is well over twice the amount allocated in 1997–98. Having inherited a £19 billion backlog in housing repairs when we came to office in 1997, our release of a huge amount of capital receipts to improve social housing has been an important part of our programme.

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The hon. Member for St. Ives gave a graphic description of the housing problems in his constituency, many of which I recognise. We understand the need and the problems, not just in his constituency, but in other parts of the south-west and the rest of the country. We know that sometimes the attractive chocolate-box exterior of some rural communities hides serious problems of rural deprivation.

Mr. Drew : Before coming to the Chamber, I attended the Calor Gas village of the year lunch. I hope that my village of Coaley wins, but I do not yet know if it has. The point was made—Stephen Wright, who represents Gloucestershire community council, has made the same point—that the Government should understand that they do not want changes to the exceptions rule or the raising of the minimum level of a community from 3,000 to 10,000 because that would make a huge difference in small rural villages. I hope that the Minister will pass that comment on.

Phil Hope : I am sure that when my right hon. Friend the Minister for Housing and Planning reads the debate he will take account of that contribution.

I am pleased to say that real progress is being made in Cornwall. The West Cornwall Together partnership is taking a real step forward in tackling problems in the constituency. Some £6.5 million of neighbourhood renewal funding has supported people with problems in those neighbourhoods and in the constituency of my hon. Friend the Member for Falmouth and Camborne, who referred to the urban regeneration company. I have an urban regeneration company in my constituency and know the value of such partnerships in bringing together different players in district and county councils, local redevelopment agencies, English Partnerships and other private sector players into a partnership to bring about progress. I shall consider her comments about the importance of taking that forward.

The hon. Member for St. Ives asked about second homes and was right to do so. He acknowledged the change that has been made to the council tax rules to reduce the 50 per cent. discount for second homes. The hon. Gentleman and other hon. Members who referred to the matter would like Government intervention to tell district and county councils how to use the proceeds, but he probably knows that the Local Government Association wants more freedom and flexibility for local government to make decisions. [Interruption.] I was not going to point out the contradiction that that is also Liberal Democrat policy, but my hon. Friend the Member for Edmonton made that point well from a sedentary position. I understand the difficulties, but we believe that it is for local authorities to decide how to use additional income raised in the light of local needs and priorities. In areas such as St. Ives where there is a shortage of housing, we expect careful consideration to be given to the use of funds to provide additional affordable housing.

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The hon. Member for St. Ives said that building more homes might reduce house price inflation and thereby solve the problem with changes in the market. To reduce house price inflation to zero would involve a level of provision not seen in this country for some time. There are huge problems of environmental constraints and pressure on achieving such provision. We must make choices, prioritise needs and plan carefully to meet those needs if we are to make real progress.

The Government recognise the need for affordable housing, and we are endeavouring to deal with the problem in different ways in different areas. We are spending more money specifically on affordable housing and have given no less than a 30 per cent. increase in funding under the main approved development programme for social housing amounting to £20 million extra for housing in the south-west. That brings the total to £81 million and will deliver 2,000 new, affordable homes for the region in this financial year. We also aim to deliver 350 new affordable homes in villages in the south-west in this financial year and increase that on average to more than 380 a year during the following two years.

The hon. Member for Fareham asked about local authority social housing grant. I understand his concern, but we believe that as that money has been fairly taken, put into a central pot and distributed to regional housing pots, it is important that the regional housing boards should assess housing needs in their region—that is part of the Government's devolution policy—and then reflect action to respond to those housing needs in their funding proposals. Devolving that decision and providing those extra resources means that the provision can meet local needs as defined by local people.

In the brief time available to me, I want to mention PPG3, which is an important piece of planning guidance that addresses one of the issues also raised by the hon. Member for St. Ives about the need for a better mix of housing. PPG3 will give local planning authorities the ability to reject housing developments that do not broaden housing choice. We do not want large housing developments of one sort or another. We want a mix of size, type and affordability. We shall give local authorities the tools to deliver that and will back those local authorities in that direction when necessary.

My hon. Friend the Member for Bethnal Green and Bow raised a number of different problems in her area in London. We recognise that gap funding for negative value transfers or partial transfers is a significant issue for authorities such as hers. The regional housing boards must consider the need to fund those if their overall regional strategies are to work effectively. The local authority and the regional housing board must address that issue.

On assurances for council tenants who are transferring to housing associations, the transfer process requires a statement of the services and investment that will be provided by the new landlord on transfer. The transfer can take place only when tenants are happy with what will be provided. No transfer associations have gone bust, and surveys show that tenant satisfaction rises after transfers.

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