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Matthew Green: I agree with my hon. Friend. Moreover, many of those children live in overcrowded conditions. If the Government are prepared to change the definition of overcrowding to a more sensible one, which will inevitably mean that the numbers of people in overcrowded conditions increase overnight, we will not use that as a party political issue. I make that pledge because we want the definition to be changed. I hope that the hon. Member for South Holland and The Deepings (Mr. Hayes) will support that on behalf of the Conservatives and that we can achieve a consensus, because will be hard for the Government to make the change if they think that they will come under attack as a result.

I want to consider the right to buy, a principle that we support, although parts of the country experience difficulties with it. To put it simply, in an area of low demand, there is no difficulty, but problems arise in areas of high demand. The right hon. Member for Skipton and Ripon (Mr. Curry) partly recognised that when he exempted rural areas from the similar right-to-acquire scheme. However, he failed to do that for right to buy. I believe that the local council is the best body to judge whether it has a detrimental effect on the amount of social housing stock in a given area.

If the Government genuinely believe in local points of view, why do they not trust local councils to decide whether there should be a rebate on the right-to-buy scheme, thereby providing for local variation throughout the country, rather than having a Minister in London determine the areas where the rebate should be varied? That would show a genuine commitment on the part of the Minister for Housing and Planning to local variations to suit local needs. I hope that the right hon. Gentleman accepts that we need more local variation to tackle affordability.

We also need to provide more stepping stones for people to get from renting in the social or private sector to home ownership. To do that, we need to put rungs back on the ladder, because the gap between the rented and owner-occupied sectors is widening rapidly. There are few means whereby people can ascend the ladder, so I hope that Ministers will consider what I have called the right to invest.

The right to invest is the right of a tenant—of a council house or a registered social landlord—to purchase a share of the property. The scheme resembles shared equity but starts from the premise that the tenant is renting and then wishes to purchase a share. Tenants cannot purchase the whole property, which therefore remains in the social sector, but the scheme would allow them to translate rent into mortgage, build up equity in the property and eventually get on to the owner-occupier ladder.

Mr. Mark Field: The hon. Gentleman outlines an inventive scheme. Clearly, we cannot make policy here
 
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on the hoof, but in poverty-stricken areas—for example, in parts of London—the lack of capital in the hands of some of the poorest people prevents them from starting their own businesses. That applies especially to those who have few qualifications. I urge the hon. Gentleman to urge the Minister to ensure that we consider innovative schemes to provide an allowance for individuals to have a small asset base—the liquid capital that could enable them to develop businesses.

Matthew Green: The hon. Gentleman has made some sensible comments.

David Wright: May I ask the hon. Gentleman for some details of his suggested policy? How would it work? Does he envisage the local authority having to buy back the equity stake in the property?

Matthew Green: That is exactly what I am suggesting. I am happy to discuss the detail with the hon. Gentleman, but not now. I have discussed the scheme with registered social landlords and they support it. Although they opposed the Conservative right-to-buy proposal for registered social landlord property, they would be happy with a right to invest. I appreciate that the hon. Member for Telford has much experience of the subject and I would be more than happy to have a long discussion with him—

David Wright rose—

Matthew Green: But not now, because I am conscious of the time.

I want to consider the affordability of home ownership. There has been no mention of the price of land, which drives new house prices in particular. Fifteen years ago, developers worked roughly on the thirds principle: property value consisted of one third the cost of the land, one third the cost of building and one third profit. That is to put it in crude terms. Nowadays, the average house builder considers that the cost of the land will be 55 per cent. to 60 per cent. of the final sale price. The profit goes not to the house builder but to landowners, who discover—perhaps through a local plan—that what were nice farmers' fields have suddenly become building land. In the south-east, that means an overnight movement from £3,000 an acre to more than £1 million in land value. That is the driver of property prices.

Mr. Hayes: The hon. Gentleman is making a sensible speech. I hope that he will deal with the point that affordability is essentially a people-centred issue. Targets for building a certain number of houses that one considers "affordable" are nonsense, because the houses could become more or less affordable as a result of the variables that the hon. Gentleman stressed. Affordability is about making affordable houses available to those who need them; it is not about a static housing stock. The hon. Gentleman is right to emphasise that.

Matthew Green: The hon. Gentleman makes some good points.
 
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I want to refer to a proposal in relation to which there has been an exchange of letters between the Minister and me—a proposal concerning what Liberal Democrats call the intermediate tier of housing. Clearly, I have not explained it sufficiently well in writing because the officials do not understand what I am writing about, so if hon. Members will bear with me, I hope to elucidate the matter a little more.

By an intermediate tier of housing, we mean that a house is completely owned by someone who buys it at a price that is capped down. To qualify to buy it, the person must fulfil specific requirements. For example, in a rural area, the criteria might include living and working locally; in London, the person might have to be a key worker. The scheme has started in Shropshire, where it is used by people who live and work locally and would otherwise be priced out of the rural housing market.

Mr. Love: Will the hon. Gentleman give way?

Matthew Green: No, I should like to continue. In Shropshire, the price of a typical property would be realised at £90,000 whereas the average price for that same three-bed property would be closer to £200,000. The key point is that the property is cheap not only the first time it is bought but remains cheap. That happens through the use of a section 106 agreement in the planning arrangements to keep the house affordable. An agreement is made about the amount by which its value can grow. It can be sold only to the same categories of people. It is a variation of a scheme—the agricultural workers dwelling scheme—that has existed for a long time. It is not new science but it needs to be applied much more widely.

The scheme can be used, as often happens in rural areas, in exception sites, which allow someone to build an affordable home for themselves if they own a plot of land. It is easy to build for £90,000 if one owns the plot of land, because the land price has been taken out of the equation. The scheme could be used to provide extra affordable homes in London and the south-east—for example, in the Thames gateway. If the Government increased the figure for affordability to 50 per cent. on sites of two or more dwellings, it would not need to be registered local landlord property. It could be 25 per cent. registered social landlord property and 25 per cent. intermediate tier or capped price home ownership property. Under the latter scheme, the builder could build the house and sell it with an incorporated build profit but not a land profit. The other 25 per cent. would be handed over to the registered social landlord sector, as currently happens. The other 50 per cent. of houses on the site would be sold on the open market and could fund the other schemes.

There would be an issue with existing land banks for house builders, and I have discussed that with the House Builders Federation. If the Government gave a commitment to introduce the scheme in two or three years, it would not be a problem because house builders could build on their existing land banks in that time—the new policy would give them an incentive to do so—and they would acquire new land in the knowledge that the value of the properties would mean that they were forced to pay a lower price for the land. The hit would therefore be taken by the person who believed that he
 
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had a £3,000-an-acre field, subsequently thought that it was worth £1 million an acre but discovered that it was worth only £500,000 an acre after all. That person is still doing well, but perhaps not as well as he thought.

The scheme would mean that we could get affordable homes through the planning system without its costing a penny of Government money. It means that the houses stay affordable, using section 106 agreements. I hope that that is a better explanation than the one I provided in writing, and that the Government will take it seriously. Some but not all Conservatives in Shropshire support the scheme. It could gain cross-party support and be a major way forward in dealing with the housing market. The Barker report does not mention it. I am not surprised because it does not go into that sort of detail.

I hope that, after my bit of fun at the start of my speech, I have tried to be as positive as possible. Housing is one of the biggest problems that face the country. It needs solutions and I hope that some of those that I have suggested will find favour with the Government. If not, they should be prepared to make way for someone who is prepared to introduce some genuine policies.

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