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Homes for All: Five-year Plan

3.30 pm

The Deputy Prime Minister (Mr. John Prescott): With permission; Mr. Speaker, I should like to make a statement about the Government's five-year strategy, "Homes for All".

May I begin by offering my apologies to the hon. Member for Meriden (Mrs. Spelman) and to the Liberal spokesman for the delay in providing copies of my statement? The computer failed, and my words of persuasion failed totally to convince it to speed up the process. Nevertheless, it is a complicated statement, and I want to offer my apologies to both of them.

As the House is aware, the Government have been drawing up a series of five-year plans as we continue to modernise our country. Today, I am presenting the Government's new five-year strategy, "Sustainable Communities—Homes for All." We will: provide more homes to buy or rent through responsible growth; continue to improve the social housing stock; promote greater home ownership; and give more people a share in their home. "Homes for All" offers choice, opportunity and fairness. It is a comprehensive strategy to deal with the housing challenges that face this country.

For decades, Britain has faced major long-term problems in housing. We inherited: a boom and bust economy, with 15 per cent. interest rates and hundreds of thousands of people suffering the misery of negative equity; a £19 billion backlog of repairs to social housing; a record number of rough sleepers and families in bed-and-breakfast accommodation. For decades, the number of households has increased while the supply of new housing has fallen. This has widened the wealth gap and priced millions of people out of home ownership. Successive Governments have failed to deal with these long-term challenges.

Our priorities in the first five years were to deliver economic stability, tackle the backlog in housing repairs, and remove the obstacles to increasing housing supply. That is what was intended in our policy. I am proud of what we have achieved: there are more than 1 million fewer non-decent homes than in 1997; rough sleeping is down by two thirds; and we have virtually ended the use of bed-and-breakfast hotels for homeless families and children. In the private rented sector, we have improved investment and quality and tackled the problem of bad landlords. Labour economic stability has replaced Tory boom and bust, with low interest rates, low unemployment and low inflation. Only by making progress on these issues have we been able in our second term to take action to increase housing supply and to give more people choice and opportunity in housing.

The number of households has been increasing faster than the growth in population, while the supply of new housing has been falling. The number of single person households has more than doubled from more than 3 million in 1971 to about 6.5 million today. Ten years ago, house prices were three and a half times people's annual salary; they are now six times the annual salary. Sons and daughters cannot afford to live where they were brought up. Nurses and teachers cannot afford to buy homes near where they work. As house prices rise,
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more people are priced out of the market. This is not just a housing problem; it is a matter of fairness, opportunity and social justice.

That is why I announced the £38 billion sustainable communities plan to the House two years ago. The plan provided for 200,000 extra homes in London and the wider south-east, increasing the total to 1.1 million new homes by 2016. Kate Barker's review of housing supply supported that decision. It said that the undersupply of housing was threatening economic stability and people's quality of life. The review also said that we needed a step change in housing supply, meaning an extra 70,000 to 120,000 new homes a year. The Barker review concluded that many people on moderate incomes in high-demand areas were unable to buy a home.

The case for sustainable growth is clear and unambiguous. The sustainable communities plan and this five-year strategy will achieve growth in a fair and responsible way. Responsible growth means concentrating more housing in our four growth areas in the wider south-east; modernising the planning system to make more land available for housing; encouraging environmentally sustainable homes; using brownfield land; and protecting the green belt. Responsible growth also means providing an infrastructure, because we are creating communities, not just housing estates. We are investing extra resources in schools and hospitals, and making more than £3 billion of new transport investment in the growth areas—the Thames gateway, Milton Keynes and the south midlands, Ashford and the Stansted-Cambridge corridor. It is all about creating sustainable communities with more affordable housing. Today I am announcing the provision of £40 million for sustainable communities in other areas, to support extra housing growth and promote regeneration.

I am also announcing important changes to our planning policies. We are extending our stricter controls on density to cover more areas of high demand, in the east of England and the south-west. Development on brownfield land has already increased from 56 per cent. in 1997 to 67 per cent. in 2003, and today we are further encouraging the use of such land. Our new planning guidance will help local authorities to release unwanted industrial land to be used for housing and other purposes.

We are using less land to provide the homes that people need. We are already doing that in London and the south-east, where we are providing for 1.1 million new homes on less land than the last Government set aside for 900,000 homes in 1997. We have added 19,000 hectares to the green belt, an area the size of Liverpool. Now I am proposing a new green belt direction that will further strengthen protection of the green belt. Local authorities will have to seek my endorsement for its development.

We also want more affordable homes in rural areas. For the first time we will allow local authorities to ring-fence land so that it can be used for rural affordable housing to meet local needs. Today I am announcing a review of the way in which existing home owners apply for planning permission for home improvements. The number of such applications has doubled in 10 years to more than 300,000, which has put additional strain on the planning system. I believe that we can reduce the
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amount of red tape and make the planning system more effective, while still safeguarding the rights of neighbours and protecting the environment.

In parts of the north and the midlands, long-term industrial decline and people's changing aspirations have led to low demand for housing. Some 850,000 properties are affected, the value of people's homes has been devastated, and communities have been undermined. We are investing £1.2 billion in nine market renewal pathfinders to help lift housing markets in many of the worst affected areas. That investment could also attract billions of pounds of private investment.

I am making £65 million available to new areas such as Tees Valley, West Cumbria and West Yorkshire to tackle their problems of low demand. The plan offers more fairness, opportunity and choice to our 4 million social housing tenants. We are providing more affordable homes, more decent homes, more choice in regard to where people want to live, more help with jobs and housing and more opportunities of home ownership.

Following the recent spending review, we will provide 75,000 new social rented homes over the next three years. By 2008, we will have doubled our annual investment in new affordable housing to £2 billion since 1997. That is in addition to the £18 billion that we have invested in the improvement of our existing social homes since then, to correct the disinvestment incurred by the last Administration. Over 1 million people have benefited: many have new kitchens, bathrooms and central heating. I realise that the houses are not new, but they are certainly new homes to the people who live in them.

We aim to halve the number of households in temporary accommodation within five years, and we are on track to meet our commitment to bring every social home up to a decent standard by 2010. We are making available £500 million in new private finance initiative credits to allow local authorities to work with housing associations and the private sector to build new affordable homes. We are offering social tenants more choice to rent or buy, and we have already improved tenant participation considerably. We are offering tenants more information and more involvement in the decisions that affect their homes.

Local authorities such as Newham and Sheffield have been running choice-based lettings schemes, which have been very popular with tenants. Now I want to work with all local authorities to expand choice-based lettings, so that we can create a national system by 2010. I want the system to include housing associations and private rented homes. It would give information not just about renting, but about the cost of buying a share in a home, and it would give more people a chance of finding a decent home with employment. So we are establishing a new scheme called MoveUK, which will help tenants to find a new job as well as a home. MoveUK will extend our existing location schemes to help tenants find a new home and a better quality of life in another area. We are offering social tenants more choice and more opportunity. Our plan means that local authorities will continue their excellent work in delivering the decent homes programme and continue to
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invest in new social housing, while offering more choice, managing housing better and using their land for low-cost homes.

We know that many social tenants want to own a share in their own home. Since 1970, home ownership has increased from 50 to 70 per cent. and has continued to grow in every region. Average interest rates are half what they were under the previous Government. Cheaper and more stable mortgages have enabled over 1 million more people to buy their home under this Government, but there are still many more who want the opportunity to own a home. By offering more people the chance to own, or to buy a share in, their home, we will widen opportunity and narrow the wealth gap between those with housing assets and those without.

The House will be aware that 80 per cent. of social tenants already have the right to buy their home. The right to buy and the right to acquire will continue to be available. They have helped to boost home ownership, but have led to the loss of 1.8 million homes from the public sector, at a cost of £40 billion in discounts. I have capped the level of discount in 41 areas of housing crisis, but elsewhere, the right to buy still gives a discount of up to £38,000 for each home and the right to acquire a discount of up to £16,000. On average, it costs us £75,000 in grant to replace each home sold. I asked Baroness Dean to chair a taskforce, which made recommendations on how to promote sustainable home ownership while protecting the social housing stock. I am grateful for its valuable work and for her recommendations.

Today's new five-year plan offers a comprehensive package of schemes to help social tenants and first-time buyers to become home owners. We have two different approaches: HomeBuy, which will offer up to 300,000 council and housing association tenants the opportunity to buy an equity share in their home at a discount; and the first-time buyer initiative, which, together with our key worker and other low-cost home ownership schemes, will help 80,000 families into a home of their own by 2010.

HomeBuy is significantly different for several reasons. It will protect the social housing stock—we consider that essential—because social landlords will have first refusal to buy the home back if the owner moves on to the private sector. It will help more people—up to 300,000 tenants—and it will be more cost effective. We will consult on a range of options for discounts, up to the level of the right to acquire. Moreover, tenants will be able to buy as little as half their home, increasing their share over time if they want to. That will be particularly helpful to tenants who are unable to afford, or who do not have, the right to buy. Unlike the right to buy, HomeBuy will treat local authorities and housing associations equally, allowing both to retain full receipts from the sale of homes and thereby creating a level playing field.

Today's housing plan will widen the opportunity to own or to part-own. In addition to our HomeBuy scheme, I am announcing, as I mentioned, a radical new first-time buyer initiative. Our key worker programme has already helped more than 13,000 key workers such as nurses and teachers, who have been priced out of the housing market. The new first-time buyer initiative will help even more key workers and people on low incomes who cannot afford to buy a home. When they are ready
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to move on, the social landlord will have first refusal to buy the home back, so that it can be offered to another first-time buyer. The scheme will use surplus public land for new homes. The first-time buyer will pay a price that reflects the cost of construction, and the public sector landowner will keep a share that reflects the value of the land. In due course, the first-time buyer will be able to increase their share up to full ownership, if they want to.

To begin with, the first-time buyer initiative will use land owned by the Government and their agencies, but I want to encourage other public and private sector landowners—in urban and in rural areas—to use their land for new affordable housing. We have been encouraged by our talks with the Council of Mortgage Lenders about how the private sector can support and extend the initiative. Separating the cost of land and the cost of construction through the initiative will be a big help in driving down the purchase price for the home buyer, but we still need to reduce construction costs, which have gone up more than three times faster than retail price inflation in recent years. Such costs are certainly higher than in other European countries.

I have said that it is possible to build a home for £60,000. Apparently, that was a controversial statement, but now it is clear that it is possible. So I am asking English Partnerships to hold a competition, challenging the contractors and house builders to produce a well-designed, environmentally efficient home for £60,000 without sacrificing safety or quality. Next week at the sustainable communities summit in Manchester, English Partnerships will exhibit a house that shows that high standards can be delivered at low cost—[Interruption.] I invite the hon. Members mumbling below the Gangway to come and see it.

The five-year plan is the next step in creating sustainable communities—mixed use, mixed tenures, designed to the highest standards, using less land to build more homes and helping thousands of key workers and first-time buyers to get a home of their own. It means more homes and more home ownership, with extra help for first-time buyers. The five-year plan offers choice for all; fairness for all; opportunity for all; homes for all; and homes for all in sustainable communities. I commend this statement to the House.

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