Westminster Hall
Wednesday 17 January 2007
[john cummings in the Chair]
Affordable Housing
Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Alan Campbell .]
9.30 am
Dr. Brian Iddon (Bolton, South-East) (Lab): I am grateful to the Speaker for selecting this debate. It is an extension of the debate that took place in the main Chamber on 7 December when several hon. Members, some of whom are here today, were unable to make contributions. I cannot deny that there are significant housing problems in the heated economies of London and the south-east, but MPs for constituencies in the north and the midlands are experiencing similar housing problems.
I cannot deny that the Government have doubled the amount of money spent on its housing policies, but a significant amount of that new money is not delivering new homes and is being used, for example, to pay increased land costs and to deal with the £19 billion backlog of public sector refurbishment left behind by the previous Administration.
Increased house prices are causing problems too in our regeneration areas. We are paying a lot more in compensation now just to clear the oldest homes. In the north-west, the housing economy bears little relation to the general economy. While the housing market is soaring, the underlying issues of deprivation, poverty and relatively poor economic performance affecting many places in the region are still significant, although much improved since 1997.
The average house price in the north-west in 2005 was £137,804, which is nearly double the average in 2000 and more than 6.4 times the average regional income of £21,541 for that year. House prices in the north-west have grown much faster than for England as a whole during the past five years. England has experienced a 74 per cent. house price increase since 2000, compared with the north-west's rise of 95 per cent. While house prices in the north-west have risen 134 per cent. since 1997, regional incomes have grown by just under 20 per cent. in the same period. As a consequence, the affordability gap for most households in the north-west is becoming much worse. The house price/income ratio has doubled from an affordable 3.3 in 1997 to today's figure of 6.4. The new forecasts from Oxford Economic Forecasting suggest that the region's affordability gap is likely to worsen from now until 2011.
There are huge variations in the north-west housing market. In Eden, Cumbria, for example, the house price/income ratio is 10.5, while in Burnley it is only 3.7, which is more affordable.
Christine Russell (City of Chester) (Lab):
In Chester, the average house price has now exceeded £200,000 and that means that first time buyers need an income of
more than £50,000 per annum to stand any chance of getting a foot on the housing ladder.
Dr. Iddon: That illustrates the point of this debate and I fully sympathise with the people in my hon. Friend’s constituency. The National Housing Federation has produced an interesting booklet entitled “The North-West's Housing Timebomb”. It has also analysed housing waiting lists. Some 560,000 households are waiting for affordable housing across the northern region. That represents 33.4 per cent. of England's housing waiting lists, yet the northern regions receive only 11.4 per cent. of the national affordable housing development allocation.
Shelter is currently conducting a campaign on affordable housing and has conducted some research that shows that, nationally, one in seven, or 1.6 million children, are either homeless or housed badly—170,000 of those are in the north-west region. Shelter believes that we need 20,000 extra affordable homes for rent to be built in addition to existing Government commitments.
Mr. Denis MacShane (Rotherham) (Lab): I congratulate my hon. Friend on obtaining this important debate. If we travel across the Pennines to Rotherham, there are 30,000 people on the housing waiting lists and 5,000 actively seeking homes with only 30 lets possible every month. Last year, figures from the Ministry showed just 15 socially affordable houses were built in the whole of the south Yorkshire region. We need to get a grip on this issue and I hope that as a result of his debate there will be a movement up a gear in the Ministry’s approach to this grave problem.
Dr. Iddon: I was about to amplify similar problems in Bolton. Before the right-to-buy legislation was introduced more than 25 years ago, Bolton had between 26,000 and 27,000 council houses. Today, it has just over 18,000, which is a loss of one third of its stock as is reflected throughout the northern regions. The overwhelming majority of sales unfortunately have been two or three-bedroom homes, which are the highest demand type of housing. The current high level of private sector house prices has meant that RTB sales have increased rapidly in Bolton, from around 100 per annum ten years’ ago to a peak of 800 in 2004. However, sales have fortunately decreased a little since then.
I have always been against the RTB, especially in high demand areas. In an Adjournment debate on 11 January last year, the Minister told me that 50 per cent. of RTB sales are maintained 15 years after purchase. However, it is the 50 per cent. that are not that concern me most as many of those end up in the hands of private landlords, who charge at least twice the rents of social landlords. That has a consequent impact on the housing benefit bill. Of more concern is the fact that we have not replaced the houses that we have sold in those quantities.
I am also concerned about low valuations of the council-owned homes that are still being sold. The turnover of stock has decreased significantly because people cannot afford to move on. House prices in Bolton rose more than 14 per cent. last year in one year alone, which is more than anywhere else in Greater Manchester, and is certainly above the national average. Terraced houses selling around my home for
between £20,000 and £30,000 just a few years’ ago are now fetching an astonishing £100,000—well out of reach of those on low to medium earnings.
Bolton's Homes For You runs a choice-based letting system. In 2003-04, the turnover of stock was 12 per cent. That had reduced to 9.5 per cent. in 2005-06, and is still reducing. In the past three years there has been a 20 per cent. reduction in homes advertised for letting in Bolton and coupled with demographic changes, that is having a marked effect on the housing waiting list. Increasing numbers of elderly people, younger people not getting married, and divorcees, as well as inward migration into the borough, all affect the housing waiting list.
The demand for properties has doubled in the past three years. In the traditionally more sought-after areas the demand rose from 25 per cent. to 48 per cent., but it was a significant 68 per cent. in the traditionally more deprived areas. Homeless statistics for Bolton show increasing levels of homelessness, which peaked in 2004. Bolton has the third highest number of homeless acceptances in the north-west, behind only Manchester and Liverpool.
In my time as chairman of the housing committee for the local council, 1986-1996, the housing waiting list always averaged about 5,000 per annum in Bolton. Today, it has shot up to the current figure of 23,700 and is still rising steeply year-on-year. The Northern Housing Forum, which was formed in the past three years has made a submission to the comprehensive spending review 2007. It proposes that the Government should allow councils across the north-west to release land at less than its market value in order to supply houses for rent at affordable rents. I hope that our Government will listen to that plea.
Mr. George Howarth (Knowsley, North and Sefton, East) (Lab): Does my hon. Friend accept that the picture he has painted of Bolton can be replicated across the north of England and does not just apply to the north-west? Even in Knowsley, where we have experienced decades of a decline in population, we now have an affordable housing waiting list of about 3,000. Previously, there would have been virtually no waiting list. Does he also accept that that means two things? First, initiatives such as building new affordable housing for purchase or for rent in places in Knowsley is now an active policy that needs to be considered. Secondly, initiatives—
John Cummings (in the Chair): Order. Interventions should be brief as there are many hon. Members who wish to speak.
Dr. Iddon: I recognise that the problems that I am outlining for Bolton are replicated across the northern arch of authorities. That is why I urgently called for this debate.
Bolton At Home has an arm’s length management organisation that has a very distinguished record. It refurbishes not only homes in the public sector, but homes in the private sector and it will meet the Government’s decent homes target. We are asking the Government to allow us to securitise the assets of
the Bolton ALMO, so that we can not only complete the refurbishment of the public sector stock but, more especially, build new stock to meet the housing waiting list requirements that I have explained.
I have three final points. First, community land trusts are catching on throughout Britain as a new way forward, and I am all in favour of them. Those organisations buy land and capture its value indefinitely for the benefit of local communities. Buyers of houses built on that land pay only for the cost of the building, not for the land. In some areas, such as Cornwall, that is halving the cost of purchasing a property, so I ask my hon. Friend the Minister to consider seriously the idea of community land trusts. Perhaps northern authorities can adopt the idea as well.
Secondly, I want to comment briefly on buy to let. There is a belief in some quarters that buy-to-let speculators are fuelling house price rises. In London, they are purchasing two thirds of the new homes. Investing in property is obviously much more attractive today than investing in other areas, such as the stock market. Buy to let is acceptable provided that the let part of the deal is honoured by the speculators. However, there is growing evidence that this phenomenon is significant in the north-west and, unfortunately, not all the homes are let. Many are kept empty, awaiting a quick sale should the market dip suddenly. The charity Crisis believes that those speculators are unbalancing the housing market at a time of severe housing shortage. In Leeds, for example, 50 per cent. of new flats are being left empty. In Salford, the figure is 40 per cent.
Finally, let me comment on shared ownership. The Government are putting a lot of weight on that area of policy, but although the price of a home can be controlled when it is first sold under shared ownership, the problem is that the price of the house soon reaches the market value. Then, unfortunately, the idea of shared ownership is lost.
There is an emerging, or even emerged, housing crisis in most parts of the north and midlands. Each region is different, of course, but selling off much-needed public sector homes at a time when they are very much in demand and the obscene land prices that we are seeing currently are two of the main drivers for the current housing crisis. I look forward to listening to contributions from my parliamentary colleagues.
John Cummings (in the Chair): Before I call the next speaker, I inform hon. Members that a considerable number of hon. Members wish to speak. I appeal to speakers to be brief and to speak for no more than six minutes. Then everyone will be accommodated. I call Mr. David Kidney.
9.42 am
Mr. David Kidney (Stafford) (Lab):
Thank you, Mr. Cummings. I congratulate my hon. Friend the Member for Bolton, South-East (Dr. Iddon) on securing the debate. He is one of the most knowledgeable and consistent champions of the cause of housing in the House, and he will be a great loss to us when he retires from the House. I also congratulate him on making the subject of the debate affordable housing in both the north and the midlands, enabling a west midlands MP
such as myself to point out that everything that he said about housing shortages in the north-west applies with equal force in the west midlands.
My hon. Friend mentioned the National Housing Federation and its booklet for the north-west. That is one in a series of regional booklets produced by that excellent organisation. There is an overall one for England. The one for the west midlands, which also talks of a housing time bomb, tells us that house prices are now seven and a half times the average regional incomes; affordable home building is running at less than half the levels needed; and housing waiting lists are rising faster than they are anywhere else in England. Clearly, the need in the region where my constituency is located is just the same as the pressing need that my hon. Friend described for the region where his constituency is located.
I want to consider the basic reason for the overall lack of affordable housing. I know that predict and provide is now old hat but, as the Barker investigation and the two reports, interim and final, showed us, a mismatch between supply and demand still causes a lack of affordable housing. Too many buyers are chasing too few homes. That is why, prompted by Barker, the Government propose a target of building 200,000 new homes a year by 2016. That target was endorsed by the third report of the Select Committee on Communities and Local Government last year, and it is certainly backed by Shelter, which has campaigned consistently and for a long time on the need to increase the supply of affordable housing and especially social housing.
That will cost money to achieve, which is why the Select Committee called for priority for housing in the comprehensive spending review 2007. It is why Shelter calls for priority for housing in the comprehensive spending review this year. It is why I call for priority for housing in the comprehensive spending review. The booklet produced by the National Housing Federation on the west midlands states:
“The Government must deliver on the promised prioritising of housing in the Comprehensive Spending Review 2007 and make sure the West Midlands receives its fair share.”
I entirely endorse that comment.
David Taylor (North-West Leicestershire) (Lab/Co-op): Will my hon. Friend accept that his remarks about the west midlands extend to the east midlands, where there are 130,000 households on council waiting lists but only 100 council houses were built last year and only 1,200 by registered social landlords? Does my hon. Friend hope that the incoming Prime Minister will relax the embargo that there has been for some years on local authorities building and providing housing that we know can be affordable, accountable and decent housing to the highest standard? That is one of our problems, is it not?
Mr. Kidney: I am grateful to my hon. Friend. I think that the Government have been entirely right to concentrate on the £19-billion backlog of necessary repairs to council housing, but I agree that we should see the various supply models for the housing market and that council housing, where there is a suitable business plan that is robust enough, ought to be an equal player with anything else in trying to meet the need. I am with my hon. Friend on that.
I congratulate the Department on its announcement last year of a £3.9 billion spending plan for the next two years. That is up 15 per cent. and should mean that 33 per cent. more new affordable homes will be built in the next two years than were built in the last two years, including 49,000 social rented homes and 35,000 new low cost home ownership homes. I am still trying to get my head round the three new homebuy options to ensure that my constituents benefit from them wherever they can. That should mean in the north-west 5,150 more social homes, costing £220 million, and in the west midlands 4,900 new affordable homes, costing £195 million.
I thank the Government for that, but I remind my hon. Friend the Minister that Shelter says that parts of the north and the midlands are experiencing chronic shortages of affordable homes every bit as acute as shortages in London and the south-east, which was the point that my hon. Friend the Member for Bolton, South-East made at the start of his speech.
In my constituency, there are particular problems. It is a rural seat and an urban seat. In the rural areas, there are special problems with providing affordable homes. The area has wages that are lower than the national average and house prices that are higher than the national average. There is a lot of green belt in the south of my constituency, so the housing supply is smaller still and prices of houses are even higher. My casework for the constituency involves a higher proportion than I would like of homelessness cases.
As the Select Committee said in its report last year,
“a simple supply and demand model cannot be applied to the housing market.”
The situation is much more complex than that. Yes, we are not building enough houses at the outset, but as well as that there are changes in the market, such as in the buy-to-let market, which my hon. Friend mentioned. There are the changing needs of people in relation to the kind of house that they want to live in and the kind of life that they want to live. There are changing levels of consumer debt, which perhaps makes it dangerous for us to concentrate too heavily on home ownership as the solution to housing shortages. We still need to take more seriously the tackling of empty homes and second homes, whereby we could help to increase the supply using existing property. We need increasing interventions in areas such as fiscal policy and we need changes to planning.
The performance of local authorities in providing affordable homes through the route of section 106 agreements for planning developments has been variable. If we could improve the performance of all the weak local authorities to the level of the best ones, we would massively increase the supply of affordable housing provided by the private developers when they build their estates in the first place. The new planning policy statement 3 should help us to ensure that local authorities realise that they have the powers to do that. I especially want to thank the Government for paying particular attention in PPS3 to the needs of rural areas when considering the exercise by local authorities of section 106 powers.
We should acknowledge that there are great differences in this country from region to region and within regions—from urban areas to rural areas and
within constituencies. That will be evident from hon. Members’ contributions. We need not only to increase the total supply of housing, but to be clever enough to have different solutions to meet the differing needs in different areas of the country. We must ensure that there is a supply of affordable housing in every area that meets those differing needs.
John Cummings (in the Chair): For the benefit of Members, I will be calling the winding-up speeches at 10.30 am.
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