Westminster Hall
Tuesday 11 November 2008
[Hugh Bayley in the Chair]
Housing (Greater London)
Motion made, and Question proposed, That the sitting be now adjourned.—[Chris Mole.]
9.30 am
Hugh Bayley (in the Chair): May I remind hon. Members that last week Mr. Speaker made a statement saying that all hon. Members, officers and staff of the House who wish to observe a two-minute silence at 11 o’clock this morning will be able to do so? Therefore, at 11 o’clock I will be standing and I hope that those hon. Members who are in this Chamber will join me at that time.
Jeremy Corbyn (Islington, North) (Lab): I welcome this debate and I acknowledge your point, Mr. Bayley, so we will finish in good time to allow us to observe the two-minute silence.
This is not the first debate that we have had on housing in London and it certainly will not be the last. A number of recidivists are here, including my hon. Friend the Member for Regent’s Park and Kensington, North (Ms Buck) and the Minister. I guess that we will debate the matter quite a few more times, because the housing situation in London is difficult and, for the constituents whom my colleagues and I represent, it is dire.
There is a huge amount of housing stress. The current financial problems—the credit crunch—have exacerbated these difficulties, with a number of people moving into negative equity, although I suspect that a lesser proportion have moved into negative equity in London than in other parts of the country. There are also problems with repossession and there is a huge level of stress among owner-occupiers.
London housing is expensive, both in the private rented sector and in the purchasing sector. The lending policies of many of the banks and building societies over the past few years—lending astronomical proportions of people’s income, often relying on two incomes—mean that there is a serious crisis if one partner loses a job or does not get the bonus that was expected. I hope that the Minister will offer us some assurance about the behaviour of the banks and the building societies on the repossession policy, because repossession of a property benefits almost nobody; it is a disaster for the family concerned and is traumatic for the children of that family, which often ends up homeless and a charge on the public assets anyway. I hope that, since we have put £34 billion into the banks and given a huge amount to them in loans, we will use the power of public ownership of the banks—or at least part public ownership—to enforce on them a much more humane, rational policy on lending and repossessions. That does not just apply to London; it applies to the whole country.
Broadly speaking, 58 per cent. of Londoners live in owner-occupation, 9 per cent. live in housing association properties, 19 per cent. in private rented accommodation
and 14 per cent. in local authority properties. Those figures are from a couple of years ago and I suspect that the number in owner-occupation has gone down, the number in private rented has gone up a great deal and the number in local authority accommodation has probably remained roughly the same.
The problem in London is that housing is so expensive that local authorities are not building as much as one would hope. The housing associations have similar problems. So many people are having difficulty buying that they are forced into the private rented sector—indeed, many are forced into the private rented sector by local authorities that have nowhere to put them or because the housing associations cannot do it. On top of that, the number of starts, particularly in the private sector, has decreased a great deal—by 19 per cent. in one year, in respect of the relevant quarters. The number of starts by registered social landlords—that is, housing associations—is roughly the same. However, the number overall has gone down. The number of completions has also gone down. We are looking at an acceleration of decline, which is a difficult situation to be in.
The useful briefing provided by the Greater London authority states:
“London has by far the greatest housing needs of any English region...50,000 households are homeless and living in temporary accommodation in London, and around 200,000 households are overcrowded.”
“the highest house prices in England, with acute affordability problems in most boroughs...In the last three years nearly 75,000 new homes were built in London, 34 per cent. of which were affordable homes (either social rent or products such as shared ownership for those on intermediate incomes). These figures do not include several thousand vacant homes returned to use and non self-contained units in hostels and halls.”
I mention that because the word “affordability” is thrown around too easily when we talk about housing needs in London. The reality is that, certainly in my constituency and, I suspect, in those of my colleagues, there is no possibility for 80 to 90 per cent. of the people that I represent to buy a home in the community where they live. The figures vary across London, but there is probably no constituency where even half can afford to buy within their community. This is a serious crisis.
The reality is that we are not building enough homes. The Housing Federation briefing states that we are
“not building enough homes. Only two thirds of the social homes needed in the capital each year are being built and, overall, London needs at least an extra 11,000 new homes a year...The number of people made homeless in London last year outstripped the number of new social homes built. Over 15,000 families were accepted as homeless by London councils last year. But fewer than 11,500 new social homes were built.”
In other words, the number of people who are homeless is increasing; the social disaster is getting worse. It goes on:
“House prices cost over 14 times the average Londoner’s income and private rents are more than twice as expensive as social rents...In 2007, the average cost of a London home was £355,000...Buying at the cheapest end of the London market still requires an income of over £56,000, more than double median earnings in the capital.”
This is a disastrous situation.
Mr. John Randall (Uxbridge) (Con): I welcome what the hon. Gentleman says. If I can catch your eye, Mr. Bayley, I hope to elaborate on some of the points. Does the hon. Gentleman agree that it is utter madness to consider the plans for a third runway at Heathrow, where 3,000 or 4,000 homes will be demolished, when the number of homes and houses is so pitifully short in the London area?
Jeremy Corbyn: I am completely with the hon. Gentleman on the future of Heathrow airport. I am opposed to the third runway for many reasons, including the potential loss of housing if it goes ahead. That will not necessarily make an enormous difference to the huge housing issue that we are dealing with across London, but it is one of many factors.
Before I go into how we look at and deal with the problem—the solutions—I ask hon. Members to think for a moment about the issues facing people in London: a higher proportion of their income than in any other part of the country goes on housing; house prices are the highest of anywhere in the country; the housing waiting lists are the longest; the housing transfer lists are the longest; the number of people who are homeless is the highest; the number of people living in hostel accommodation is the highest; and the number of people who are totally homeless is the highest in the whole country. Those things have a huge effect on society in lots of ways.
I represent an inner-city constituency, which, like all other inner-city constituencies in London, is a peculiar nexus, being both very expensive to live in and very poor at the same time. The stresses caused by housing problems are huge. There are people who, if they could dispose of their housing assets, are theoretically capital rich. However, in reality, they are often cash poor because they spend such a huge proportion of their income on mortgages.
Some people live in council or housing association accommodation that, by any stretch of the imagination, is grossly overcrowded. That means that if one child gets sick, all the children get sick; if one child cannot do his or her homework, none of the children can do their homework; if one child cannot bring friends home, none of the children can bring their friends home. Gradually, we end up creating a situation in which the children of such families are underachieving in school, the families concerned suffer from poor health and the teenagers of such families spend more time out of the home than they necessarily want to because there is no space for them to entertain or be at home. That therefore leads to the problems of underachievement in education, and increasing rates of social disorder and crime.
Frankly, children’s lives are being wasted because they do not have anywhere decent or reasonable to live and they cannot survive in the family unit. Too often, that leads to family break-up. How many of us, as London MPs, have sat in our advice bureaus and listened to the most heartrending stories of people who live in grossly overcrowded conditions? Families cannot survive if there are three or four children living in a one-bedroomed flat, as, unfortunately, is often the case. The local authority then sends a letter to such families which states that they do not have enough points for the bidding scheme. London is awash with people who are desperate to get the local paper every Thursday to start the choice-based
letting process. By the end of the day or a few days later, such people are disappointed and it is up to us to try to do something about it.
Another important aspect is the effect of the problem on single people in London. Household structures are changing rapidly across the whole country. Although the notion of the two-parent, two-child household clearly exists in many parts of the country, it is less and less becoming the norm. People live much more complicated lives and many more people choose to live a single existence. I have faced the problem—I am sure colleagues have, too—that when single people who are threatened with homelessness, or who are homeless, arrive at my office or advice bureau, there is nothing I can do for them unless they have a serious medical condition. Virtually all local authority lettings policies—understandably, I suppose—give greater weight to people with medical conditions, older people, families or children. They put almost no emphasis at all on the needs of single people.
I have met people who have a reasonable job as sales representatives in a shop, for example, but who sleep in cars and go to a public toilet in the morning to freshen up and make themselves look smart for the day. They then go and work in west end shops and go back to sleep in a car at night because they cannot afford the deposit for a private rented flat. Even if they could afford to take on a flat, they cannot afford the rent. We must do something about that. Changing the allocation policy is part of the action we need to take, but we also need to build far more places to rent.
I have mentioned the high social cost, which is disastrous for many people who suffer from housing problems as a result of the housing shortage in London. However, there is also a big financial cost because all local authorities have built hardly any or no properties at all during the past 20 years. The social building that has taken place has been largely done by housing associations. Under right-to-buy legislation, local authorities have been forced to sell a large number of properties. There is a declining public sector, and an increasing demand on that public sector. Local authorities can no longer house people in council housing association places, so they are forced to place families in private rented accommodation. Sometimes the local authority will pay the deposit and sometimes it will have a leased arrangement with people. Such accommodation is very expensive.
Last week, we had a debate about rented accommodation, and I am sure the Minister understands that there is an over-convenient relationship between most London local authorities and local letting agencies. Local authorities simply call such agencies and say that they need 50, 100 or 200 flats and they produce them. However, it seems that little inspection is made of those places. The places I have visited are disgusting, and that is reflected in the reports that I have read. People are forced to live in such conditions; they have no choice because that is where they have been placed. The rent levels are not cheap; in fact, they are phenomenally high. I know families who are paying—or are having paid for them through housing benefit—£300 or £400 a week for inadequate accommodation.
Mr. Mark Field (Cities of London and Westminster) (Con):
I entirely agree with the hon. Gentleman; he makes an important point. Does he agree that part of
the difficulty is that there is a relationship between local and central Government in relation to the housing benefit rules? That also makes the problem of affordability acute. I endorse what he said about the appalling human cost, which applies even in relatively wealthy boroughs, such as the city of Westminster—as it does, of course, in Islington.
Jeremy Corbyn: I thank the hon. Gentleman for that intervention. We must deal with housing benefit with great care. First, I should state that I support the housing benefit system in the sense that it gives people the right, when they are on income support, jobseeker’s allowance or a basic state pension to receive support for their housing costs. I do not want to take that away from anybody.
However, I have a problem because, in effect, the local housing market is maintained by the housing benefit system, through which high rents are paid. That maintains what somebody decides is the market level and the problem goes on. The cost to the public is phenomenal. A few weeks ago, a family came to me who were living in a small, former council house. The rent was £420 a week. The house next door is still owned by the local authority and the local authority tenants were paying a rent of something like £100 or £120 a week. In other words, there is a £300 gap, which goes to somebody who bought the council place on a discount some years ago. Owners of former council houses can live off that money quite easily because their mortgage is probably small—or perhaps they do not have a mortgage. They can live off one property and we, the public, are paying the difference. We, the public, are paying a phenomenal amount of money to keep somebody in temporary accommodation, which normally involves a six-month contract. In the case I have mentioned, the property was in a reasonable condition, but often the conditions in which people live are appalling.
I am not given to quoting the Evening Standard; indeed, in many ways, I do not have a huge regard for the paper. However, yesterday it provided an interesting breakdown of housing benefit costs across London. The article states that they amount to £4,151 million—in other words, £4 billion a year is spent on housing benefit in London. As I have said, I have no problem with people receiving housing benefit. However, if we break down the figures further, the average cost created by people in private rented accommodation who receive housing benefit compared with those in social rented accommodation is more than double. We are subsidising a private rented system and something has to be done about that. I reiterate that I am not in favour of taking the right to housing benefit away from people and I am not in favour of red-lining. However, I am in favour of examining the problem. We must consider putting in place rent controls across London or the country, as the Labour Government of the 1970s did to deal with a similar housing crisis. We must be prepared to be bold in dealing with the problem.
Mr. Field:
Does the hon. Gentleman agree that a difficulty with rent controls—this goes back to the first world war when they were first imposed—is that often the quality of housing stock can deteriorate rapidly? Although one might agree that it is right to make things
affordable, often the unintended consequences of rent control can be disastrous, particularly for the poorest in our communities.
Jeremy Corbyn: I recall that during the days of rent control, the rate was often so low that there simply was not enough money to pay for building repairs and maintenance. We must take account of the need to retain sufficient quality of housing and, of course, I understand that point. However, I think that during this crisis, we, the public, are being ripped off big time by the private landlords across London.
We must consider what action we should now take. When local authorities carried out large volumes of building work in the ’50s, ’60s and ’70s, most of it was a result of direct Government grants to local authorities—in some cases, through 60-year borrowing arrangements. Indeed, many hon. Members in the Chamber today are former councillors and will be well aware of that situation.
The housing association movement grew, and 70 per cent. of its capital expenditure was initially borne by central Government grant. Successively, local authorities have almost ceased building altogether. One or two of them are doing small amounts of building at present, and I hope that that is a good sign of a return to building. Housing associations increasingly have to borrow a higher proportion of their capital expenditure on the money markets and have increasingly stopped looking like social landlords or social associations. Increasingly, they look like property companies with a social conscience that have to borrow large sums to build. They build almost speculatively, and they expect to sell a proportion of whatever development they are doing. With what is left over, they are able to build for rent, which is the very purpose that they were set up for in the first place.
Increasingly, the social housing that we get in London is a result of planning agreements under section 106 of the Town and Country Planning Act 1990, whereby there is a requirement that a proportion of the construction be left over for affordable housing, which means a combination of part-rent, part-purchase properties and direct social renting to people in desperate housing need. With the slow-down in the construction industry, there is an increasing number of mothballed or incomplete property developments across London. There are large numbers of unsold properties. There are also large numbers of stalled schemes, and it is unclear what will happen to them.
In this crisis—it is a crisis—I appeal to the Government to do a number of things. I appeal to them to change the regulations on the construction of private developments throughout the country, so that they meet the same standards as those that are required in the building of housing association properties. It is bizarre that, even if housing associations or councils have the money to buy up many of the unsold private places, they do not have the necessary room sizes and do not meet the energy standards—they are just not good enough. That is not right, and we need to do something about it. Surely, it is within the purview of the Government to do that.
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