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12 Nov 2008 : Column 277WH—continued
10.13 am
Mr. Austin Mitchell (Great Grimsby) (Lab): I congratulate my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) on securing the debate and on his brilliant speech. I agree wholeheartedly with the arguments that he made.
The housing situation today contrasts sadly with the high hopes of last year, when I composed my famous lines, “Bliss was it in that dawn to be alive, but to be MP for Hartlepool was very heaven.” We had hopes of a big building drive, a Minister in the Cabinet to push it forward and councils that were allowed to build. What has happened since? We have been through three Housing Ministers and the target of 3 million new houses by 2020—not enough, according to calculations by Shelter—has been demoted to an aspiration. Building is falling of a cliff and new starts are down dramatically. Private builders are not building because they are going bust and housing associations do not build as they, too, have been hit by the credit squeeze. They now face the problem that right-to-buy sales are drying up and revenue is not coming in. The buy-to-let market has collapsed along with the collapse of its main financier, Bradford & Bingley building society, and despite all the promises, councils have still not been allowed to build effectively.
To add insult to injury, the guide rent increase for this year and next is 6 per cent. on council rents. That is above the rate of inflation and well above the historic cost average of previous rent increases. That is monstrous. The Government are draining huge sums out of housing revenue accounts, and with the rent increase, those sums will get bigger. That money should go to housing, not to the Government. The second addition of insult to injury is the scheme floated in The Times on Monday. It is the insane idea of turning council housing into the ghetto of last resort. It suggested that secure tenancies would end, tenancies would be reviewed, and if people were somehow not worthy of the fatherland, or employment or whatever, they would be booted out to make room for people on the waiting list. We should make room for people on the waiting list only by building more houses, not by booting out existing tenants. It is a ludicrous scheme and I hope that my hon. Friend the Minister will wholeheartedly disavow it.
We will not get anywhere near the build targets that we need over the next crucial two years in the developing
situation. We are meeting on a cold November day in the grip of a gathering recession, and the best answer to recession is to build. What can be built most quickly? Houses. They are not huge railway projects on the east coast line, or Crossrail—those things take years to organise and build, but houses can be built quickly. In the 1930s, house building was the major answer to a depression, perhaps even more important than the rearmament programme. The building of those estates put people back to work and solved the immediate problem.
The immediate problem now is that we need public housing to rent for those who cannot afford to get on the ladder, and for the increasing number of people who will be thrown out in repossessions over the coming year as negative equity grips the market. That public housing could come from housing associations—social housing—but it should also come from councils. In the Government’s rush to encourage ownership, there is one aspect of economics that we have not understood. We can have ownership, but unless we build public housing for rent pari passu with private build, the cost of private building goes up faster than it would otherwise. Other European countries, where there is a far higher proportion of rented housing, have not seen the insane price escalation that has taken place in this country.
We must also build housing for rent to provide for those who cannot get on the housing ladder. Otherwise, people get on to the housing ladder when they cannot quite make it. That is the sub-prime crisis in this country. Unless we build public houses for rent, people will be pushed into ownership when they cannot sustain it. That is what has been happening. We must build private and public houses pari passu.
It is crucial that we have a big building programme. Who can do that? As my hon. Friend the Member for Sheffield, Attercliffe said, it could be done by the housing association and we could improvise in all sorts of ways involving local housing companies. I am not keen on that, but it is an innovation and should be tried. Mainly, however, the move must come from local authorities and council house building. They can supply what is needed, provided that we finance them to come back into building.
That can be done in one of two ways. One is by letting local authorities keep their own money. Instead of Government draining £1.5 billion every year from housing revenue accounts for their own purposes, we could let local authorities keep those funds. We could let them borrow by paying adequate management and maintenance grants—which are 40 per cent. underfunded—so that they can borrow on a stream of revenue. We could do that.
The Government are reviewing council housing finance, but that will take until next year, and it will not be implemented until 2010. What is going to happen in 2010? There will be an election. We will have made ourselves odious in housing estates around the country but we are not doing anything about the predicament. Unless we take action by building council houses and regenerating the estates, the Government will have failed.
Mr. Betts:
My hon. Friend is a long-standing champion of local authorities being allowed to build new homes. His argument was certainly political in the past, but does he agree that this is now also a pragmatic issue? We
have talked about housing associations. Some may be able to respond if extra funds come in, but in the current circumstances some may not. Housing companies may be a possibility, but it is technically difficult to set them up and they are not an immediate answer. The pilots and the arm’s length management organisations will produce only a handful of properties. Allowing local authorities to borrow and use their resources is now the key to unlocking the problem.
Mr. Mitchell: May I say how happy I am to find myself in total agreement with my hon. Friend? What he says is exactly right. We should finance councils properly. We can take less from their housing revenue accounts—the fourth option—or pay a direct development grant for councils to build, which would not be all that expensive.
Councils need to be lured back into building. Only they can put private builders back to work, with contracts to build council housing. That is what is needed. We have a waiting list of 1.6 million who will never get a house. We have a huge waiting list in Grimsby and north-east Lincolnshire. Those people are not going to get anywhere because we are not building houses for them to move into. We should put the councils in a financial position to start building and let them trigger a building boom. Frankly, the only solution to our current difficulties is to build, build, and build again.
10.21 am
Martin Horwood (Cheltenham) (LD): I shall try to keep within the time limit, Mrs. Dean, although I shall have to skip some of the arguments that I wished to expand on. However, I agree with much of what has been said, so that should be relatively easy.
We are clearly in a market downturn for housing, but I hope that it will be seen, at least in part, as a market correction. I hope that we will never again see a return to the ludicrous housing market that we have experienced over the past 10 years. Insane multiples of people’s salaries were being offered for mortgages, and people were targeted by the sub-prime market on the conscious and frankly immoral understanding that they could not afford to repay the loans that were being offered—and in which a 25 per cent. deposit was regarded as ludicrously large.
I slightly take issue with the hon. Member for Sheffield, Attercliffe (Mr. Betts), although I generally agree with him. Many years ago, when I first tried to get on the housing property ladder, the 90 per cent. mortgage was almost unheard of. Increasing multiples and increasing lending have fuelled house price inflation to a great degree. House price inflation has been based, at least in part, on spiralling personal debt. Indeed, my hon. Friend the Member for Twickenham (Dr. Cable) often pointed that out at the time.
The Select Committee on the Office of the Deputy Prime Minister, of which the hon. Gentleman and I were both members several years ago, made that point when considering the supply of land for housing:
“Many witnesses pointed to the complexity of the housing market. There are many factors, other than supply, which affect affordability of housing. It is important for the Government to avoid an over-simplistic reliance on one policy and to examine a range of strategies which might influence demand.”
“The particular nature of the housing market means a simple supply and demand model cannot be applied to the housing market. With the multitude of factors affecting house prices it is very difficult to support an increase in housing supply simply on the basis of improving affordability.”
That, of course, was the question that was asked of Kate Barker. She was asked not to consider housing need as such, but to tell us how much of an increase in supply would be needed to affect affordability. She probably gave a legitimate answer, but the question was wrong and rather dangerous.
I draw the Minister’s attention to an article written by Merryn Somerset Webb, the editor-in-chief of Money Week, only the other week. He wrote:
“It is true that Brown’s targets will not be met, but that doesn’t mean that the shortage of supply is getting worse—mainly because there was no shortage of supply in the first place.”
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr. Iain Wright): What tosh!
Martin Horwood: I am sorry, but the Select Committee report—the hon. Member for Sheffield, Attercliffe will remember this—pointed out on the first page the fact that there were more homes than households. That is still true today. The problems to which hon. Members have referred are to do with localised patterns of supply and demand, and the differing balance of various kinds of housing. They are absolutely right. The lack of social housing and affordable housing is chronic, and the imbalance between family homes and flats is a problem. However, there has not been a lack of supply overall.
Merryn Somerset Webb continued:
“If there weren’t enough houses in the UK, why would Paddington Basin—home to hundreds of new build flats—be pitch black at night? Why would the centres of Leeds and Manchester be jammed with empty and utterly unlettable, let alone unsaleable flats? And how would the FT magazine have managed to find several almost entirely empty housing estates to base a cover story on last weekend?”
The Empty Homes Agency estimates that Britain has 840,000 empty homes. Even the Federation of Master Builders—one would have thought that it had a vested interest in continuing the myth of a lack of supply—puts the number of empty houses in the UK at around 700,000.
Mr. Betts: Will the hon. Gentleman give way?
Martin Horwood: I am terribly sorry; I really do not have time, otherwise I would do so.
Even if we question some of the statements about supply, as some hon. Members might, serious social and environmental consequences will result from the Government’s strategy. One of them has been alluded to this morning.
About 8,100 new homes are planned for the urban area in my constituency. That plan is supported by almost all parties. If 40 per cent. of those houses were for social housing—I tend to agree with the hon. Member for Great Grimsby (Mr. Mitchell) that they should be overwhelmingly social housing for rent—every person on Cheltenham’s housing waiting list would have a home. The trouble is that that is not the total number. The regional spatial strategy pushes the number up to 13,800. As a result, 5,000 will have to be built on the
green belt to the north of Cheltenham and 1,300 on the greenfield sites to the south. The consequences of that are clear for the wider housing market and for areas of housing deprivation and areas in need of regeneration.
Professor Ian Cole, who may be from the constituency of the hon. Member for Sheffield, Attercliffe, gave evidence to the ODPM Committee all those years ago. He said that
“it would be entirely misleading to view this in terms of ‘the North’ catching up ‘the South’: the disparities are still intense. The Barker recommendations, focused on easing supply constraints in high demand areas”—
like those in my constituency—
“would simply intensify these differences, with acute difficulties for labour mobility, the revival of vulnerable local markets and the capacity of the construction industry.”
The West Midlands regional assembly made the same point in evidence. It said that focusing growth on areas that are already affluent, already growing and already prosperous undermines attempts at urban regeneration.
Focusing on supply is a problem because, as a result, we ignore the real issue—the chronic lack of social housing. Historically, house building numbers decreased not because of the private sector, which was relatively consistent over the decades, but because of the collapse after Mrs. Thatcher’s intervention and the resulting inability of councils and other social landlords to buy and build social housing for rent. That needs to be tackled urgently. I entirely agree with other hon. Members on that point.
The environmental consequences are serious. I have considered the matter mainly from a constituency perspective. A huge proportion of our green belt is about to be bulldozed by developers. Of course, the developers are not considering the brownfield sites but are heading first for the greenfield sites. We are fighting one planning appeal after another, all on greenfield sites. The developers are not considering brownfield sites at all.
The Environmental Audit Committee’s recent report highlighted the acute risk that in this sort of market greedy developers will develop the greenfield sites first. That is happening. There is no shortage of enthusiasm among developers for providing houses around my constituency, but they are all on greenfield sites. The risk is acute. However, the Campaign to Protect Rural England says that the problem is nationwide. It estimates from the various regional spatial strategies that 27,000 hectares of greenfield land are under imminent threat. That is an area the size of Birmingham.
We should consider the climate change consequences of such a new build—developing an average new build house probably results in at least three to four times the carbon footprint of converting an existing property. We should also consider the loss of agricultural land and greenfield areas, which are loved and valued by, and good for, local people. Mind’s “Ecotherapy” report and reports by the Countryside Agency and others emphasise how important green spaces are to people. It all adds up to an environmental catastrophe. The Government have the power to reconsider the sequential test. Even if we agree that we need these houses, at the very least we should develop brownfield sites first and greenfield sites last. That way we will avoid many of the social and environmental consequences of current housing policies.
10.30 am
Julia Goldsworthy (Falmouth and Camborne) (LD): I, too, congratulate the hon. Member for Sheffield, Attercliffe (Mr. Betts) on securing this important debate. The fact that so many hon. Members focused on the lack of social housing underlines where the heart of the problem lies. More generally, however, the housing market is unfortunately in the middle of a perfect storm: falling house prices, a market downturn, and supply and affordability crises. Those are the difficult issues that we must unravel. The problem cannot be solved by focusing purely on social housing, because so much of the housing market interrelates. I am concerned that the Government’s primary focus has remained on private sector housing to buy, but no real attempt has been made to boost the supply of affordable housing to rent. Dealing with that will be critical to dealing with the wider problems.
Of course, the private sector is important, but it is in a freeze at the moment. Some of the Government’s actions do not seem to have helped matters. As has been mentioned, we have had the stamp duty holiday, which has made matters worse over the summer. Constituents of mine have had their exchanges fall through because the buyers have said, “There’s no way I’m going through with this when there could be an imminent announcement of a stamp duty holiday.” I have also received anecdotal evidence that home information packs are causing real problems. Some of my constituents are not putting their properties on the market. They are worried that they will not sell their properties and that they will simply be throwing away a few hundred pounds, because they will have to take them off the market. Although some estate agents have offered to cover those costs, that is only on condition of sale. Has such anecdotal evidence been gathered nationally to assess the impact of that uncertainty?
The Government’s response remains focused on shared ownership schemes, which are proving difficult. Constituents have come to me because they have found it difficult to negotiate their way around the first-time buyer and shared ownership schemes. In my constituency, where house prices are incredibly high and incomes very low, many people have failed to qualify. The emphasis has been on helping public sector workers, but such workers in Cornwall are relatively well paid. People on very low incomes, on the other hand, have gone through the rigmarole of being told that they are entitled, only to find out at the last minute that they are not.
Hon. Gentlemen are right that the key problem is that, effectively, lenders are withdrawing from the market and viewing the schemes as 100 per cent. mortgages, but there is no such thing anymore. They simply are not being offered. Rather than simply re-announcing investment available to those schemes, the Government need to take a long, hard look at whether they are helping people who want to buy in areas where affordability is in crisis. In Cornwall and elsewhere, buying a home remains completely out of reach. The Government need to bear in mind that informal withdrawal from the market. Simply saying, “The money is there,” does not mean that people will take up the schemes.
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