Housing and Regeneration Bill

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Clause 68

Low cost rental
Andrew Gwynne (Denton and Reddish) (Lab): I beg to move amendment No. 327, in clause 68, page 31, line 39, leave out paragraph (b) and insert—
‘(b) the rent is below the market rate to such an extent that it is affordable to those on low incomes’.
The Chairman: With this it will be convenient to discuss the following:
Government amendment No. 168
Amendment No. 328, in clause 68, page 32, line 1, leave out paragraph (c) and insert—
‘(c) the accommodation is let in accordance with rules for eligibility designed to give preference to people in housing need whilst also promoting mixed and sustainable communities.’.
Government amendment No. 169
Amendment No. 329, in clause 69, page 32, line 12, leave out subsection (3) and insert—
‘(3) Condition 2 is that the accommodation is affordable for those on low incomes and made available in accordance with rules for eligibility designed to give preference to people who cannot afford to buy or rent at market rates whilst also promoting mixed and sustainable communities.’.
Government amendments Nos. 170 to 172 and 177.
Andrew Gwynne: The Bill designates two types of housing as social housing—low-cost rented accommodation and low-cost home ownership. My amendments would further clarify what is meant by “low-cost”, so that such housing is made realistically affordable to people on low incomes.
Amendment No. 327 would prevent providers of social housing, be they private providers, registered social landlords or local authorities, from letting units as low-cost rental homes if the rent was only marginally below market level, which as a result would still be out of reach to those on low incomes. Amendment No. 328 would give legislative expression to the aspiration of achieving mixed communities on housing estates in the context of the limited supply of low-cost homes currently available for rental.
Amendment No. 329 would ensure that those aims apply in relation to low-cost home ownership, too. It would ensure that low-cost home ownership was genuinely affordable and was, therefore, a genuine option for those on low incomes.
My concern is that many homes are originally planned and designed as low-cost housing, but are ultimately sold or let only marginally below market value. In addition, the amendments would give legislative and regulatory expression to the aspiration of achieving mixed communities in areas of privately owned accommodation.
As right hon. and hon. Members will know from their surgeries, many homes provided through the affordable housing programme—both social rented and low-cost home ownership schemes—are increasingly priced beyond the limits of realistic affordability. As currently worded, the Bill will not rectify the problem; it will not guarantee to help those facing such affordability pressures.
The amendments would result in social housing having to be priced at a level that was affordable for people on low incomes. As my hon. Friend the Member for Ealing, Acton and Shepherd’s Bush pointed out on 11 December, Wandsworth council once called properties at 99 per cent. of the market rate affordable. Other authorities are targeting their affordable housing at people with incomes of between £50,000 and £60,000 a year, something referred to by my hon. Friend earlier today. Those are certainly not the levels of income that I come across when attempting to help my constituents find a home that they can realistically afford. The average annual income in my constituency is £16,500 a year, with many people earning a lot less than that. As we increase social housing to rent and to buy, we need to ensure that it is affordable to people on that sort of income.
Anecdotal evidence suggests that the reduction in the level of housing corporation grant per unit has led to the problem becoming more acute, with some housing associations increasing the number of homes they rent at intermediate rates relative to the number of homes let at social rents.
There are further upward pressures on pricing. The National Housing Federation recently called for non-profit-making housing associations to have the power to raise rents by 1 per cent. above the retail prices index rather than the RPI plus 0.5 per cent. as at present.
Affordability is an issue for people looking for a home to rent and those needing help to get on the housing ladder alike. Last year’s Halifax key worker survey showed that a nurse living in London would have to spend more than 10 times his or her annual salary to buy a house, an increase of nearly a quarter since 2002. It is not a problem only in the capital. Although the problem is acute in parts of London, house prices in my constituency have risen by almost 500 per cent. over the past 10 years, making even a modest terraced house unavailable for people on a low income. According to the Halifax survey, only 1 per cent. of towns across the country are affordable for nurses, and teachers are priced out of the market in 78 per cent. of towns. The difficulties are not restricted to entry-level salaries or to those in one or two occupational groups; the issue affects working people in all sectors of the economy and it is the lowest paid who face the greatest difficulties. If teachers are priced out of the market in 78 per cent. of our towns, there is little chance for teaching assistants, cleaners, bus drivers or shop workers either.
Key worker schemes have certainly provided some respite and I welcome the Department for Communities and Local Government’s new campaign to provide information to key workers, to raise awareness of the scheme and to make it easier and simpler for employees to apply. Nevertheless, opportunities to access key worker schemes are clearly limited to specific occupational groups. Such schemes should not be an alternative to increasing the supply of affordable housing more generally.
The Bill makes it clear that low-cost rental accommodation and low-cost home ownership should be set below the market rate. My amendments would ensure that those two varieties of social housing are realistically available to all those on low incomes. I appreciate that there will be further work to do to define what we mean by low income in the regulations, but introducing low income into the equation and referring to it in the Bill would provide greater clarity than simply defining social housing as below the market rate.
As I stated, my amendments would give some legislative expression to the aim of creating mixed and sustainable communities. In the Bill, there is a sense that social housing—whether low-cost ownership or low-cost rental—will be housing of last resort and that it will be exclusively for those who cannot afford the market rate. In the current context of scarcity of supply, I am sure that hon. Members believe that the needs of those with abject housing problems should be prioritised. However, we should not forget our long-term aspiration to create genuine mixed-community developments and to avoid past problems caused by building large amounts of social housing separate from areas of privately owned housing. I realise that the primary way in which that can be achieved is by solving the current lack of supply of housing and consequential high prices by building more homes. I fully support the Government’s ambitious goal of increasing the supply of housing so that 3 million new homes are provided by 2020. However, a good supply of housing for rental and purchase will still need to be realistically available to those on low incomes, including many of my constituents and those of other hon. Members. That will require a more substantial definition of affordable and low cost than is in the Bill.
Lembit Öpik: I praise the hon. Member for Denton and Reddish for his insightful amendments, particularly amendment No. 328, which is exactly right. I am keen on it because I fear that our readiness to consider social housing as a problem solver risks ghettoising the people who live in social housing. Much of the Bill makes the underlying assumption that we are helping the poor, and that recipients of social housing are some how disadvantaged in society so we must house them in a way they can afford. Although I use that language for effect, the truth is that we want to ensure that everyone in the UK, which is after all a first-world country, lives in something better than second-world accommodation. However, if there is not a proper balance, there will be ghettoisation. Amendment No. 328 makes a sincere and fairly informed effort to ensure that there is a decent mix of housing and a generation of sustainable communities.
I hope the Minister will accept the sentiments expressed by the amendment. If I were him, I would happily accept the amendment—that might be a reason for the hon. Member for Denton and Reddish to cross the Floor, but I will talk about that later. Will the Minister tell us how we can ensure that the Bill and the Government’s general strategy on social housing does not create ghettos, but results in the type of mixed housing that amendment No. 328 would introduce?
Mr. Wright: This is an incredibly important group of amendments and I pay tribute to my hon. Friend the Member for Denton and Reddish for raising the issues they cover. It is incredibly important that we ensure that all concerns are addressed.
Clauses 67 to 69 define the term social housing for the purposes of the Bill and regulation. The Committee will note that I, too, have tabled amendments in the group that I hope will make our intention clear and clarify the effects of the clauses.
The amendments in my name are partly a response to concerns raised in the House, during oral evidence sessions, and by stakeholders that the definition used could be perceived as permitting or appearing to permit the means-testing of social housing tenants on the basis of whether they can afford to buy or rent a home at market prices. Let me be clear: there is absolutely no intention on the part of the Government for the definition to have that effect. Concerns have been expressed that a Tommy Cooperesque moving of the hands will take place to ensure that it looks as though we have provided more social housing. That is not the intention either.
We are trying to provide 3 million new homes by 2020 and it is important that we provide 45,000 to 50,000 new social homes a year. There is no sleight of hand; we simply want to ensure that social homes are provided to those who need them and that they are regulated to the best standards. We are trying to be very clear about that, but there has been misinterpretation and the existing clauses 67 to 69 cause confusion. I accept that the definition is not perfect and could be made clearer, which is why we have proposed our amendments.
Linked with the problems and concerns about means-testing is the issue of security of tenure, which has been mentioned by stakeholders and by my hon. Friend the Member for Denton and Reddish. I want to clamp down on concerns about that as fast as I can because people should not have the impression that we are saying, “You are allowed a council house or social house, but once you get to a certain income and have been promoted you will be kicked out because it is all about means-testing and security of tenure”. That is not the case. People were concerned that the Bill would allow eviction if tenants reached a certain level of income and I want to reassure the Committee and wider stakeholders that that is not the case. Clauses 67 to 69 have nothing to do with security of tenure; they are meant to provide for social housing for the purposes of regulation. The security of tenure attached to a particular tenancy type is provided for in other legislation, for example the Housing Act 1988, which specifies the grounds on which landlords can seek possession. Part 2 of the Bill, which deals with regulation, does not change the 1988 Act; it does not alter the grounds for possession for any type of tenancy, so I hope that we can put to bed concerns about security of tenure.
Mr. Slaughter: I do not think that it needed to be said again, but as the issue was raised, the Minister is right to be so categorical. Given that the matter was raised by the Opposition, perhaps he will join me in condemning these words:
“Living in social housing should be viewed as a transition during which support is temporarily required for moving up the ladder to some form of shared or outright ownership”.
Mr. Wright: That is a disgraceful phrase. As the hon. Member for Montgomeryshire said, the idea seems to be that those who have not succeeded in life are forced to live in social housing. That is exactly what we are trying to avoid, because we want balanced and mixed communities. The hon. Member for Welwyn Hatfield mentioned Mrs. Thatcher, who said that people who lived in a council house or who used a bus before the age of 30 were failures. That is an absolutely disgraceful attitude, which we need to move away from, and I am glad that the Government are not pursuing policies based on such attitudes.
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Lembit Öpik: I am pleased ‘to hear that, although I will resist the temptation to vent my dislike of that dreadful woman.
Mr. Love: Go on. Let rip.
Lembit Öpik: I will not be baited.
I have one question for the Minister. Is he aware that it is regarded as a matter of course in much of the rest of Europe that people might choose to rent accommodation, rather than own it, and that is certainly the case to a great extent in Germany? Perhaps he can save us a little time by clarifying whether what he said about security of tenure was intended unequivocally to reaffirm that nothing in the Bill will weaken security of tenure as it was before we began debating the Bill. If that is correct, it is useful to have it on the record.
Mr. Wright: I can reaffirm that. Let me extend the hon. Gentleman’s invitation to my hon. Friend the Member for Denton and Reddish to cross the Floor by saying that he is more than welcome to come and join us—it is certainly much warmer on this side of the Committee.
The hon. Gentleman makes an important point about tenure, social housing and employment. My mother and father came from council houses, and until she died recently, my grandmother lived in the same house that she had lived in since 1950. Her whole estate had full employment, and my ambition during my time in this post is to see social housing again become synonymous with full employment. We can ensure that that happens by providing a range of support to deal with worklessness and other skills training. We have an exciting agenda, which will move us forward on that issue, and we are seeing those things happen again. Social housing is not seen as a last resort, and that is exactly what I want to avoid.
Alistair Burt (North-East Bedfordshire) (Con): I did not intend to intervene, because I am conscious of the time, but I will do so briefly given the way in which the sitting has gone. The Minister will recall that during the evidence sessions and on Second Reading I discussed security of tenure, the importance of mixed communities and how we must address the fact that there is much more renting on the continent. Despite the good intentions of the Minister and the Government, he must be disappointed at the lack of social mobility that is becoming apparent and which has, alas, become a feature of the Government’s past few years in power. If he intends to realise his aspirations, he must surely tackle social mobility, because it has either become paralysed or it is going backwards, which it did not do during my party’s time in power.
Mr. Wright: Social mobility is incredibly important—and it is what a progressive left-of-centre Government are all about. I do not want to labour the point, but the Prime Minister has set out his long-term ambition in terms of skills and this country’s ability to compete given the challenges facing the global economy. We are absolutely up for the challenges facing us and we are putting in place policies to achieve those aims. That is exactly what we should be doing in the new and difficult globalised situation in which we find ourselves.
Grant Shapps: I am also conscious of the time, but some of this cannot slip by unchallenged. My grandma lived in a council house for most of her adult life, and I used to visit her there before she died. She was proud of her home, and it is completely untrue that there is a policy out there to overturn such arrangements and kick people out of their homes. As the hon. Member for Ealing, Acton and Shepherd’s Bush well knows, the policy document to which he referred was a proposal to the party, not the policy of the party. Such a claim simply cannot go on the record. Will the Minister accept the point made by my hon. Friend the Member for North-East Bedfordshire that social mobility is at a low as a result of 11 years of his Government’s policies?
Mr. Wright: No. The Conservative party would have considered the policy. The fact that it is even up for consideration is disgraceful, let alone that it was ever thought of as policy. I want to crack on and address the points that were made by my hon. Friend the Member for Denton and Reddish about the amendment.
Amendment No. 327 covers part of the definition that we are not amending. Clause 68(b) states that low-cost rental homes should be let at sub-market rates. The amendment would go further, requiring that rents not only be below market rate but
“to such an extent that it is affordable to those on low incomes.”
We have already discussed at length, and no doubt will do so again, the concerns that were raised by our original definitions of low-cost rental and low-cost home ownership accommodation, which referred to its being allocated in accordance with rules designed to ensure that it is occupied by people who cannot afford to rent or buy at the market rate.
While amendment No. 328 seeks to omit such reference to affordability from the part of the definition referring to rules for allocating low-cost rental accommodation, amendment No. 327 seeks to introduce a stronger affordability criterion elsewhere. For the reasons outlined earlier, I do not think that including an affordability criterion as part of the defining characteristics of low-cost rental accommodation would essentially address the concerns that have been raised by hon. Members and stakeholders in respect of means-testing. I shall come on to that later as well.
My concern with the amendment is that, if it is taken to its logical conclusion, any social home that did not have a sufficiently low rent level would, in theory, actually be a market home and therefore not subject to regulation. That would decrease the number of homes regulated. Alternatively, the effect of the amendment could be that the definition limits rents to a certain level. I have some sympathy with that, but I do not think that the definition of social housing is the right place to set rent policy. We consider that the best way to do that is through strategic Government direction under clause 177, which we shall discuss, implemented by the regulator through the standard setting under clause 173.
Mr. Love: I agree with my hon. Friend on the need for flexibility and for deciding policy at the appropriate place, but does he accept that certainly in Greater London there is real concern about the rental policy that is being followed and the resulting affordability of accommodation? I do not think that it is appropriate to try to set rents through this Bill, but the issue must be kept under consideration. At the very least, we must accept that, for many people on lower incomes, paying the rent in socially rented accommodation in some of our urban centres is difficult.
Mr. Wright: I disagree with my hon. Friend. He looks a bit shocked at that, but such discussions are within the scope of the Bill. When we reach clauses 173 and 177, I look forward to a robust debate on his point about rent setting, standards and directions. We can have that debate then.
Amendment No. 328 would revise clause 68(c), which covers the rules of allocation for low-cost rental. I pay tribute to my hon. Friend the Member for Denton and Reddish, because his amendment is helpful. However, it is unnecessary, given the Government amendments that I hope to move shortly, which seek to resolve Members’ concerns.
We have discussed the matter longer than I imagined we would, but I am sympathetic to the proposal that rules should also promote mixed and sustainable communities. I strongly support such communities. However, there is not a precise legal term for mixed communities—I believe that my hon. Friend mentioned this—and I am not sure what the effect would be of including the requirement in the Bill. I keep referring to discussions that we will have on the clauses on standards. I suspect that the standards on lettings are probably a better place than a statutory definition of social housing to ensure that lettings contribute to mixed sustainable communities. To the extent that the amendment suggests that the rules should seek to ensure that scarce low-cost rental accommodation be made available to those who are not on low incomes or in housing need, it risks adding to shortages.
Amendment No. 329 would revise clause 69(3), which covers the definition of low-cost home ownership. Again, while I am sympathetic to the spirit in which the amendment was tabled, I have concerns about its practical effects. An additional concern is that it would require that homes be affordable for those on low incomes. We would all like to increase access to home ownership for those on low incomes, but, unfortunately, that is not always possible. A fundamental point is that low-cost home ownership schemes are additionally targeted at many groups that would be considered to be middle income. We have mentioned nurses, and other public sector key workers could be involved, as well as first-time buyers. We would not want low-cost home ownership aimed at those groups to be excluded from the definition of social housing.
The amendments in my name try to do things that are similar to what my hon. Friend’s amendments would do. The intention of the clauses is to define social housing in respect of its characteristics, a point that I made in debating with the right hon. Member for North-West Hampshire. Those characteristics are that the allocation of new lettings is limited by some mechanism to those who need it most, and lettings are offered at below market prices, at least for low-cost rental, which those who need it can afford. That makes sense: if there is a limited resource—social housing will always be a limited resource because, obviously, there is a finite amount of public money—access must be prioritised.
On that basis, I propose three changes to address the concerns that have been raised. First, amendments Nos. 168 and 170 remove the words “of eligibility” after “rules”. Those words are not necessary to define social housing, and the amendments make it clear that the rules referred to are likely to cover allocation rather than eligibility. The word “eligibility” has a particular meaning in the context of social housing allocation legislation, and we did not want to risk further confusion.
Secondly, amendments Nos. 169 and 171 replace the words “occupied by” with “made available to”. They clarify that the rules referred to relate to the initial allocation of a home rather than the ongoing occupation of it. As I said earlier in response to a point made by the hon. Member for Montgomeryshire, I have always been clear that these clauses have absolutely no effect on tenants’ security of tenure or on the grounds on which landlords can seek possession of their homes.
Nevertheless, in spite of that assurance, I think that replacing “occupied by” with “made available to” better captures the point at which the rules would have effect.
Lembit Öpik: That probably resolves the issue that Shelter and I raised. For the avoidance of doubt, therefore, what the Minister is saying is that there is no intention of challenging the existing tenure arrangements with that modification of the legislation. The assessment will be made at the start but will not be revisited thereafter.
Mr. Wright: The hon. Gentleman’s understanding is absolutely right. That is the clear intention.
My third proposed change is in amendments Nos. 169 and 171, which refer to
“people whose needs are not adequately served by the commercial housing market”,
“people who cannot afford to buy or rent at market rates”.
We recognise that social housing is not just for those who cannot afford market-rate housing. It may also be for people who are vulnerable and need greater security of tenure than is offered by the market, or who need a form of specialised housing. I made that point in the oral evidence sessions last month.
The revised wording is consistent with clause 71, which deals with the Secretary of State making regulations to add to the stock covered by the social housing definition. The effect of the amendments is only to clarify what was always our intention in defining social housing.
Mr. Slaughter: Before my hon. Friend moves away from the definition of social housing, I have sympathy with his criticisms of the amendments of my hon. Friend the Member for Denton and Reddish, and I agree that their intent is good. However, I do not think that the Minister’s definition, although it is better, goes far enough. As was pointed out, where there are attempts to evade what we would consider a reasonable definition of social housing—there is the example of 99 per cent. market rate, or there are the examples that I gave this morning—they would still come squarely within the definition of “not adequately served by the commercial housing market”.
Conservative councillors in the area that I represent have expressly said that they do not wish to see, in relation to housing, people who are in an income bracket below £50,000. The leader of the council in Hammersmith said, “We must stop our borough becoming a ghetto for the urban poor.” Fifty per cent. of households in my constituency have an income of below £20,000. It is a very divided community in income terms. How will the Minister ensure that there is not manipulation of the definition to ensure that not people at the bottom or in the middle, but only people at the top benefit?
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Mr. Wright: In the short term, that is exactly the sort of thing that the regulator could investigate. We will soon discuss cross-domain regulation. I know that there are concerns that local authorities and ALMOs will not be brought into the scope of the regulator straight away. However, the regulator could consider that sort issue and ensure that those concerns are addressed. I will go away and reflect on that, because my hon. Friend raises an important point. I hope that he is satisfied with that pledge.
Government amendment No. 172 simply corrects a reference in clause 70. It currently includes the phrase
“low cost shared ownership accommodation”.
Clause 69 refers to the concepts of
“low cost home ownership accommodation”
and “shared ownership arrangements” but not low cost shared ownership accommodation. The amendment therefore amends clause 70 to use the correct phrase, which is
“low cost home ownership accommodation.”
Under clause 241, registered social landlords registered with the Housing Corporation will automatically become non-profit registered providers under clause 241 when the existing system is confined to Wales only. Clause 76 provides that, unless specifically exempted, all property owned by such landlords will be social housing even if it does not meet the tests in clause 67. I thought it important to provide protection for existing housing stock of existing RSLs, as the Housing Corporation can in theory regulate it all.
I have already explained that one reason for providing a definition of social housing is that not all housing owned by existing RSLs is social housing. In clause 76, we have sought to provide exemptions for certain stock owned by existing RSLs who will become registered providers under clause 241, which we do not think requires the same degree of regulatory protection. Clause 76 includes a power for the Secretary of State to make regulations to exempt certain existing stock owned by existing English RSLs from the definition of social housing. We thought that it would be helpful to add to the list in the statute where we were clear that a particular category of housing should not be social housing. The Housing Corporation does not regard, for example, student accommodation as social housing. Government amendment No. 177 means that existing accommodation owned by English RSLs made available only to students in full-time education or training will not be social housing.
I have deliberately spent some time trying to explain the intentions behind the amendments and clauses. I hope that I have reassured the Committee about our clear intention, which has not changed. I hope that, on that basis, the Committee will accept my amendments and that my hon. Friend the Member for Denton and Reddish, who spoke to his amendments so eloquently, will feel that we have addressed his concerns and he can withdraw the amendment.
Andrew Gwynne: I am flattered by the approaches made by the hon. Member for Montgomeryshire. I shall have to decline his kind offer, though. He is certainly on board with the Labour Government’s housing agenda. I only wish that I could say the same about his colleagues on Stockport council, my experience of whom has put me off the Liberal Democrat cause for life.
Lembit Öpik: In which case I withdraw all the compliments that I paid to the hon. Gentleman earlier.
Andrew Gwynne: Which I happily accept for my next meeting.
The amendments were probing to clarify and place on record the direction of the Government’s thinking on these important issues, particularly the affordability of social housing to buy and to rent, and creating mixed communities. I am reassured that the Government are heading in the right direction, especially given their amendments, which go quite some way to reassuring me on a number of points. I welcome the Minister’s comments. I certainly shall not be crossing the Floor, and I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendments made: No. 168, in clause 68, page 32, line 1, leave out ‘for eligibility’.
No. 169, in clause 68, page 32, line 2, leave out from ‘is’ to end of line 3 and insert
‘made available to people whose needs are not adequately served by the commercial housing market.’.—[Mr. Wright.]
Clause 68, as amended, ordered to stand part of the Bill.
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