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The second area I would like to look at is low-cost home ownership, because Hammersmith and Fulham council has put a huge amount of money into promoting
that. I shall at this point respond to the hon. Lady’s remark. She probably understands that even in Wandsworth housing allocation policies are done on a borough basis. Therefore, what happens in Fulham affects my constituents in Shepherd’s Bush. The 200 homes that were given back, in a cosy deal, to a private developer would have been homes for people living in Shepherd’s Bush as much as for people living in west Kensington and Fulham. Therefore, the hon. Lady’s point is not only trivia, it is inane as well and I am sorry that it is the best she can do.
No one is against low-cost home ownership; indeed, the previous Labour council in Hammersmith and Fulham brought in a much higher proportion and amount of low-cost home ownership than the current Conservative council. The real shift has been away from social rented housing to market housing. However, there is a problem with low-cost home ownership in London: it is not low cost. That is a problem for many authorities. On the council’s own figures, the average income of people accessing low-cost home ownership in Hammersmith and Fulham is currently £38,422. The Conservatives would like it to be higher than that—that is why the Mayor has extended the upper income limit to £72,000—but an income of £38,000 excludes almost everybody in housing need; on those terms, the numbers we are talking about are almost in single figures. The vast majority of people on the low-cost home ownership register are not council tenants or those in temporary accommodation, and they are certainly not people who are disabled or people from black and minority ethnic backgrounds, because the council itself concedes that its policies discriminate against those classes of people as they tend to be on lower incomes. Already, people accessing this kind of housing are earning £40,000-plus, but 40 per cent. of households in the borough are on incomes below £20,000, and they are, in general terms, those most in housing need. This average figure is distorted by the fact that a lot of very wealthy people live in west London, but even the average income is only £28,000.
The ratio in 2007—I appreciate this might have changed, but not to a very great extent—between average income and the average price of a home was 19; people needed to raise 19 times their average salary in order to buy a property in Hammersmith and Fulham. The general costs of shared ownership properties are about two thirds of market rates when one takes into account discount, rental element, service charges and so forth; that is the formula that housing associations and RSLs tend to work on. Even if the ratios are no longer as much as 19 and two thirds, it does not take much imagination to understand the sort of income level that people need to have to access low-cost home ownership property. This is a problem.
Hammersmith and Fulham is the local authority that has made it an absolute testament only to invest in property for sale; it is not interested in property for rent whatever. So far this year, five properties have been sold under the right to buy, and about 40 people have accessed housing through the total raft of home ownership schemes. That includes through social homebuy. It speaks very highly of that—although I know those on the Opposition Front-Bench do not—yet it has failed to sell a single unit through that scheme. So, the approach simply does not work.
Low-cost home ownership is used by Conservative councils as a Trojan horse for doing nothing. They are happy for people on £50,000 or £60,000 to have a property that they would not otherwise be able to access unless they were on £70,000 or £80,000, but these so-called home ownership schemes are simply not a possibility for people on £20,000 or £30,000—the key workers, and the people on low, average or even twice-average incomes. The Government need to take note of that, because we often all fall into the trap of saying that we are providing for people who just do not qualify for social rented housing when, in reality, we are not providing for that class of society at all—things are being done with extraordinary cynicism.
The final point that I wish to deal with is slightly topsy-turvy, because although these policies are being pursued with some gusto by Conservative councils across London, their net effect is to keep waiting lists down. That is partly because of the temporary accommodation targets, which are a good thing, but they have unintended consequences. Conservative authorities, in particular, are looking at ways of keeping people off the housing register come what may, and that can be done through the crudest and cruellest measures.
For the 25 years that I have been going to Hammersmith town hall, if a homeless family turned up out of hours—after 4 o’clock and thus having not been able to get into the housing office—they would have to wait in the reception at the town hall until the emergency service could find them emergency accommodation. In such circumstances, people now have to wait outside the town hall, where a red phone has been put up. They speak to someone on the other end of the line and they then wait for one hour, two hours, three hours in the rain or the cold because they are not considered fit people to wait in the town hall foyer of an evening. Staffing, too, has been considerably cut back.
These are all old tricks learned from Wandsworth and Westminster in the 1980s. There is a story that may be apocryphal, although I do not think it is, that back in the early ’80s Wandsworth council closed its housing advice services and put a map on the front door showing the way to Hammersmith and Fulham town hall, because that is how much it was interested in people in housing need in the area. The messages are unmistakable. If a Member of Parliament writes in to complain about somebody who is wrongly banded in an allocation scheme or who has been waiting an inordinate amount of time, they receive the most cursory letter back emphasising—it does not apologise or give an explanation—the length of time people would have to wait to access social housing. These letters say, “For this type of property, the wait will be a minimum of 12 years.” Everything is geared to encouraging people not to register, to move out and to go somewhere else—that is the policy. It is not surprising that that is the policy, given what I said about the absolute decline that has taken place—the demolition and sale of housing, and the failure to build it. In such circumstances, of course these councils cannot cope with more people on their waiting lists.
Someone who does manage to see a housing adviser at Hammersmith and Fulham will be pressurised into signing a form that says that they do not wish to go on
to the housing register. What they will be given instead is a little assistance with accessing housing benefit and possibly with a deposit. They will then be introduced to a friendly private landlord who will offer them a property—this is called “direct lets”. Typically, it will be an ex-local authority property—under some of the schemes that we have heard about—in another borough, it will be vermin-infested and it may not have gas or electricity. But the council does not mind that, because the person will be not only off the list, but out of the borough. The relationship that local authorities have with some very dubious landlords of this kind simply in order to be able to prevent people from accessing social housing or even getting in the queue for it is, again, something that the Government need to examine. The irony is that this system means that the housing waiting lists are lower than they perhaps otherwise would be. I do not deny, and have never denied, that this is an issue with which the Government must come to terms; it will not be resolved by local authorities in London.
I shall give one more example, because it was used earlier in relation to temporary accommodation. There is some good council-owned temporary accommodation in residential streets throughout the borough of Hammersmith and Fulham—not only in Shepherd’s Bush and Hammersmith, but even in Fulham. That is being sold off for auction; in other words, the families who are in those properties are being moved out. Either these families jump the queue, which is good for them, but bad for others on the list, or they go into private sector temporary accommodation, which is, again, usually outside the borough, and the taxpayer will be paying up to £700 a week in housing benefit charges. Again, the council does not mind that, because it gets a capital receipt for selling off the property in the borough. The council also does not mind that the total cost to the taxpayer might have been £100 or £200 a week when the family was in the original accommodation and will be £700 a week in the new accommodation—after all, it is not the council’s money; it is the Government’s money.
This approach is being taken on every possible criteria and in every possible area of policy. What is the reason for that? Part of the reason is social engineering and, indeed, political engineering. The Tories who are running London make Shirley Porter look like Joseph Rowntree in terms of that degree of policy. A deeper motivation is involved, which came up in the Tory policy review. I have put this to the Opposition spokesman on many occasions and he wriggles a bit. The press release put out by my local Conservative council celebrating the overturning of targets states:
“Council housing can be a great safety net to help get people back on their feet, but that should be all it is. Council housing is a springboard — not a destination”.
That is what lies behind the Conservatives’ housing policy, and these authorities are simply a stalking horse for what I believe we will see if they get into government; permanent council housing—rented housing—is no longer considered to be an option, which is why we will see right to buy in respect of registered social landlords and why we will see no new building, despite what is said here. We have heard nothing from them to say where the money will come from for that building. We will see a continued pressure on the most pressurised part of our society—people who live in housing need—with all the socially detrimental effects that we all know that has in
terms of schooling and health. This is a deliberate policy—it is not incompetence and it is not down to a lack of money or resources—of studied cruelty, which the Conservative party has decided to put into effect. It has certainly done so in London, and I suspect that it has done so in other parts of the country too.
That is why I say that despite this welcome opportunity to debate these issues, rather than making the trivialising and schoolboy points that we have heard, the Conservatives should look at what they are doing to a significant sector of our society—people who are being marginalised and punished for nothing more than not having the means to afford good quality housing in our capital city.
2.47 pm
Sir George Young (North-West Hampshire) (Con): It is a pleasure to follow my successor but one, the hon. Member for Ealing, Acton and Shepherd’s Bush (Mr. Slaughter). I was not surprised to hear that housing remains the most challenging problem for his constituents—it certainly was for the 23 years that I represented Ealing, Acton—but I must say to him that he overstated his case. Accusing my hon. and right hon. Friends of having a housing policy of “studied cruelty” is absurd, and saying that it is our intention to punish poor people is a parody of my party’s housing policy. I honestly do not think that that sort of language advances very far what should be a serious debate about housing.
I wish to pick up a point made by the hon. Member for Sheffield, Attercliffe (Mr. Betts). I am sure that some communities are resistant to more social housing being built, but other communities do not have the rather narrow vision to which he referred. There is a village in my constituency in Hampshire that is accommodating all the extra houses required by the local plan and still has taken the view that there is not adequate social housing in the village. There is a move to sell off the allotments owned by the village and relocate them at the edge in order to provide more social housing in the middle of the village, over and above that which it has to provide. The reason for that movement is that the village is in control—this is not additional housing being foisted on it by a remote authority; it is local people seeing a local need for houses for the teachers, the postmen and the nurses, and wanting to make that provision. So, there is another side to that coin of resistance to new housing.
I do not want to fight old battles, although there is a real temptation to do so, given that some of the speeches we have heard have gone back to the 1970s, the 1980s and the 1990s. However, I will say that the introduction of the right to buy was a progressive and enlightened social reform that was bitterly resisted by Opposition parties at the time. It enfranchised millions of people and made a reality of home ownership for people for whom it had previously been a dream. It transformed monolithic local authority estates and generated large sums of money that either reduced public debt or were recycled back into new housing. I make no apology for being a keen supporter of the right to buy when it was introduced.
Other policies were bitterly opposed at the time—housing action trusts and large-scale voluntary transfer—but are now an accepted part of housing policy. They are the foundations on which housing policy is now built.
Bob Russell: Will the right hon. Gentleman give way?
Sir George Young: I hope that the hon. Gentleman will not invite me to fight old battles.
Bob Russell: I just wanted to ask the right hon. Gentleman whether he agrees that if the proceeds from the right-to-buy policy had been invested in new housing stock, we would not be in our present situation. Will he acknowledge that connection?
Sir George Young: I was a housing Minister in the 1980s, and the receipts from right to buy tended to clock up in Tory-controlled boroughs outside the cities. We prevented them from spending those receipts and we recycled the spending power into the inner cities, which were not generating right-to-buy receipts to the same extent. That was not a popular policy with my colleagues, but it was the right thing to do. So it was certainly the case that we stopped some local authorities spending their capital receipts, in favour of areas of greater need.
With the benefit of hindsight, the Government must be wishing that the £12 billion spent in December on the VAT reduction had been spent, at least in part, on helping those in housing need. Instead of an imperceptible reduction in retail prices, the money could have been used to buy up land at low prices; build out sites with planning consent; buy properties overhanging the market; increase grant for section 106 schemes frozen in the pipeline; and put more resources into the mortgage rescue scheme, helping those in housing need and threatened with being homeless. We would then have had something tangible to show for the huge debt that the Government have clocked up in our name. We would have had some assets on the other side of the balance sheet.
If people are in housing need, what matters to them is not the number of new homes being built, but the number that are re-let. That is the currency that really matters. I was disappointed to read—I think that it was in The Times last Saturday—a badly informed piece attacking the tenants incentive scheme. If one wants to provide a new home to rent to someone on the housing list, it is much cheaper and quicker to encourage someone to move out of an existing local authority or housing association home and re-let it. It is perfectly acceptable to say to people whose circumstances have improved since they became the tenant of a registered social landlord, “Can we help you achieve what may be your ambition of becoming a homeowner?” In that way, public money can be used to generate a re-let and increase turnover. I hope that the tenants incentive scheme and related schemes will remain part of the portfolio, and that the Government do not fall for the criticism that I read last Saturday.
A constituent who came to see me at my advice bureau a few days ago said, “Why are the Government putting so much money and energy into rescuing the motor industry and not doing nearly so much for housing?” He had a good point. I note in passing that both the motor industry and the construction industry have as their sponsors experienced Ministers who left the Government when Tony Blair was Prime Minister, but who came back last year at the invitation of the Prime Minister—Lord Mandelson and the Minister for Housing.
We all have sympathy with those who work in motor manufacturing, but I start from the premise that people need homes more than they need cars. In the motor industry, there is excess supply and inadequate demand, as pictures of cars stacked at docks constantly remind us, but when it comes to affordable housing, there is excess demand and inadequate supply. So, to the neutral observer, the case for additional Government support is far greater for housing than for motor manufacturing, especially as houses, by definition, are manufactured locally, whereas a good percentage of the cars we buy are imported.
My constituent had a good question. Why, since the beginning of the year, have we had statements, initiatives and publicity on the one, but not on the other? It may be because the motor industry is better organised and located in politically sensitive areas. Whatever the reason, we need to redress the balance, and I hope that in the next few weeks we will have an announcement of support for the housing and construction industries. The £12 billion spent on VAT reduction was a wasted opportunity, and I wonder what housing Ministers were doing during the debates before that decision. Did they make their case forcefully?
I wish to be brief, as many hon. Members wish to speak, but I want to touch on two options, one a dead end and the other a possibly useful way forward. The dead end is a return to council house building. I have nothing against local authorities building houses, but it is not a sensible use of public money. As Bob Kerslake said in Inside Housing last week:
“The problem is that the HCA has been forced to treat money councils borrowed to build homes, on top of grant, as public subsidy. If a housing association bids, only the grant is counted as public subsidy, making council schemes more expensive to the public purse.”
So anyone who wants to get more homes for a given amount of public money will route the money through housing associations, not through local authorities.
The pressure to build council houses is not coming from those on the waiting list. All they want is a good quality home, at an affordable rent, with a responsible landlord—they do not mind whether it is a local authority or a registered social landlord. The pressure to build council houses comes from councils that do not realise that the world has moved on and that they now have a strategic and enabling role, rather than one as a direct provider.
The Prime Minister has raised false hopes on this front. Speaking at the New Local Government Network, he said:
“If local authorities can build social housing in sustainable communities that meets the aspirations of the British people then we will give them our full backing and put aside anything that stands in their way.”
Elsewhere he inserted the key phrase “cost-effectively”. When he was Chancellor, he was pressed on several occasions to change the rules to allow local authorities to borrow without that scoring against public expenditure, and he refused. It would be an astonishing U-turn if he now agreed to that, especially as we now have an independent body in charge of the definition of public borrowing. Those who believe that the resumption of council house building will solve our problems are
crying for the moon. A much more promising option is not mentioned in any of the motions, but it would help those on waiting lists and in housing need. It is to revive the debate about getting private institutional funds into renting, through housing investment trusts or real estate investment trusts. For 15 years, there has been an all-party consensus on the need for a new investment vehicle to promote investment in residential property that would attract long-term institutional funds, broaden the market, give a wider choice to those who want to rent, help those on the waiting list and enable private and institutional investors to get exposure to the residential property market that they cannot get at the moment.
Such trusts were envisaged as the last stage of a series of reforms to promote the increased supply of good quality rented housing. We introduced assured shorthold tenancies to put tenancies on a viable basis. Once we had that underpinning the private rented sector, there was going to be a new fiscal framework to get serious, respectable, long-term institutional funds into property for rent. At present, such institutions can get exposure to equities and to commercial property, but not to residential property. Such trusts would allow that exposure. No one knows whether we are at the bottom of the property market, but we are a lot closer to it than a year ago. There is therefore a real appetite to invest now, with billions of pounds available, as long as we have the right investment vehicle. Unfortunately, the Government have been very dilatory.
In March 2004, the Treasury consultation paper said that a real estate investment trust
“structure in the UK would therefore set a challenge for the industry to encourage development of new housing, which could...be managed within”
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