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16 July 2009 : Column 163WH—continued
I would like to see mortgage lenders moving back to what they used to do, which was to examine closely the individual circumstances and creditworthiness of the people involved and the condition of the property, rather than have the tick-box mentality that has become part of the mortgage lending culture, in which if people satisfy a particular percentage, they get a loan, and if not, they do not. Often the judgement is made with little or no regard to their circumstances. That partly explains why the mortgage lending business got into such a mess: it made many loans without examining the
creditworthiness of the people involved. The sub-prime market in the United States was a classic illustration of that, but there were many similar illustrations in the UK and the lenders burnt their fingers badly. Why they have not recognised the need for more thoughtful attention to the individual loan, I do not fully understand. I hope that that issue will be considered more thoroughly.
I am extremely wary of the people who argue that regulatory formulae should be imposed such as a ban on loans of more than a particular per cent., for precisely the reason that I gave in responding to the hon. Member for Brent, East (Sarah Teather). There may be circumstances in which an advance of more than 100 per cent. is justified, even today. A tick-box approach that sets arbitrary figures and requires all lending to fall within that does not satisfy what I believe should be the key criterion, which is a proper assessment of the creditworthiness of the individual and their ability to service a loan on a property that hopefully will provide adequate security. Those are the factors that should be taken into account, and mortgage lenders should be giving more attention to that.
We also need to consider how to assist people who for the moment cannot acquire a loan because the percentage that a lender is willing to offer falls far below their ability to raise a deposit. The range of shared equity models that the Government have promoted and that are offered by housing associations, the Homes and Communities Agency and some house builders have an important role to play. I welcome the attention given to those options, which assist people whose income is sufficient to repay a loan to secure a mortgage advance and to buy a property, rather than being trapped in a position in which they believe that their only option is to look for social rented housing-of course, that increases even further the pressure on individuals looking for social renting.
Grant Shapps: The right hon. Gentleman has been most generous in taking interventions. I hear what he is saying about shared equity schemes. Is he, then, as disturbed as I am to hear that the Government cancelled the most popular of those schemes-Ownhome HomeBuy-just a fortnight ago?
Mr. Raynsford: This is an interesting story, and it is not a new one. That scheme, which enabled people to acquire a property of their choice on the open market, followed in a long line of similar schemes, of which perhaps the most famous historically was known as DIYSO-do it yourself shared ownership. That followed a similar model. The individual identified a property that they wanted to buy and then went to a lender and secured a shared ownership advance on that property. The scheme was popular with the public, but unfortunately it was rather expensive in terms of public subsidy and did not deliver quite the same benefit as a more targeted scheme.
At a time when we are looking to assist developers to begin to develop again, when we want to generate new homes and when we want, as my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts) rightly highlighted, to ensure that we are sustaining capacity and skills in the construction industry, it may be right for the Government to put the focus on the elements of homebuy that are geared towards supporting new
construction and new building, rather than assisting people to buy properties on the open market. I rather regretted the passing of DIYSO, because it was popular, and I regret the fact that the Government have taken what seems to be a very negative stance on the latest formulation, but I understand the logic in times when finance is inevitably very tight and there is a clear wish to use public resource to best effect.
As my hon. Friend the Member for Milton Keynes, South-West rightly said, the Homes and Communities Agency is playing a vital role in the current situation and, had it not existed, there would undoubtedly be a strong case for creating it. I pay tribute to Sir Bob Kerslake and his team. What they have managed to do in very difficult circumstances is remarkable. The agency was created against a background of expectation that it would drive an expansion programme. When the agency came into existence at the end of last year, it was clearly in a completely different context, in which it had to operate a rescue scheme to assist the housing market to come through the worst crisis that it had faced for many years. Sir Bob Kerslake and his team have responded admirably to the challenge. We are already seeing, in a series of ways, results that are testimony to their effectiveness. I sincerely hope that they can continue to intervene in a range of ways to help individual new schemes to go ahead-sometimes regeneration schemes that would otherwise have stalled. Such interventions allow an increase in the output of social rented and affordable housing, and ensure that the skills base is maintained and capacity retained in various parts of the country where that is necessary. They also ensure that people can afford to obtain housing that otherwise they would not be able to. The HCA plays a vital role.
My concern is about the lukewarm position of the Opposition in relation to the HCA. I hope that the hon. Member for Welwyn Hatfield (Grant Shapps) can amplify his party's position when he responds to these comments, because I recall that when we were members of the Committee that considered the Bill that became the Housing and Regeneration Act 2008, which brought the HCA into effect, there were quite strong voices in his party that questioned whether the agency had any purpose and whether it should come into existence. I am pleased that he has not been adopting a strident line of promising the abolition of the agency, unlike some of his colleagues, who seem to believe that calling for a bonfire of the quangos is a good news story. It may be. It may get a cheap headline, rather like the headlines about mortgage lending of more than 100 per cent., but it may be wrong. In the position that we are in at the moment, an agency that has shown itself to be so competent in addressing the problems and challenges of a very difficult market, that has given confidence in relation to a series of regeneration schemes that otherwise would not have happened, that has assisted with maintaining output of social and affordable housing at a higher level than otherwise would have been possible and that is helping to restore confidence in the market is vital.
During the run-up to a general election, it would be damaging for there to be speculation about the continued existence of the Homes and Communities Agency, were the Conservative party to form the next Government. I hope that the hon. Gentleman will put our minds at rest that that agency, which has played a vital role, will continue to be able to do so, whatever the outcome of the general election.
I would like to say some words about the expansion of affordable and social housing. That expansion is essential and has been called for on many sides. We all recognise the need not only to deal with the large backlog of people in need, but to ensure that we sustain capacity and support a recovery faster than would occur otherwise. I am concerned to ensure that we do not lurch back into what I believe was one of the most pernicious characteristics of housing in the last century-the social segregation of people according to tenure.
The pattern of building single-tenure estates, with social housing uniquely for social tenants in one area, and owner-occupied homes uniquely for home buyers in another, has not served us well and is an historical anomaly. Traditionally, it was not the case that people of different economic circumstances lived in entirely segregated areas. Of course, richer people lived in larger, pleasanter and more attractive homes or, in some medieval towns I can think of, in the larger and more attractive rooms of a house that was also occupied by poorer people. That was the pattern historically. People of different economic circumstances did not have to live geographically segregated from each other.
One of the great Housing Ministers in the history of this country, and one of the great figures of the party that I am proud to be a member of-Aneurin Bevan-made a famous speech on the subject in the 1940s, and talked about his dream of seeing a community where the doctor, the greengrocer, the artisan and the baker all lived in the same street and were not segregated. We must retain that vision of social cohesion and communities that are not segregated by tenure.
Earlier this week, I was pleased to be present at the launch of a new Fabian pamphlet, "In the mix", which strongly endorses the case for sustaining mixed-tenure housing and building mixed communities.
Emily Thornberry: I agree with my right hon. Friend. My only concern is that sometimes his remarks might be misunderstood, and it could be thought that the two of us are at opposite purposes. I entirely agree that we need to have mixed communities. Within a constituency such as mine, there are streets containing people from all sorts of backgrounds, and small estates next door to the Lord Chancellor's residence. We are a very mixed community, but we do not have enough social rented housing.
Mr. Raynsford: As my hon. Friend will recall, I stressed the importance of increasing the output of social rented housing and other affordable housing. My comments are about the importance of ensuring that we do not lurch back into the pattern of mono-tenure estates. There are some pretty nasty examples of those-I think of the Ferrier estate in my own constituency that is currently being demolished. The last thing we want to do is spend money producing housing that is so unsatisfactory that it has to be pulled down 30 or 40 years after it was built. Instead, we should produce environments where people will be happy to live for centuries, because they are built to a high standard and achieve the level of social integration that I and my hon. Friend feel is essential.
Sarah Teather:
This issue is often characterised by saying that we can achieve a sustainable mix by having homes for ownership, and affordable social houses for
rent next door to one another, or within the same estate. However, we could also have lots of different types of housing for rent. I wish that we could think more flexibly about that, especially at a time when it is difficult to get mortgages for shared equity properties, for example, or even to sell at market value.
Mr. Raynsford: The hon. Lady makes a good point. Diversity does not stop at outright ownership, shared ownership and social rented housing. Of course we want a wider mix of options. Some of the good options now being looked at include the "rent now, buy later" scheme, which would help people who are not currently able to raise mortgage finance, but who probably will be able to afford to buy in due course and are therefore given an option to rent in the short term. I wholly endorse the comments from hon. Members on both sides of the Chamber about the merits of looking for ways to attract more institutional investment into the private rented sector, so as to provide more good-quality private rented housing.
Diversity of tenure is absolutely crucial. Economically, it is a good safeguard against the kind of problems that we have seen over the past two years. Where there is diversity of tenure, there are options for people to move between tenure if they are in difficulty. It should not be only a one-way process of people moving from a rented tenure into owner-occupation. There are many circumstances where people in owner-occupation might find it easier to move into rented accommodation. That could be to remove the burden of meeting mortgage obligations that they find difficult to satisfy, or because they do not want to continue with the obligations of maintaining the property if they are getting elderly and require support and help. A more diverse tenure pattern is admirable, and something that we should work for.
Emily Thornberry: What my right hon. Friend says is thought provoking. Would he be equally critical of private developments, particularly gated private developments, where there is no mixture of tenure at all?
Mr. Raynsford: Of course. That is the obverse side of the coin and is a consequence of what I believe was a terrible mistake made during the last century-that of segregating households between tenure. The obverse of the sink estate, which is stigmatised because it is seen as solely housing poor people in unsatisfactory accommodation, is the "exclusive" gated community of exclusively wealthy people who have said, "We don't want anyone else anywhere near us, and we are putting a barrier around our homes to keep other people out." That is why the policy is so wrong. It results in social exclusion and social segregation rather than the kind of inclusive and more coherent society that I believe we should promote. We must not, even in difficult times, forget the longer-term objective, which is the creation of a housing market that satisfies the full range of needs with a choice of options and tenures, and a strong commitment to quality.
In the past, when the focus was on housing numbers-there are some indications that in recent years that has again become a focus-there was a risk that quality was
forgotten. When we produced large numbers of houses, they were not always of good quality, and I have referred to some poor-quality social housing estates that have had to be demolished. Equally unsatisfactory were the unsustainable private estates that were built to low densities with poor energy efficiency standards. They now contribute seriously towards the problem of global warming, but that would take me into another subject that does not form part of this debate.
I will conclude my remarks by congratulating the Government on the steps that have been taken to date. We are not anywhere near being out of the woods; we still face huge problems and, during the years ahead, we must sustain the kind of commitment that there has already been. I hope that the Opposition will also show a commitment to sustaining and keeping in place agencies such as the Homes and Communities Agency, which can help to ensure that this country continues to respond to the huge challenges in the housing market.
3.59 pm
Sarah Teather (Brent, East) (LD): The report is most useful, and I congratulate the Select Committee on a timely and interesting contribution to the debate.
The Committee made a number of recommendations and conclusions, most particularly on the need to continue building social housing and affordable housing to rent, a point made by the hon. Members for Islington, South and Finsbury (Emily Thornberry) and for Sheffield, Attercliffe (Mr. Betts). I agree with the recommendation that it is more sensible for the Government to focus on affordable housing for rent rather than on low-cost home ownership models, because of the difficulties of selling caused by the unavailability of mortgage finance.
The right hon. Member for Greenwich and Woolwich (Mr. Raynsford) spoke of the need for sustainable communities and how they could be achieved. In a sense, we have an ideal opportunity to do that, given the Government's policy of dealing with housing developments being started but not completed, and the money being provided to the Homes and Communities Agency to invest in private development. We have an opportunity to drive that model forward. I hope that the Government will think seriously about mixing different types of rented tenure. It does not necessarily have to be a long-term solution.
The hon. Member for Sheffield, Attercliffe, who is no longer in his place, asked whether we could encourage developers to continue owning properties and renting them, and whether they would then take a particular interest in the quality of their developments. If the taxpayer is to invest in property, we have an opportunity to ensure a mix of tenure, with affordable housing to rent, and intermediate and private rent. We should not focus on the model of home ownership, part or wholly owned, and affordable housing for rent as being the only option for mixed tenure. It is not. We need to progress that model quickly, particularly as the taxpayer is about to invest in certain developments.
Emily Thornberry:
Will the hon. Lady join me in condemning Boris Johnson for changing the mix of affordable housing in London from a 70:30 split- 70 for social-rented housing and 30 for intermediate ownership-to 60:40? If she joins me in that, will she
join me also in condemning Islington Liberal Democrats, who in their planning strategy consultation favour a 50:50 split?
Sarah Teather: We all want to ensure that housing is built, and that we have as much affordable housing as possible, but the means of achieving it is a matter for debate. The Government's insistence on particular targets for various local authorities does not seem to have worked. They have been unable to deliver. Whether we will be able to deliver more through negotiation I do not know. I like to think that negotiation and consensus are a better way of delivering more housing, but we shall have to see what happens. As the hon. Lady would expect, however, I do not join her in condemning Islington Liberal Democrats. Indeed, she was most unwise to invite me to do so-but it was a nice try. I was trying to make a serious point. I attend many housing debates in Westminster Hall, and they are usually more thoughtful. Sadly, however, a lot of straw men were built this afternoon and then knocked down.
The Committee's report helpfully focused on the need to maintain skills in the building and construction industry. If we lose those skills, it may take a decade to regain them, but there is a desperate need to continue building. I accept that there are problems with continuing to build as a result of the unavailability of private finance and so on, but if those skills are lost in the long term it will create a massive bubble in house price inflation. That will have a knock-on effect for a decade or more. Unless we focus on maintaining the industry's capacity, we shall regret it for a long time.
I realise that the Government have brought forward finance for the HCA and that the agency has been trying to be more flexible in working with housing associations, which have struggled to continue building with the cross-subsidy model. That finance has taken time to filter through, however, and housing associations are still concerned about Treasury targets on subsidy per unit. Even if the finance is brought forward now, they may find a hole later and be unable to achieve the Government's targets.
The most obvious thing that the Government could have done earlier-it would have made a significant difference-was to give councils the power to build. Unfortunately, the House rises next week, and the Government will not produce their consultation on the housing revenue account until Thursday 23 July. Giving councils the power to build would have made more difference than anything else that the Government could have done, and it is frustrating that it has taken them so long.
If councils are to build more property, they will need access to HCA grants; they will also need to be certain of their revenue stream, their rental income and their asset base. I do not know what will be in that consultation document, or what mechanism the Government propose in order to deal with the question of negative and positive subsidy. However, there is no legislation in place to enact it in the short term, so I see no prospect of it being introduced in this Session.
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