Westminster Hall
Wednesday 27 October 2010
[Mr James Gray in the Chair]
Housing (CSR)
Motion made, and Question proposed, That the sitting be now adjourned.-(Jeremy Wright .)
9.30 am
Mr James Gray (in the Chair): In answer to a request from the Minister, it would be perfectly in order for gentlemen to remove their jackets. I was told to put you in order in relation to that, Mr Betts.
Mr Nick Raynsford (Greenwich and Woolwich) (Lab): I am pleased that we are meeting under your chairmanship this morning, Mr Gray. At the outset, I wish to draw attention to my interests in the Register of Members' Financial Interests. I am grateful to have this opportunity to raise an issue of huge importance and very real concern to our constituents and the whole country: the impact of Government policy and the comprehensive spending review on housing investment and supply.
I have been closely involved with housing for almost all my working life, during which I have seen a number of ups and downs. However, at no time during the past four decades can I recall there being a bleaker outlook for people looking for a new home or a solution to their housing problems. As MPs, all of us know from our constituency surgeries and our wider contacts in our communities how many people face housing difficulties, whether that expresses itself in the despair felt by many prospective home buyers who cannot find a home at prices they can afford or in relation to those people who think they have found a home at a price they can afford only to have their hopes dashed when they cannot obtain mortgage finance. Such despair might also be reflected in the anxiety of tenants and home owners, who fear that they will no longer be able to afford to stay in their home against a background of rising unemployment and harsh cuts in housing benefit. Alternatively, there is the desperation felt by families living in overcrowded or squalid conditions who have an urgent need for a move but see no prospect of getting an offer of a social tenancy and are nervous about whether they can afford the cost of a private one.
All those and many other problems are familiar to us, but what is particularly alarming is the prospect-I fear it is a very real prospect-of things getting much worse in the months and years ahead as a consequence of the coalition Government's policies and the comprehensive spending review. We have just come through the most serious recession of my lifetime, and housing was inevitably badly affected. Private house building in England fell from just over 150,000 new starts in 2007 to just 60,000 in 2009. That clearly has had a serious impact on the situation, but things would have been far worse if the then Labour Government had not taken a series of bold measures to counter the downturn.
As a result of the fiscal stimulus and more specific policies targeted at the housing market, repossessions, which had been forecast to rise to similar levels to those seen in the recession of the early '90s, peaked at around half that level. Investment was made through the Homes
and Communities Agency in schemes such as Kickstart, the national affordable housing programme, and HomeBuy Direct, which meant that social and affordable housing programmes were maintained and confidence began to return to the market.
In the early months of this year, house builders were reporting month-on-month improvements in house sales and in the output of new homes; it appeared that we had turned the corner. Then came the general election and the formation of the coalition Government. Since then, a series of ill-considered, unco-ordinated, untested and, frankly, irresponsible policy initiatives and cuts have destroyed the prospect of recovery, brought the housing market to the verge of a double-dip recession and spread alarm and concern around almost every sector of the community that is in need of better housing.
Two weeks ago in this Chamber, my right hon. Friend the Member for Barking (Margaret Hodge) highlighted the disastrous consequences of the housing benefit cuts announced in the June Budget. As we had a full debate on that subject then, I will not go over the same ground again. However, I will reiterate her words on the spectre of rising homelessness, indebtedness, insecurity and forced migration, all of which have been prompted by the coalition Government's policies. Of course, since then, the already bleak prospect has been compounded by the announcement of further benefit cuts and caps in the spending review. It is hardly surprising that fears for the future viability of the private rented market are being voiced by landlords and tenant representatives alike. The situation would be bad enough if that was the only policy change emanating from the Government, but there have been many more.
Confidence in the private house building industry has been severely damaged over the past five months by ill-thought-out changes to the planning regime, a continuing mortgage famine, fears about rising unemployment and severe cuts to the Homes and Communities Agency budget, which had been supporting many new housing and regeneration schemes. Last week, on 20 October, The Times reported that Bellway-Britain's sixth largest house builder-had
"delivered what one analyst described as an 'unremittingly bleak' assessment of the housing market. The Newcastle-based company said that while it had enjoyed a strong spring selling season, consumer confidence had 'slowly ebbed away' after the general election and subsequent media discussion of how the Government planned to tackle Britain's budget deficit."
The Daily Telegraph reported last week on 22 October that the Bank of England is warning that home prices are likely to remain static or decline in 2011, as home loans become harder to secure after the spending cuts. The article goes on to state:
"The warning will add to growing fears about the fragility of the housing market after values dropped last month by the biggest monthly amount ever recorded."
The Guardian also reported last week on 22 October that:
"Britain's struggling housebuilding industry is 'bewildered' by government plans to radically change the financing of new council houses as experts warn the measures could have a 'devastating impact' on the future supply of social housing."
Mr Mark Field (Cities of London and Westminster) (Con):
I have some sympathy with what the right hon. Gentleman has said. Clearly confidence is fragile, but that is partly because there has been a reality check
since the election and the Government have been upfront with the public about the need for austerity. However, I share-I hope that he does, too-the positivity that lies behind the very determined strategy for growth that the Prime Minister has been articulating in the aftermath of the comprehensive spending review. His comments and that strategy will help to restore confidence. The austerity message is important given the fact we were living far beyond our means.
Mr Raynsford: I cannot agree with the hon. Gentleman, whom I know well and for whom I have a lot of respect. The truth is that the economy was recovering during the early months of this year, as the figures show. I am not giving my own opinion; I am talking about the opinion of experienced business people, house builders, lenders and analysts who all say exactly the same thing: the housing market was recovering and there was the prospect of growth. In the past five months, that has been taken away by a series of measures-Budget measures introduced by the Government, changes in planning policy and changes affecting institutions that have been summarily abolished. A series of ad hoc, poorly co-ordinated and ill-thought-out proposals have damaged confidence in the market. Any person who is seriously worried about housing should feel very alarmed about that.
Mr Andrew Smith (Oxford East) (Lab): I congratulate my right hon. Friend on securing this vital debate; he is speaking with his customary expertise on this very important subject. Further to the comments of the hon. Member for Cities of London and Westminster (Mr Field), is it not the case that there has been a conjunction in the restriction of supply-for all the reasons my right hon. Friend has set out-and vicious cuts in the ability of the poorest people to meet the costs of the supply that is available? The consequence of those two factors has been to carry out a vicious attack, particularly on the housing needs of the poorest in our community. Once what is happening gets across to the wider public, it will cause outrage.
Mr Raynsford: My right hon. Friend, who has great experience in both the financial field and housing, makes an extremely telling point. I have a huge amount of sympathy for what he is saying. From what I will say later, he will hear that I agree wholeheartedly that the impact of the measures announced by the new Government will disproportionately affect poorer people.
After Ministers have been confronted with such dire evidence of the negative impact that their policies have had over the past six months, one might expect that they would be reconsidering some of their impetuous early decisions and the harsh cuts package. One certainly might expect a Liberal Democrat Minister to wonder why he and his colleagues have lashed themselves to the mast of a Tory ship heading directly on to the rocks, steered by a demented helmsman, while the captain appears blithely unaware of the immediate perils, fixing his gaze instead on some distant coastline and imaginary sunlit uplands and-to use the words of the hon. Member for Cities of London and Westminster-prattling on about growth tomorrow, unaware that the reality is one of cuts and unemployment coming today.
Instead of changing course, Ministers continue to press ahead on their doomed journey, ignoring all the evidence of impending disaster and pinning their hopes on the so-called housing bonus incentive, which is about as unconvincing as the imagined sunlit uplands. The scheme has been promised as the panacea for the housing market for the past six months. In the summer, the Minister for Housing and Local Government promised anxious house builders that it would be launched before the summer recess. We were then told that all would be revealed in the autumn. Now we are promised a consultation in November. All the while, confidence is draining away from the housing market.
Perhaps the Minister can reveal today how that supposed panacea will work. Will it, as the Housing Minister originally claimed, apply to all new homes? That was the prospectus. I now gather that it is more likely that it will apply only to net additions to the housing stock. If that is the case-I would be grateful if the Minister confirmed that-what will that do to regeneration? What will it do to areas where there is a need to develop brownfield sites and clear properties or to improve older, substandard ones as part of that process? In such areas, it will probably be years before there is any net addition to the housing stock. What possible benefit will there be in such areas from a bonus scheme that is based solely on net additions to the stock?
The Parliamentary Under-Secretary of State for Communities and Local Government (Andrew Stunell): It might shorten the right hon. Gentleman's speech a little if I say that it is a new homes bonus.
Mr Raynsford: That is as clear as mud. Is it additional new homes, or new homes? The original prospectus specified all new dwellings.
Andrew Stunell: The right hon. Gentleman obviously was not listening. I did not use the term, "additional new homes"; it is a new homes bonus. He should trust the words of the Housing Minister.
Mr Raynsford: If that is the case, I am pleased to hear it, but there has been much speculation in the housing press, based on the Housing Minister's remarks at the Conservative party conference-not an occasion that I attended-indicating that it would apply to net additions to the housing stock. There is an obvious concern, and I hope that we will have greater clarity than we have so far received on the subject.
Mr Andrew Smith: There is a further problem with that bonus idea. We have all been present at planning meetings at which those who are opposed to new housing developments say that they are being built for the money. Chairs of planning have been able to stand back and say, "No, the planning issues are being judged on their merits." Will not they now have to put their hands up and say, "Yes, we are doing it for the money."?
Mr Raynsford: My right hon. Friend makes a valid point. People who are opposed to housing developments will inevitably see a council's decision to grant consent as tainted if it is to receive a financial sum as a result of doing so. That will always be a problem with such a scheme, and I highlighted the difficulties that it would create almost a year ago when I spoke with the Housing Minister, who was then the Opposition spokesman.
There are many other areas of uncertainty. How many homes will the scheme generate? We have been given some pretty flamboyant promises by the Housing Minister, but how will the Government's estimates for the number of new homes generated compare with the 160,000 homes for which plans have already been ditched since the general election, primarily because of changes in planning rules? Tetlow King Planning has estimated in a report for the National Housing Federation that a further 120,000 to 140,000 planned homes could be lost in the coming year.
What will be the impact of cuts to funding schemes for local authorities? Which authorities will gain and which will lose? How will the bonus be split between district councils and county councils, bearing in mind that the former have to give planning consent, but that the later have to meet most consequential infrastructure costs? I hope that the Minister can give us more detailed answers to those questions, but I fear that we may have to wait rather longer, as we have waited in vain for the emergence of detail on the scheme for the past five months.
One question that I hope the Minister will answer is this: given all the questions and doubts that have been raised in so many quarters, including by those who have a real understanding and professional involvement in the field, why has the scheme not been piloted to test whether there is a realistic prospect that it will deliver the benefits that the Housing Minister constantly assures us it will bring? How can the Government claim to believe in evidence-based policy making, when they have not a shred of empirical evidence to support the case for the housing bonus incentive?
As if the damage caused by the harsh housing benefit cuts and their maladroit destabilising of the housing market was not enough, the Government have also embarked, in clear breach of Conservative election pledges, on a dismantling of the whole basis of social housing in England. Why Liberal Democrat Ministers and Members are choosing to go along with those disastrous policies is a mystery. Perhaps the Minister can give an explanation. Enjoying security in one's own home is an asset that almost all hon. Members take for granted, as do the great majority of the population. The old adage that an Englishman's home is his castle reflects a deep-seated belief that a secure home is a bedrock of a decent society.
Ms Karen Buck (Westminster North) (Lab): Is my right hon. Friend aware that a growing body of research demonstrates the negative impact upon children's well-being of high enforced mobility? The savings gained as a result of some of those measures and the removal of security of tenure will be more than offset by the damage done to children's health, emotional well-being and educational achievement.
Mr Raynsford: My hon. Friend speaks with considerable knowledge and experience of the subject, and I wholly endorse what she said. That is an area where there is great cause for concern. It is rather depressing that it is coming from a Minister whose language reveals the rather cavalier approach that he is adopting towards his policies.
In March this year, in the run-up to the general election, the current Housing Minister said:
"Conservatives will ensure that living in social accommodation means that you'll get a 'freedom pass' to get on and do more with your life."
That is the first time that I have heard a notice to quit described as a freedom pass. That is an indication of the Orwellian language that the Government are using to justify some of their wholly unacceptable policies.
All of us recognise that security is so important for people's life prospects, so why should the coalition Government, without any manifesto commitment or reference in the coalition agreement, move to take away that precious security from a group of our fellow citizens who arguably need it more than anyone? The only credible argument advanced by those who advocate the policy is that it will free up social housing, making more homes available to those in need, but any serious analysis of the Government's proposals shows clearly that it will not have that effect-on the contrary, it will discourage mobility-and that, even if it did have the intended effect, it would have disastrous social consequences.
Let us take those arguments in turn. If existing tenants are not to lose their security, and if new lettings are to be made on a new basis without the traditional security and at 80% of market rents, existing tenants who might have considered moving to a smaller home, so releasing larger accommodation for those in need, will obviously have second thoughts if the result will be a loss of security and a rent increase. The policy would have the opposite effect of that intended. If, however, to counter that perverse incentive to remain in an under-occupied home, tenants are allowed to keep their security when moving and not have a rent increase, there will be grotesque anomalies. Wholly different rents and tenancy terms will be perpetuated solely on the arbitrary criterion of whether the tenancy is offered to a transferring tenant or a new applicant.
Worse still will be the consequences of using the new insecure tenancies to require tenants to move on if their income increases or if they are judged to have enjoyed sufficient time in social housing. What chance is there of creating mixed and balanced communities, rather than ghettos of deprivation, if anyone who gets on is told to leave? If only the poor and the unemployed can occupy social housing, that is a recipe for residualisation and a total disincentive to aspiration.
Mr Andy Slaughter (Hammersmith) (Lab): My right hon. Friend has come to the nub of the issue, which is that this is not about creating balanced communities but about social engineering. On new build housing, I use the example of my local authority, Hammersmith and Fulham, which is aiming for 40% affordable housing over the next 10 years. All those units will be intermediate housing, which is for people on incomes between £20,000 and £80,000 a year, yet 40% of households in the borough are on incomes below £20,000. The people most in housing need will not be provided with housing.
Mr Raynsford: My hon. Friend makes a valid point and shows the linkage between the policies on housing benefit, which will put enormous pressure on people on lower incomes to move out of high-cost areas, and the impact of the changed social housing policy that the new Government are introducing, which will have exactly the same effect.
I can match my hon. Friend's observation by referring to the experience in my constituency. In the SE10 postal district, which is at the heart of the Greenwich and Woolwich constituency, average market rents are estimated at £380 a week and 80% of them would involve a rent of more than £300 a week for a supposed social letting. No one in low-paid work would consider such a tenancy unless they were to have most of the costs covered by housing benefit. Of course, if that were the case, there would be a huge surge in the cost of housing benefit, which hardly tallies with the coalition Government's current objectives, nor the caps that they are applying.
Indeed, if people did move in on the basis that they would get most of their costs met by housing benefit, the double whammy from some sanctimonious Minister would be a call for further housing benefit cuts or caps on the grounds that people on benefit should not be able to live in such expensive areas. So who will occupy any homes that are built on that basis? Some may go, perfectly properly, to people in what is often described as the intermediate market. One of the more encouraging trends in recent years has been the development of mixed-tenure communities with opportunities for people to occupy housing on a range of different terms: social renting, intermediate renting, market renting, low-cost home ownership and outright ownership.
The whole point of such diversity is to provide for a range of needs and for people in different economic circumstances. It makes a lot of sense to provide intermediate renting solutions as part of mixed developments. However, it makes no sense to substitute intermediate renting for the social renting options that are available to those on low incomes. If in Greenwich, where social rents for council and housing association tenancies are currently in the range of £80 to £110 a week, all new lettings involved a substitution with lettings at 80% of market rents, the poor would lose out, and, even so, the scheme would probably fail because low-cost home ownership would provide a more attractive proposition to those who can afford a rent in excess of £300 a week.
Once again, we see a policy that has all the hallmarks of being made on the hoof. There is no serious analysis of its likely consequences, let alone empirical tests or pilots to see whether it works. It carries all the marks of the coalition Government proposing far-reaching and fundamental changes to institutions and policies that have potentially devastating consequences, with no supporting evidence base.
In their five months in office, the coalition Government have already had a disastrous impact on housing in this country. The recovery from recession has been stalled, house building is in crisis, social housing is facing a death warrant, private renting is being undermined by housing benefit cuts and hundreds of thousands of tenants are fearful about whether they can continue to afford their rent and many more are under the threat of having to move or facing the bleak prospect of homelessness. It is difficult to think of a more inept and deplorable record in such a short period of time. One can only hope that Ministers will come to their senses and recognise that this is no way to run housing policy. Our country and our people deserve better.
9.54 am
Tony Baldry (Banbury) (Con): Banbury and Bicester are both growing towns. I now have the 15th largest constituency in the country in terms of population, and, collectively, we most certainly are not nimbys. Planning permission has been granted for thousands of new homes in Banbury and Bicester, for the refurbishment of some 300 houses and for the building of some 700 new houses at the former RAF Upper Heyford site. In addition, Cherwell district council, Oxfordshire county council and Bicester town council are supporting the development of the new Bicester eco-town as an exemplar housing development, demonstrating low-carbon housing and a sustainable community.
We are waiting to learn whether a fully funded flood defence project, supported financially by the district council and businesses such as Chiltern Railways, will get the go-ahead following a public inquiry. If it does, that will enable a new regeneration scheme of mixed residential and commercial properties on the canal-side that runs through the centre of Banbury. Further to that, Defence Estates appears to want to release some sizeable land holdings on the outskirts of Bicester. If it is realistic about the price, the land could be used for shared equity housing and new social housing.
I am sure that Cherwell district council will want, wherever possible, to take advantage of the new homes initiative, a programme under which the Government will give local housing authorities a multiplier of 1.25 times the amount the occupants pay in council tax for six years, in addition to the council tax payment itself.
In my area, planning permission has been granted for hundreds of houses. However, at present, construction of new houses on new sites in my constituency is painfully slow. As a consequence, the prospect of wider community gains, such as a new community hospital in Bicester, has been delayed. Why is that? Simply, it is because house builders are hoping that the market for new houses will strengthen before they start to build, so we have a Catch-22 situation.
The first issue that I would suggest has to be grappled with is the availability of mortgages so that people can buy homes or get the funding for sensible shared equity schemes. Mortgage lending dropped to a 10-year low last month; it was the lowest September total since 2000. So while mortgage rates have dropped in recent weeks, banks and building societies appear to be continuing to tighten their lending criteria. The rates are being reduced but the criteria are being tightened, and the Bank of England has warned that lenders are expected to tighten further their criteria, making it even harder for people to get mortgage funding.
If people cannot obtain mortgage funding, they will not buy new homes and developers will not develop sites. That obviously will make life much more difficult for those who aspire to own their own homes. It also makes it much more difficult to provide new social housing. For some time, in areas such as mine, new social housing has almost entirely been a planning gain; a proportion of new social housing is built as part of large-scale new developments. Therefore, if one does not have significant new housing developments in Banbury and Bicester, one will not have the much-needed new social housing that goes with them. There is no new housing and no new social housing without new development.
What can be done to get the building societies and the banks to play their part in a housing recovery? No one is suggesting a return to the daft income multiples for lending that we saw several years ago, which certainly did not help anyone but simply led to artificially inflated house prices, but we do need the banks and building societies to be prepared to lend at responsible multiples to enable people to start buying their own homes again.
The banks' targets for lending for 2010 seem unchallenging. My first question to the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Hazel Grove (Andrew Stunell), is what he and my right hon. Friend the Minister for Housing and Local Government are doing to encourage the banks and building societies to adopt lending criteria that will get the housing market going again. That must be in everyone's interests. Frankly, any discussion about housing numbers will be somewhat academic unless builders feel able to build houses for sale and buyers can access reasonable mortgage finance.
That takes us to the rest of the housing market: social housing and the private rented sector. I have enormous respect for the right hon. Member for Greenwich and Woolwich (Mr Raynsford) and his knowledge and expertise in this area. However, I must say to him very gently that I do not think it sensible to start using words like "sanctimonious" and "demented", given that the record of the last Labour Government on the housing front was one of lamentable failure. He started his speech by saying that he could never recall "a bleaker outlook" for housing. In fairness, this Government have been in office for just a few months-and that was commentary after 13 years of a Labour Government. Furthermore, that type of hyperbole will not help any of us, really.
Housing figures for the last year of the Labour Government fell by nearly a quarter on the previous year, with only 128,680 new properties becoming available. That was the biggest decline since the Department for Communities and Local Government began collecting data 10 years ago, when it was part of the Office of the Deputy Prime Minister. Moreover, that decline was against a Labour target of 240,000 new homes, which was itself pretty modest. Also, waiting lists for social housing doubled under Labour to five million people, so in fairness it is not for ex-Labour Housing Ministers to be so censorious.
We started off with an inheritance of a huge waiting list for social housing and huge pressures on public finances, and they are both inescapable realities of today. Consequently, it is inevitable that public investment will be limited, although I understand that £1.1 billion will still be allocated to social housing each year for the next four years. Clearly, all of us have to find new ways to try to ensure that public investment goes further. Why have a record of what we would like to have in halcyon days if it is not possible to deliver?
Every Member of Parliament, whether they represent a constituency in inner London or a constituency such as mine, would acknowledge that there are great pressures on social housing. Furthermore, I am sure that pretty well every colleague in this House will acknowledge that one of the predominant issues in our constituency surgeries is the desire of people to access social housing and to have-understandably-a decent home.
At present, social housing is provided by a number of housing associations, and there is a private rented sector with a multiplicity of private landlords. However, very
few sizeable businesses have moved into the private rented sector. Why, for example, have the pension funds not become more involved in investing in becoming private sector landlords?
As I understand it, local authorities will be able to borrow against the income that they attract from the new homes initiative to help fund new housing projects, and to encourage those with private finances and property developers to become involved. I say to my hon. Friend the Under-Secretary, who will respond to this debate, that we have heard a lot from Ministers about the new housing bonus. However, we have not had as much detail as I suspect local councillors, council officers and others would find helpful about what local authorities are expected to do to respond to what seems to be a Government offer for local authorities to start to behave in a different way, in terms of local authorities being a catalyst for getting new housing projects going on their own patch.
For many years, local authorities have certainly been planning authorities, and they have sought to encourage registered social landlords to become involved with major new housing developments, but what is being proposed is something new for local government. As my hon. Friend the Under-Secretary will know, it sometimes takes a little time for councillors and council officers to realise what is being asked of them and what they are being invited to do, and if local authorities are being asked to approach local housing supply and housing projects in a different way, it behoves the Government to ensure that the new housing bonus, including how it will work, is fully understood. For example, will local authorities be allowed to borrow against that new housing bonus? If the anticipated bonus will run for six years, can a local authority borrow all the money up front? Will there be freedom to do so? What will the Treasury say about that, and so forth?
There are a number of other issues that we must face up to. I am conscious that others wish to speak in this debate, so I will try to keep my comments short. However, we need to be adult about this. At present, those who access social housing usually have security of tenure for life; indeed, in certain circumstances, they can pass on their tenancy to the next generation. Generally, they also have rent levels that are markedly below those being paid in the private rented sector. By contrast, those in the private rented sector often pay significantly higher rents and have to be assisted by housing benefit, but often they have a security of tenure that is no greater than an assured shorthold tenancy of six months.
In addition-I suspect that this applies to the constituencies of most colleagues, given the way that housing allocation policies work-it is now often extremely difficult for working families on modest incomes to access social housing. A working family-a husband and wife both at work on modest incomes, with two children-have little choice nowadays but to rent in the private rented sector, with significantly less security of tenure. For those reasons alone, and particularly because of that disparity, there are issues that need to be properly debated. As I understand it, what my right hon. Friend the Minister for Housing and Local Government is seeking to do, in part, is remove some of the types of distinctions that have, over time, grown up almost by accident as we have developed housing policy.
There are a number of questions that are genuinely about all of us wanting information and knowledge. For example, I see that my right hon. Friend intends to introduce a new tenancy for social tenants called "affordable rent". As I understand it, that will effectively almost give a person a short-term tenancy as a social tenant, but there are a number of issues to consider.
At the moment, if one becomes a tenant of a social landlord, one is generally enabled to remain a tenant of a social landlord for as long as one wants. Of course, that is one of the reasons why people are understandably very anxious to be able to access a social housing tenancy; they know that they will then be able to remain in that sector pretty much for as long as they want. However, what happens when someone ceases to be a tenant of an affordable rent tenancy? Do they remain in the social sector? Or what then happens in terms of definitions of statutory homelessness and so on?
We must engage collectively with the substantive issues and not the non-issues, but that is not a criticism of colleagues in the House today. Whether this measure is a new homes "bonus" or a new "homes" bonus is a matter of fact; it should not require a whole load of debates across the House. So I just say to the Under-Secretary that the more the Government, and in particular my right hon. and hon. Friends in the Department for Communities and Local Government, can do to explain all this, the more we will be able to focus on the substantive issues, rather than debating things that are fanciful.
Mr Andrew Smith: The comments of my honourable colleague from Oxfordshire about the availability of mortgages and the need for more detail on the housing bonus were well made. I am not quite clear whether he supports the idea that because some people in the private sector are insecure, it is a good idea to make people in the social sector insecure. If he supports that, does he accept that it will have appalling consequences on families? We could all go round an estate and see which houses have shorthold tenancies, because the gardens are a mess and the houses are dilapidated. Does that not threaten to have an awful effect on communities?
Tony Baldry: The point that I am trying to make is that at present we have an artificial division in the housing market. On housing estates in the right hon. Gentleman's constituency and mine, families that would have been the anchors of traditional 1950s estates on which those of our age grew up-working families from Cowley and so on-find themselves in an insecure position as assured shorthold tenants. Whether the categories of tenancies and tenants are endurable in the 21st century is a legitimate debate. I am trying to understand exactly what the Government are proposing. I am seeking knowledge, because our councillors and constituents will soon come to us asking for an explanation, and I would like to be able to provide one.
That takes me to housing benefit, and I have some questions for my hon. Friend the Under-Secretary. I have heard my right hon. Friend the Minister for Housing and Local Government say that the Government intend to increase rents in both the private rented sector and, particularly, the social sector, to nearer 80% of market
rents, but families will be able to access housing benefit. I am not clear about this; I need an explanation of the suggestion that a greater return from housing investment would attract more investors from the private sector-banks and so on. That may be a worthwhile objective, but if that is funded by housing benefit, I do not understand how it will reduce the housing benefit bill. I want to understand how those two policy imperatives relate.
When public finances are tight, we cannot pretend that we can do as Harold Macmillan was able to do in the halcyon days of the 1950s and build as many new homes as we want. Sadly, that option is not available to us, but if we are not to have a frustrating non-debate, the more information that the Government can provide about what is intended, the better.
Mrs Madeleine Moon (Bridgend) (Lab): Will the hon. Gentleman give way?
Tony Baldry: I am about to finish, because I know that other right hon. and hon. Members want to speak.
The Government have given a lot of information about the new homes bonus, and I think we all understand it. What we now want to understand is: what is intended for the relationship between social tenants and private sector tenants; how the Government will go forward; the nature of the various new tenancies, including under the affordable rent scheme; and how housing benefit rules will relate to those who pay higher rents, so that we can attract investors into the housing market.
10.14 am
Mr Clive Betts (Sheffield South East) (Lab): The Government's comments on housing in the spending review suggest that the most pressing problem-indeed, almost the only one-is the increased bill for housing benefit. I congratulate my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) on securing this debate, and on the usual expert way in which he dissected the Government's policy and its lack of an evidential base.
The housing benefit issue has arisen not because more people have claimed it over the past few years, but because the amount being claimed has risen as rents have risen. Rents have risen because of a shortage of housing in this country, which is the same reason why house prices have risen in the private sector. The Government should address that fundamental problem, and not try to find appalling ways of cutting benefits and forcing people into housing difficulties. I shall give two examples.
The Deputy Prime Minister was upset in the Chamber yesterday when the words "socio-economic cleansing" were used. Undoubtedly, there will be a substantial dispersal of families from the centre of London to the outer boroughs because of the Government's policy of housing benefit not covering private rents to the same degree as previously. That policy will apply not just in London, and the Deputy Prime Minister should be upset because the problem will also occur in Sheffield. It will not be just the overall target figures for the maximum amount of housing benefit that can be paid that will have an impact, it will be the 30th percentile because of the large disparity of rents in cities such as Sheffield where people will be dispersed from the affluent
parts in the Deputy Prime Minister's constituency to the rest of the city. Those people will not be just the workshy, feckless families that the Government like to stereotype, but people in professional jobs who lose their jobs in the next few months and also lose their homes. That is the reality of the situation.
My second example is the very unacceptable policy-I say no more than that-of dealing with people in under-occupied properties by telling them that the size of property that may be funded by housing benefit will be limited. Let us take a couple in their late 50s who have brought up their family, who have now left home. That couple may be in work, but planning to retire at 65 and to move at some stage to a pensioner's bungalow if they can find one. They will want two bedrooms because their grandchildren come to stay, and that is perfectly reasonable, but there is a shortage of bungalows, so they will have to wait some time, even when they have retired. Suddenly, they become unemployed-that is a prospect that will hit many people in the next few months-and cannot afford their rent because it is no longer covered by housing benefit. They have a family home in which they have invested and which contains their furniture and family memorabilia. They may have a garden that is their pride and joy, and which they use for recreation. Suddenly, they will be moved to a one-bedroom or two-bedroom maisonette or flat somewhere with the all the costs involved at the very time that they lose their jobs.
Such family situations will occur, and if people move, do they move to a property where the new rent will be 80% of market level? Will the Minister explain whether that will apply to transfers for existing social housing tenants, and to mutual exchanges and assignments? Will it be covered by housing benefit in total, in which case, will the Department for Work and Pensions pay if extra money comes into social housing through the introduction of the new higher rent levels? That is all unclear, and it is incredible that such a major housing policy is introduced with a few words in a spending review.
What do 80% rent levels mean? In his statement, the Chancellor said:
"New tenants will be offered intermediate rents".-[Official Report, 20 October 2010; Vol. 516, c. 953.]
Does "will be offered" mean that they will have a choice about whether they accept those rents, or will they have to have them? Will landlords have a choice? "Will be offered" seems to imply that all new tenants will have such rents, but the spending review document that the Treasury produced says:
"Social landlords will be able to offer".
It introduces the word "able", so what is the Government's policy? Will social landlords have to introduce rents at that level for new tenants, or will they be able to offer them if they choose? What will happen if they choose to do so?
We understand that there will be a cut of at least 50% and probably more in the amount of money available from the Government for social housing through the social housing grant. That extra money from rents, presumably partly funded by the DWP, is supposed to fill the gap. What is the situation regarding social housing grant? If a social landlord decides that they will not increase rents for new tenancies to the new 80% of market level, they will presumably forgo some of the money that they could otherwise have received to build
new social housing. That is apparently the purpose of increasing rents to that level. If they do that, and if in future the option is available to keep rents at the current level and tenancies on the same basis for new tenants-we do not know whether it will be available-will they forgo access to a social housing grant? Will availability of the social housing grant be dependent on landlords being prepared to bring in new rent levels and tenancy conditions for new tenants? We need some clarity on the matter as it is unclear.
A policy has been introduced through a few comments in the spending review. It has significant implications for housing but it has not been thought through-at least, if it has been thought through, we have had no explanation about how that was done. We need a clear explanation from Ministers about whether it will be compulsory for landlords to introduce those rents, whether that will have an effect on housing benefit, whether the rules will apply to existing tenants who move, and whether the policy will be linked in some way to access to a social housing grant, whether landlords introduce the measures or not. Those are key questions that have received no response.
The Government have told us that they do not have housing targets-apparently they are out of fashion, along with regions and one or two other things. However, when the Housing Minister came to the Communities and Local Government Committee on 13 September, he accepted an important point. Success will be achieved by building more homes than the Labour Government built before the recession; failure will be building fewer homes. Therefore, the target is to build more than 200,000 homes. That is what was happening previously, so by default, that is the new target introduced by the Government.
We all know, for obvious reasons due to the recession, that there has been a fall-off in house building. We must find appropriate ways to get that building back. The Communities and Local Government Committee is conducting an inquiry into the abolition of regional spatial strategies, and housing targets at regional level being cascaded down to local level. I do not want to prejudge the outcome of the inquiry, as that would be wrong. However, we have received a lot of evidence from people who were unhappy with the operation of the regional spatial strategies. People felt that they were heavy handed and did not take account of local needs. There was also a lot of concern that the Government had abolished the strategies without thinking through the replacement.
One telling comment was made about the new homes bonus which, importantly, we understand is for every new home, not just additional homes. If the new homes bonus is set at a level that would achieve the number of homes needed in this country, even on the Government's new target figure of over 200,000, it would not be affordable given the money that Ministers have indicated is available. If the new homes bonus is set at an affordable level, it would not achieve the number of new homes necessary. There is a disjunction between what the Government think they can offer, and what is likely to be achieved.
A letter from the Secretary of State sent to local authorities last week stated that the new homes bonus may be paid not on the basis of homes built, but rather on consents given. Is that the case? If it is, we could find
that a lot of consents are given in areas where homes will never be built. Money will be spent but nothing will be delivered. That situation also needs clarifying.
The policy may not have an immediate impact because, as we all know, there is a shortage of demand at present. People are concerned about their futures, living standards and jobs. There is a fall-off in demand for housing; prices have been dropping recently. The major concern about the availability of mortgages has already been mentioned. According to the Council of Mortgage Lenders, some of the proposals from the Financial Services Authority may have even bigger implications for mortgage availability in the future.
Let us assume that in three or four years' time, economic confidence eventually returns, families feel able to return to the housing market and there is mortgage availability. If over the years, fewer and fewer planning permissions have been awarded because of the change in Government policy, we will see a massive spike in house prices and we will go back to the same problems that we hit in the 1990s. In five years' time-I am sure that the Minister will be conscious of the relevance of that date for the Government-we could have a situation where fewer homes, in particular affordable homes, have been built, prices have started to rise sharply and rents in the private sector and elsewhere have gone up. People's misery will have been compounded by the changes to housing benefit. That is not a happy record on which to fight an election.
10.24 am
Mr Mark Field (Cities of London and Westminster) (Con): I congratulate the right hon. Member for Greenwich and Woolwich (Mr Raynsford). As he rightly says, we have not so much crossed swords as spoken on many occasions on various Bill Committees and in Westminster Hall. Like him, the issue of social housing lies close to my heart. On one level, I was disappointed to see that the capital grant funding has been halved, although I entirely understand the reasons behind the Government's decision given the deficit that we face-I suspect that the right hon. Gentleman will not follow me on that.
I am delighted at the introduction of further rent flexibility to generate a greater borrowing capacity. I take on board the point raised by the hon. Member for Sheffield South East (Mr Betts) and I hope that the Minister will indicate whether the powers are mandatory or, as I suspect, part of the panoply of options open to housing associations.
In January 2009, I initiated a debate in Westminster Hall that highlighted the need for social landlords to be allowed to use their stock more flexibly. At the time, I argued that the current economic climate-which I suspect has not changed much over the past two years-provided us with a once-in-a-lifetime opportunity to create a more flexible rental market. I advised:
"Housing associations are often frustrated that the income they receive from renting a property barely covers maintenance costs and that the rental income from a four-bedroom house is only slightly more than that from a two-bedroom flat... A relaxation in rent policy will increase incentives to build to higher standards and reflect the relative value of a social tenancy."
My hon. Friend the Member for Banbury (Tony Baldry) referred to that point in his comments.
"Rent differentiation would also provide an incentive for a couple to downsize when they no longer need to stay in a large property when their children are grown up. That would hopefully free-up valuable family-size accommodation to address the problems of overcrowding."-[Official Report, 14 January 2009; Vol. 486, c. 76WH.]
Such problems of overcrowding are particularly acute in the middle of cities such as London.
I went on to use the example of the housing arrangements of one of my constituents who had recently passed away. She lived as a secure tenant on the Peabody Wild Street estate, at a rate of £75.50 a week, which included services. That estate is moments away from Covent Garden piazza, and the market rent for such a flat would be around £320 a week, probably more by now. When she passed away, the flat was re-let at £116 a week to a tenant with support needs. The difference between the social and market rent was £200 a week, or £10,000 a year. That situation has been worsening over the past couple of years.
With the neediest households receiving priority for housing in my constituency and many other constituencies in the capital, my worry is that such places have become home almost exclusively to either the super-rich or the very poor. That polarisation is not a healthy state of affairs. I do not want to be too London-based; I am sure that the same point applies in Sheffield and many other big cities. All hon. Members will have constituents who earn multiples of the average national wage, who cannot get on the property ladder or afford inner-city rents, but who are regarded as far too wealthy to qualify for social housing. The gap between social and market rents and the inflexibility of the social rent structure has meant that the cost of renting in London remains a significant issue.
I accept that some of the Government's policies are still in gestation. One hopes that they will take on board some of the concerns reiterated over the years by myself and the right hon. Member for Greenwich and Woolwich. Too often in these debates we end up talking about the interests of existing tenants who are understandably anxious about the idea of their situation changing. In doing so, however, we ignore those less vocal people who make huge sacrifices of time and money to commute to their jobs in the inner cities, or those whose families have been in a local area for generations, but who are forced to move away because of the unaffordability of city centres, particularly in London. It is right to identify the interests of those who will be affected by the new policy, but we should not forget those who have suffered under the existing regime.
The polarisation of our inner cities is a direct result of decades of well-meaning Government intervention from parties on both sides. If some of the Government's proposals make it easier for young, hard-working people on middle incomes to afford to live in the centre of London, that is a good thing. This week, the right hon. Member for Barking (Margaret Hodge) warned that the Government's policy will create middle-class ghettos in our inner cities. In truth, the young middle classes have been virtually excluded from my constituency over the past decade. We have the absurd situation where the taxpayer massively subsidises the unemployed to live in the centre of London, while working people pay extortionate amounts to commute to their jobs because they find rent levels unaffordable in the centre of town.
Some of the G15 housing associations have come up with a number of new schemes. I hope that some of that innovation will allow young people and young families, who are particularly important, to live at affordable rents while being able to save so as to move to another property or perhaps to buy a share in one in the future.
However, I also accept that the speed at which the cap is being put in place perhaps ignores some of the logistical problems for local authorities-huge logistical problems for some local authorities-in arranging new accommodation, but also coping with a sudden influx of new claimants. About 80% of the people living on housing benefit in my constituency receive a sum in excess of the housing benefit cap. I suspect that that is relatively unusual, but we are still talking about relatively high percentages even in other parts of the capital. For those individuals, this is an incredibly unsettling time. For the areas to which they will move, there will be huge social upheaval, which will affect health services and education as well as, obviously, the basic housing in the locality.
It is likely that, given the option of being able to rent out central London properties at 80% of the market value, social landlords will, to a large extent, choose to do so. At one level, that is no bad thing, because it will allow them to invest in new stock and improve the derisory levels of house building seen in recent years, but equally, as a number of hon. Members pointed out, some unintended consequences may come into play.
Mr Raynsford: I will not detain hon. Members, because others want to speak, but will the hon. Gentleman clarify whether he agrees with my view that it is right to encourage tenure diversity, as I said in my speech, but it is wrong to substitute the new near market rent tenancies for social tenancies at low rents, because then the poor will be excluded?
Mr Field: I think that there is a real risk of that. We want diversity; we want diversity of communities. The right hon. Gentleman is right to say that the issues will have to be properly identified and nailed down before we move forth.
I appreciate that other hon. Members want to speak, so I shall just make two quick observations. With regard to provision of housing by my own local authority, Westminster city council remains confident that local authorities can deliver more affordable housing, even in a period of economic austerity, provided that they are able to think and act creatively. For too long, as we know, local authorities have over-relied on section 106 agreements and registered social landlords to deliver social housing. In that respect, the establishment of the Westminster Community Homes charity locally and its development arm, Westminster Homes Development, will be critical.
My other observation, which slightly concerns me, is that a number of local authorities look on the revolution that is about to take place as an opportunity to welcome the practice of housing finance being treated as off balance sheet, bringing Britain into line with much of the rest of Europe and allowing local authorities greater flexibility to borrow against the existing stock. I confess that I would not support that. I put on record in this Chamber as long ago as 2007 my grave reservations about off balance sheet financing for private finance
initiative and public-private partnership projects by the previous Government. The cost of those will become apparent over the next 25 years. At a time when we need to improve our infrastructure, we have huge costs for schools, hospitals, prisons and road building that have already been put in place. I therefore think that we should above all try to avoid that technique.
Mr James Gray (in the Chair): It may be helpful to hon. Members to know that I intend to call the shadow Minister at 10.40 am.
10.33 am
Mrs Madeleine Moon (Bridgend) (Lab): I apologise to hon. Members, because I have another appointment that I cannot get out of, so after making my presentation, I must leave. I request that hon. Members accept my apology for that.
The hon. Member for Banbury (Tony Baldry) has said that it is in everyone's interest to keep the housing market moving and commented on the huge waiting list for social housing in his constituency. In some areas of my constituency, the wait for social housing is up to 14 years; in one of my local towns, people can wait 14 years to get into the social housing market. The problem has been exacerbated by the selling of council housing, which has reduced the number of houses locally. We do not have any council housing stock. We had a housing stock transfer and all the stock went to a social housing landlord-Valleys to Coast. I met with it recently to discuss the success of the public-private approach to funding housing associations and how that could be undermined by a combination of the drastic changes to housing benefit and the knock-on effect on the confidence that lenders will have in the social housing sector. The success is based on housing associations having been previously perceived to present a low risk to lenders.
In a letter to my local housing associations, the Council of Mortgage Lenders has said that it estimates that
"housing benefit typically underpins 60% of rent income for housing associations."
That means that housing associations have a steady and robust income flow, which helps them to attract new investment. The CML has stated categorically to my local housing associations that changes in the payment of housing benefit
"will result in a loss of confidence and appetite for lending to and investment in the sector."
The proposed changes mean a squeeze on everyone concerned: the new tenant facing a rent increase to up to 80% of the market rate, current tenants coping with the impact of the benefit cap and housing associations facing difficulties in securing investment because of a loss of confidence in their sector. Confidence in the sector is being undermined, yet somehow the Government believe that thousands of new homes will be built in the next four years. In my view, the cuts will fundamentally undermine confidence in a successful sector and condemn thousands of tenants to a lifetime of poverty. The chief executive of the National Housing Federation summed up the result of what has been announced by saying that
"it shows that providing affordable housing is no longer a government priority."
Before I came into the House, I worked for many years in social services. I am ashamed to say that I remember when social workers took children into care because their families were homeless. I never want that to happen again, but I am now living in fear that it will.
One of my constituents took the challenge of moving out of social housing and took out a mortgage with Redstone. When he took it out, it was not at a bad rate-5.15%. He then, as happens to many people, became unemployed. He lost his job and has struggled since to find employment. Unfortunately, his payments have now been reduced because of the change in mortgage interest payments. His mortgage payment is £158 a week, but he now receives only £94 a week, leaving him with a weekly shortfall of £63 a week. However, his benefit support is only £64 a week. He has been told by Jobcentre Plus to go to the mortgage lender. The mortgage lender has sent him back to Jobcentre Plus. He is trapped. He is unable to sell. The mortgage cannot be met. He faces repossession and losing his home. I have written to Redstone, asking what it can do to help.
I used to spend much of my time in my surgeries dealing with people who were desperate to get into social housing. Increasingly, I see people who have made a decision to try to get into the market living in fear of losing those market-based homes because they are in a housing trap. That is what worries me most. At every turn, the lowest-income people in this country face a trap that will lead them into homelessness. Labour Members are desperate to avoid that. I hope that the Government are listening and will address the housing needs of those families.
10.39 am
Alison Seabeck (Plymouth, Moor View) (Lab): It is a pleasure to be called to speak under your chairmanship, Mr Gray, for the first time in my new role.
I start by congratulating my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) on securing the debate on a matter of such fundamental importance to our country and local communities.
Let us be clear: there is a shortage of supply. We have been through the worst recession since the 1930s. However, in the teeth of the global recession, the Labour Government supported the building of 50,000 homes in the first six months of this year through the Homes and Communities Agency.
The housing sector has been like a patient on life support-but this month the Government pulled the plug. In the comprehensive spending review, they have failed to offer the sector any sense of direction. Instead, we have had the revocation of planning rules, whereby hundreds of thousands of much-needed homes will be scrapped, while the new homes bonus scheme has been long delayed. Given the time lag inherent in the eventual payment arrangements for that policy, when does the Minister anticipate that the first foundations of such homes will be laid?
The Government have shown over the past few months that they have the capacity to destroy confidence in the housing market, to reduce the number of new homes
being built and to eviscerate the very concept of social homes. Rent at 80% of market rates is simply not affordable for many hard-working families on low incomes or, indeed, for pensioners. Many families will not accept new, more expensive and less secure tenancies, leaving them with the unpalatable choice of remaining in overcrowded accommodation. Does the Minister believe that that would represent a fair deal for tenants? Tenants do not seem to matter any more.
If the economy is to grow-the hon. Member for Cities of London and Westminster (Mr Field) highlighted the importance of growth-we need to ensure that people can be mobile. The changes proposed by the Government represent a significant block to moving by choice to access new jobs. I said "moving by choice" deliberately-we will see people having to move, because they have no choice, to areas of poorer housing, with few job opportunities, since that is where all the cheap accommodation will be. According to London Councils' briefing on housing benefit changes, local authorities are already looking to the outer ring of London and beyond for suitable temporary accommodation, moving families away from the areas that they know to bed and breakfasts in seaside towns-something we have not seen since the early 1990s.
My hon. Friends cited many examples of the impact of current and future policies, and they all supported the general thrust of the speech made by my right hon. Friend the Member for Greenwich and Woolwich that we need to have a viable intermediate and social housing sector to meet needs. He also highlighted the month-on-month improvement in sales up to the general election, followed by the fear of a double-dip recession as the implications of Government policies are understood in the sector.
The hon. Member for Banbury (Tony Baldry), in his genuine search for knowledge and answers to questions, highlighted not only the importance of the good use of public sector land in his area, but, importantly, the issue of mortgage funding and the concern that there is a narrow view in the Financial Services Authority that is not allowing sensible risk or flexibility in the lending sector.
My hon. Friend the Member for Sheffield South East (Mr Betts) spoke of others' expertise, but his contribution to the debate gave us the benefit of his own. His unpicking of the detail of the housing benefit and its associated costs was forensic, highlighting the confusion in the advice given in Government documents. I hope that we get some prompt clarification of some of his points from the Minister.
The hon. Member for Cities of London and Westminster also mentioned the uncertainty about the precise implications of Government policy. He touched on repairs and maintenance as well, but my understanding is that the money raised from the new higher rent will not be earmarked for maintenance. If that issue is not tackled, we will see a drift back into a huge backlog of disrepair. He also mentioned housing finance being treated as off the balance sheet-I would welcome the Government's clarification on that position.
My hon. Friend the Member for Bridgend (Mrs Moon) made a powerful speech highlighting the personal misery that can be caused by Government policies and the housing trap.
Every stone that I have lifted since coming into my post has revealed another issue that does not seem to have been understood or addressed by the Government. The Minister must see the contradictions between the different strands of his Government's policies. He must see the damage that his policies are doing to the aspirations of families who just want to secure a roof over their heads.
Many right hon. and hon. Members value the diversity of their constituencies-a point made by the hon. Member for Cities of London and Westminster-and they know that the changes advocated by the Government and the Minister will tear it apart, through a housing and benefits policy that will, essentially, ghettoise those in social housing and on low incomes. We need to value mixed communities and the Government's policies do not deliver that.
To return to tenancies before I wind up, the Minister was once a vocal supporter of secure tenancies and low social rents. We have to ask, if there were a Conservative majority Government and he were still in opposition, would he have kept true to his earlier beliefs? We know what those beliefs were-the Minister was a serious, cautious, discriminate and highly selective signer of early-day motions while in opposition. He signed more than 2,800 in the last Parliament and, in 2008, put his name to early-day motion 355. Perhaps he does not recall it, but let me quote it:
"That this House points out the urgent need to boost the economy by a massive programme of public investment to improve existing council homes and estates and build a new generation of first-class council housing to provide secure tenancies and low rents"-
sentiments supported by many hon. Members in the Chamber.
The Minister has a waiting list of around 9,000 in his own authority. The average weekly rent for a property there is about £54, yet he now advocates rents at 80% of the market: an increase in London of about £200 a week for a two-bedroom property and of about £50 in Hazel Grove. How many of his constituents will be able to afford to remain living in his constituency? Perhaps his majority, too, is being gerrymandered?
As a member of the Government, the Minister will have to vote in favour of the removal of the security of tenure. He will oversee a 60% reduction in the Government's funding for new affordable homes. Call it a U-turn or a volte-face, but whatever we call it, we know the decision is wrong for this country, making a mockery of the phrase, "We're all in this together."
No, it does not really matter when the Minister changed his mind. Was it before or after the coalition discovered that the debt was lower and economic growth higher than they expected when taking office? Was it before he ceased to be an Opposition MP or, as I suspect, when the chance of cosying up to the Secretary of State for Communities and Local Government proved too much to resist?
Can the Minister confirm, in addition to responding to the excellent points made by right hon. and hon. Members, that the 67,000 homes to be built in the next two years are in fact a carry-over from the previous Labour Government's plans? They are Labour's houses. Can he confirm that the remaining 80,000 homes that the Government hope to build will not be for social rent at all and that to call a rent of 80% of the market rate
affordable is disingenuous? Can he confirm that any lack of take-up of the new tenancy will create a shortfall in the Government's funding plans for new housing? Can he confirm that the revocation of the regional spatial strategies will cause the cancellation of more than 300,000 planned homes between now and next year, as the National Housing Federation suggests?
What is the Housing Minister's plan B? According to the response that he made to the Select Committee on Communities and Local Government, it is to keep upping incentives until the local authorities bite. At what point will a decision be taken to increase the incentive? What is the figure for new builds that will give rise to a review of the payment? What hope does the scheme have if local authorities and, to a certain extent, developers know that Ministers will increase the money that they receive if they simply wait? The consequences of the Government's actions will be felt for a generation. I look forward to the Minister's response.
10.48 am
The Parliamentary Under-Secretary of State for Communities and Local Government (Andrew Stunell): A lovely bit of slapstick-I really enjoyed that-but we should start with a few facts. In 1997, the hon. Member for Plymouth, Moor View (Alison Seabeck), looked on the outgoing Government's record as a disaster, as I did. They had built 830,000 homes but sold 1.2 million, and 400,000 homes were lost to the social rented sector, which had a waiting list of just more than 1 million. The Labour party and the new Labour Government said that they would tackle the situation. They built 377,000 homes for rent and 182,000 homes for the low-cost home-ownership market-a total of 559,000 homes for the social sector built during Labour's years in office. However, they sold 605,000 homes under the right to buy and other legislation. During Labour's period in office, the number of homes in the social sector reduced by 45,530.
The right hon. Member for Greenwich and Woolwich (Mr Raynsford) said that the priority, as regards social housing, should be the very poorest, so we should judge Labour's record on what it did to the social rented sector, and exclude low-cost home ownership. If we do that, we find that the number of homes in the social rented sector during Labour's period in office fell by 227,000. Fewer homes were available for rent, so I will not take the characterisation offered by the right hon. Gentleman, who is an expert in many things, but who has forgotten how to count.
Mr Raynsford: Will the hon. Gentleman please tell us how many of the homes he mentioned were uninhabitable because of the appalling condition they were in, and how many homes were improved under the decent homes programme? Will he tell us about the millions of homes in decent condition that are now available for social rent because of investment by the previous Government?
Andrew Stunell: I welcome that, and I am happy to report that we are continuing the investment in the decent homes programme.
Let me get to the right hon. Gentleman's central proposition, which is that there was somehow no evidence of a need to change housing policies. The previous
Government's housing policy depended on continuing with the claim that they had dealt with boom and bust. As it turned out, they had dealt only with the boom. There is no public money available-those were the words of the outgoing Chief Secretary to the Treasury, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne). Indeed, during this debate, the Government will have borrowed another £24 million to fund the services that we deliver, but for which we have no income. An extra £400 million will be borrowed today, and another £400 million extra will be borrowed tomorrow and every day this year. This year, £150 billion will be borrowed. The money is not there.
What about targets? We have heard some nonsense from the Labour Front Bencher about thousands of homes having been cancelled. What she actually means is that many of the homes in the Labour targets have not been built. Last year, when Labour was in power, 78,000 fewer homes were built than were in the Government's target. Only 57% of the target was met. We know, therefore, that the Opposition's figures depend on an economy that Labour bust, on public money that we do not have, and on public targets that did not work.
Alison Seabeck: Will the hon. Gentleman give way?
Andrew Stunell: I am happy to give way to the hon. Lady and I am listening out for her apology.
Alison Seabeck: Will the hon. Gentleman confirm that 70 local authorities have withdrawn planning applications on the basis of a letter sent to them by the Secretary of State?
Andrew Stunell: That, of course, is what was wrong with the targets: they built up resistance in local communities-although not in all of them, of course; colleagues in Yeovil and Chesterfield could not build the houses that they wanted because of the absurd national targets.
The hon. Lady quoted early-day motion 355. Outside Westminster tube station, the National Housing Federation has posted a plea to us all for more affordable and social homes. I want to say very clearly-I shall be saying this on many other occasions-that when it comes to producing more affordable and social homes, a party that finished up with 45,000 fewer such homes than it started out with 13 years before is not in a good position to criticise the coalition Government. When we go in five years' time, we will leave more homes in the social sector than we started with.
The National Housing Federation briefing, which hon. Members have perhaps drawn on, says:
"Our modelling suggests that the Government's claim that up to 150,000 homes will be delivered over the four year period is achievable",
"If one in four new lettings across the sector...are made at 80% of market rent".
The reference to "one in four" is interesting. Opposition Members imagine that the Government will impose a new model compulsorily on every housing authority. That is absolutely not the case. If the National Housing Federation, which is, let us face it, not a particularly
good friend of the Government at the moment, says that we can get our 150,000 homes with a quarter of rents at an affordable level, it ill behoves Opposition Members to spread lies and deceit about the issue.
Mr Betts: Can we make sure that the Minister is telling the whole truth about this? The National Housing Federation said that the figures might be achievable if one in four new tenancies was let under the new rents, but it also said that all the new houses that were built-the whole 150,000-had to be let under the new rents. Effectively, on the Minister's definition that we should treat as social houses only those houses that are let on existing tenures at existing rent levels, no new social houses will be built under the programme proposed by him and his colleagues. Is that not true?
Andrew Stunell: I do not really understand the hon. Gentleman's point, because-[Laughter.] The reason I do not understand it is that it is complete nonsense. The homes that we are building will be available for affordable rent, and we have already set out some of what we want to do. However, I acknowledge straight away that hon. Members could have done with more detail, which is why we are producing a consultation document-hon. Members should note the word "consultation"-to set out many of our proposals and some options, and we are inviting opinions about how legislation should ultimately be shaped.
I was perhaps a little over-exuberant earlier when talking about how the new homes bonus will apply. It will apply to conversions, change of use and other net gains. I am quite content to confess that my adrenalin got the better of me earlier.
I need to deal with some of the other points made, so let me pick them up as best as I can. The hon. Member for Banbury (Tony Baldry) made some important points about mortgage availability. The crucial task for the Government is to ensure that we have a sustainable and growing economy. That is absolutely at the heart of the comprehensive spending review.
Let me make it clear to colleagues that the total being invested in infrastructure is being maintained. We have reprioritised expenditure on measures that will support growth and investment in jobs-particularly green jobs-and in industry. That has come at the expense of the traditional amounts spent on housing investment. All Members probably wish that we had a larger housing programme, but our programme will deliver more homes in the social sector in the next five years than Labour did in its 13 years. That is bound to be true, given that the number under Labour fell by 45,000.
My hon. Friend the Member for Cities of London and Westminster (Mr Field) made it clear that this country has created a housing tenure model that makes little sense. On the one hand, we have people who are excluded from any opportunity of getting social housing. The hon. Member for Plymouth, Moor View, correctly said that 9,000 people in Stockport are waiting for homes. She could have added that there are only 11,000 social homes to go into. People whose names are on the list have no realistic expectation of ever getting into council housing.
We must build more social homes, and we will be building more social homes. We must use the ones we have more efficiently, and we are providing local authorities
and housing associations with a way to enable them slowly to do that when homes are re-let. We are, of course, also trying to ensure that the sign outside the House in Westminster tube station is responded to, not just through an early-day motion, but through a policy that delivers more social and affordable housing, exactly as requested.
Work Capability Assessments
11 am
Natascha Engel (North East Derbyshire) (Lab): I am delighted to have secured this Adjournment debate on the work capability assessment, and even more delighted that it takes place under your chairmanship, Mr Gray. It is the first time that I have served under your chairmanship, so I am looking forward to the next half hour.
Before we launch into a massive programme of moving people from incapacity benefit on to employment and support allowance or jobseeker's allowance, with the launch of the pilots in Burnley and Aberdeen, it is a good time to take stock of where we are, what has happened in the past and where we will go in the future. One of the things that most alarms me is the speed at which we are making the reforms. They were of course introduced by the Labour Government. The change from incapacity benefit and income support to employment and support allowance, with the support group and the work-related group, was introduced in October 2009 by Labour. We fully support all those welfare reforms. However, I would like the Minister to respond on a question of nuance and of how quickly and in what context the reforms are being made.
It is also important to highlight the reason why we moved from incapacity benefit and income support to employment and support allowance in the first place. It was because a large number of people were languishing on passive benefits and had little contact with anyone in their area who could help and support them to move from passive benefits into work. Hon. Members on both sides of the House have always agreed that work is still absolutely the best way out of poverty.
The headlines in the newspapers about individuals who get up to £10,000 of benefits a week are headlines because such cases are extremely rare. Most people on benefits, whether passive or active, are poor. We call them vulnerable; we mean poor. Those people are not rich. They are not wealthy. Their poverty is a different kind of poverty, especially in the case of someone on a passive benefit that does not require them to go to a jobcentre every week to sign on and have a face-to-face conversation with a personal adviser. It is a poverty not just of resource, but of experience and aspiration.
People in such poverty do not have access to the things that people with jobs take for granted. Their social networks dry up, and their personal development stops. What I am talking about is not just amounts of money and moving people off benefits and into work; it is about lifestyles. It is about the people whom we have spoken to who have moved from incapacity benefit into work and who talk about getting their lives back. It is fundamental and goes to the heart of what I want to say about the motivation behind moving people from incapacity benefit into work.
One of the things that most worries me is that the motivation now seems to be to get the welfare bill down, and nothing else. I agree that the welfare bill is very high and must be an important consideration-it is taxpayers' money-but we must prioritise individuals. We must see the person, not the benefit. The group of people in question is a very large one, but they are all individuals,
with different issues and problems, and different barriers and reasons for being on incapacity benefit rather than going to work.
The reason that the pathways to work project, in which I was quite heavily involved in Derbyshire-it was one of the first English pilots-was so successful was that personal and financial advisers in jobcentres looked at claimants as individuals; they did not think only about what benefit they were claiming. The project was not just about getting those people into work and off the joblessness figures. It was about considering what kind of support people needed, including what financial assistance they needed to get them the retraining that they wanted. It involved considering the local work force and the jobs available locally and working with local colleges. That is why it was so successful.
The problem is that that approach is extremely expensive. There is no doubt about that, but we always tried to argue that that was an up-front cost to bring about a saving way down the line. When we see what it does for individuals, it is stuff that money cannot buy. I would like some reassurance from the Minister that he is continuing with that motivation and not just the motivation of getting people off benefits and into work to make a big saving on the welfare bill.
Beyond the correctness of the principle of getting people back into work, there are serious issues about Atos Healthcare. It has always been a problem, and I am the first to admit that, even under the Labour Government, it was an issue. Atos is the only provider of medical assessments that is big enough to provide the sort of support that the Department for Work and Pensions needs in contracting out the work. However, in the massive change from incapacity benefit to employment and support allowance, which involves moving on from medical assessments to work capability assessments, we are asking Atos, which is already struggling with the amount of work that it has, to take on a huge amount of extra work. How will the Minister fill that capacity? Will he take more doctors out of the NHS, or is he thinking of supplementing the existing work force with a migrant work force? Both approaches are and always have been problematic, but given the massive increase in the amount of work that Atos is being asked to do, how will the Minister provide for it?
Mr Andrew Smith (Oxford East) (Lab): I congratulate my hon. Friend on securing this important debate and endorse all that she is saying with such passion. Will she take account of the fact that an advice centre in my constituency is winning 96% of its appeals against the work capability assessment? Does not that underline the fragility of the Atos process, which she has highlighted, and does not it show the need for the DWP to apply much closer quality assurance to the assessments?
Natascha Engel:
That was exactly what I was going to come on to. Changing the description of the process from a medical assessment to a work capability assessment was welcome; it refers to what people can do and not what they cannot do. However, Atos has not moved away from an on-screen tick-box exercise. The number of people who come to my constituency surgery saying that they have been to a work capability assessment
where the doctor has not even made eye contact with them is disgraceful. However, I am very worried about the issue that my right hon. Friend has raised. Up to 75% of cases taken up on appeal by the Derbyshire unemployed workers centre are successful, and the figure is 40% nationally. I recently asked the Secretary of State at DWP questions how many people that involves.
The errors that are already occurring will merely migrate to the new system. There has been no demonstration that there will be any underlying robustness. The numbers and the traffic involved will make things very difficult. I seek an assurance from the Minister about what people are saying anecdotally-I have no evidence for it-which is that there must be some kind of incentive: Atos is being told that it must get people off benefits. I want an assurance that Atos is not being told or incentivised to move people off incapacity benefit or employment and support allowance and on to the jobseeker's allowance.
George Hollingbery (Meon Valley) (Con): I am here to make representations on behalf of a client who has had to go to appeal. It is worth noting that the high level of appeal successes in the constituency of the right hon. Member for Oxford East (Mr Smith) and of those that we heard of anecdotally from the hon. Lady may be a reflection of the capability of those who assess whether to appeal, as I understand that only 5 or 6% of assessments are successfully appealed. That may put a slightly different gloss on the figures.
Natascha Engel: It does, unless one knows the demographic of the group. A big problem for those who have been out of work for a long time is that it has a really awful impact on their self-esteem and even on their ability to get out of bed, as they can get very depressed. One problem for those who are moved en masse from incapacity benefit to jobseeker's allowance is that they do not have the confidence to appeal the decision. It takes groups such as welfare rights organisations to help them. Of those who are helped, the number who are successful on appeal is an absolute disgrace.
Toby Perkins (Chesterfield) (Lab): I wish to expand briefly on a couple of those points. In Chesterfield and Derbyshire, unemployed workers have had success in 75% of cases. I turn specifically to Atos Healthcare and its motivation. It did an assessment on behalf of Royal Mail for one of my constituents and found that he was not fit to work. Royal Mail retired him on the grounds of ill health, saying that he would never work again. However, when that person went for a work capability assessment, Atos said that he scored no points. The same company assessed him twice; on behalf of Royal Mail, it said that he was not fit to work and should be laid off, but on behalf of the Department for Work and Pensions, it said that he was fit to work and gave him no points. That puts the company's performance in context.
Natascha Engel: I might have used that example, but I thank my constituency neighbour for his contribution. It is a serious matter, and errors are a fundamental problem. The system must be right if we are to move huge numbers from incapacity benefit.
Jim Shannon (Strangford) (DUP) rose-
Natascha Engel: I shall give way briefly, but I must make some headway.
Jim Shannon: I thank the hon. Lady for giving way. Does she agree that it is not a tick-box exercise, although it seems like one at the present time, with people being asked whether they can stretch, bend or kneel? There are two parts to the assessment. One of them concerns emotional matters, such as depression and mental health; the other is physical. Perhaps the best way to do that would be to make contact with the person's GP or physician, who would have better knowledge of the claimant. It would certainly help.
Julian Smith (Skipton and Ripon) (Con): Would the hon. Lady like to comment on a case from my constituency of a gentleman who had to change his colostomy bag 16 times a day who is now going through the appeal process? In my view, we have to find a way of short cutting the system for terminally ill patients and those who are very ill, using common sense to get them away from that tick-box process.
Natascha Engel: Absolutely. That goes back to my original point about the pathways to work scheme, which was successful because it considered the individual, rather than how to get people moved off benefits and into tax-paying employment.
I wish to ask a couple of questions, the first of which is a wider economic one. The Government will be moving people from incapacity benefit, or from employment and support allowance via the work capability assessment, to the jobseeker's allowance, at a time when the Government have admitted that there will be 490,000 job losses in the public sector, and there will be a massive knock-on effect on the private sector. Even the Minister has to admit that employment will be going down rather than up. Where will the jobs come from?
My second question may seem a minor point, but the Government will be taking £25 a week from those on incapacity benefit or employment and support allowance by putting them on JSA. That may save the Government £25 a week per claimant, but that money will not go back into the local economy. Such people have so little money that they spend it all. In rural ex-pit villages such as those in my constituency, many people are on passive benefits, but it is those people who keep the local shops going. Such shops will now close. How will that help growth? How will that help the economy? How will that provide more jobs?
We are already struggling. Many people will have been on passive benefits for well over two years, yet they are still more likely to retire or die than get jobs. They may get batted into the nearest towns where there is work, but that work will be taken by people fresh out of university who are far closer to the labour market. How exactly will it work?
Huge cuts have been announced to the Ministry of Justice budget. We have already heard that the tribunal system will be overloaded by appeals against people being taken off employment and support allowance and put on JSA. Many of those appeals are successful. However, at a time when the Ministry budget is being
cut, how on earth will it work? Is the tribunal service ready for that enormous spike in its work?
To sum up, I would like to hear the Minister give those on passive benefits the idea that there is some light at the end of the tunnel. The vast majority want to work. They are not workshy; they simply need the correct help and support. Of those on benefits, 45% have some sort of mental health condition, which often fluctuates. How are we personalising the service to get those people off benefits and into work? I shall list my questions, and if I do not receive answers, I shall intervene on the Minister or write to him.
11.17 am
The Minister of State, Department for Work and Pensions (Chris Grayling): I shall do my best to answer the questions asked by the hon. Member for North East Derbyshire (Natascha Engel).
I start by saying that there is a huge amount of agreement between us. Let us be clear: the proposals are not an exercise in money-saving. I have said time and again that they are about saving lives, not money. Yes, we will save money if we reduce the number of people who are welfare-dependent, but the starting point surely must be to try to help people make a better lot of their lives. That, effectively, is where the proposals came from.
If we look back to the last Parliament, there was-and, I believe, still is-cross-party consensus on the need to make the changes. The original proposal to assess current incapacity benefit claimants came in the Green Paper that I launched in 2008. James Purnell, who was Secretary of State shortly after that, took up the proposal for the migration and put in place many of the mechanics that were needed.
Given the hon. Lady's comments, I believe that there is still cross-party consensus on the need to do something about the issue. Frankly, I regret that the assessment was not done years ago, because it is not right for anybody to be left on benefits, doing nothing, year after year without us seeking to find them a way back into work and helping them to make a better lot of their lives.
The hon. Lady is also right to say that we inherited the work capability assessment; it was set up by the previous Government, and was initially meant to operate with the employment and support allowance system for new claimants. It was designed by the previous Government and they put it in place, but it was not completely right; there were things that were wrong with it and needed to change.
One of the first things that I did after taking office this summer was make a number of changes to the work capability assessment-changes that were recommended by the previous Government following work that they did in their last few months in office. I looked at the changes and felt that they were sensible. They included: simplifying the language in the work capability assessment; making greater provision for people awaiting, or in between, courses of chemotherapy; making the higher rate of employment and support allowance available to more people with particular communication and mental health problems; and taking into account how people have adapted to a disability.
My view was that that was not enough, and I share the hon. Lady's concern. It is not in my interests or the interests of the Government to get this wrong. I do not want to do down people who should not be trying to get back into work. I want to help those who have the potential to work, and to ensure that the work capability assessment is as effective as possible. There is no hidden motivation. I am not saying that we should make the test as tough as possible so that we can get more people off benefits and into work, thus saving money. I can categorically assure the hon. Lady that that is not the case.
There is no such thing as a perfect system, but we are working as hard as we can to make the system as effective as possible. Let me tell the hon. Lady some of the things that I have done to ensure that it is. Since the election, we have commissioned a further review of the work capability assessment. It is being carried out by a leading occupational health specialist, Professor Harrington of Birmingham university. We have assembled an advisory group to work with him, which includes Paul Farmer, the chief executive of Mind. I particularly wanted him to be on the review, because mental health is a big issue. Getting the facts right on mental health is essential. I do not want to say that people with mental health problems should not be able to work. Equally, I want to find the right dividing line to ensure that we do not do the wrong thing by people with mental health problems who would have genuine difficulty in working.
Jeremy Lefroy (Stafford) (Con): I want to emphasise the importance of the assessment of mental health problems. A constituent of mine told me that he could have sat down and cried to prove that he had mental health problems. He did not and, as a result, he was categorised as having no mental health problems. That was despite the fact that his general practitioner had categorically said that he did.
Chris Grayling: I have told the mental health charities that I am happy to hear their proposals on how we can change the wording of the assessment to strengthen the way in which we deal with people with mental health problems. I am happy to look at such proposals and incorporate any sensible changes. I said to Professor Harrington and his team that I want them to bring forward recommendations on how to improve things and to knock off any rough edges so that we can make the system as fair as possible.
The majority of people-it is far from all-who are on incapacity benefit with mental health problems have issues with long-term chronic depression. We have a straightforward choice. We can either leave them at home for the rest of their lives-the hon. Lady mentioned that many people end up just retiring rather than ever moving off benefit-or we can try to do the right thing and help them back into work. I passionately believe that the second is the better option. In a moment, I will address the hon. Lady's concerns about personalisation, because I agree with her on that.
What I am saying applies across the piste: we are either saying that we will leave these people passively on benefits for the rest of their lives, or saying that we will do something to help them turn their lives around. It
may be that going back to work will involve them doing something different from what they were doing before. If, for example, they were doing a manual job and they had an orthopaedic problem, they may have to do something different, and that may be a huge wrench that damages their self-confidence. The hon. Lady was right to say that many people who are on long-term benefits have lost networks and self-confidence. I do not buy into the headlines that say, "They are all scroungers." Hon. Members will not find me using such language.
The biggest issue is about detachment from the workplace. Some people who have been in work previously and who have become utterly detached start to lack confidence; they do not know what to do or how to go about getting work. Sometimes, people have grown up in an environment in which worklessness has been the norm, and they do not have the knowledge to be able to take the first steps into the workplace. Helping them not only with the assessment but over the hurdle of getting back into work is a huge challenge, and that is what our work programme is all about.
Let me touch on one or two of the other areas that the hon. Lady raised in relation to the assessment. Atos has no financial incentive to get more people through the assessment and back into work, nor would I countenance it having one. It is Jobcentre Plus that takes the decision and not Atos, and Atos does not design the test. The recommendations that we get from Professor Harrington's review-as long as they are sensible, and I am confident that they will be-will inform our decision making about how the test should be shaped.
George Hollingbery: My constituent, Gary Dennis, was recently diagnosed with motor neurone disease. He went to his work capability assessment and passed with flying colours-he got zero out of 13. I understand the Minister's reluctance to categorise any disease as one that should not be assessed through the WCA, because everyone needs the dignity of work if they can have it. None the less, there are diseases, such as motor neurone disease, that have particularly aggressive pathways. There is a case for emergency reassessment. Within six weeks of Mr Dennis's work capability assessment, he was completely incapable of work. Will the Minister consider such cases?
Chris Grayling: I am grateful to my hon. Friend for giving me prior notice of his concerns. One of the things that I am happy to consider-I have said that we will carry on reviewing this process as we go forward-is some kind of emergency brake for people who suffer an immediate and very sharp deterioration in their condition. We should be able to reflect that, and I will ask officials to consider how we deal with such a situation. The goal is to do the right thing by people. What I do not want to do is say of any condition, "Nobody with that condition can ever work." I do not want to give people an automatic path into the support group because where we can, and where circumstances enable us to do so, we should be trying to help people into work. Clearly, when things change rapidly, we need to see whether there is a way in which to address that.
Duncan Hames (Chippenham) (LD):
I am glad that the Minister says that Atos does not have an incentive to fail people. We have heard so much about the cases in
which Atos has failed and in which people have successfully appealed against its assessment. Surely there should be some penalty for the service provider, because the system, and the appeals that errors cause, are a great waste of taxpayer's money.
Chris Grayling: We cannot simply regard this as a question of errors by the assessors. The hon. Member for North East Derbyshire mentioned the issue of the number of medical professionals available. A more diverse range of medical professionals is being used, including those with expertise in mental health and orthopaedics; it is not simply doctors who are being used. One problem with using GPs is that we are putting them in a difficult position, because they are in danger of compromising their long-term relationship with a patient if they say, "Actually, you can go back to work." We are very reluctant to go down the GP route. I am confident that having a mix of professionals will help us to deliver what the hon. Lady has asked for.
Getting the appeal numbers down is about getting the system right. I have asked Professor Harrington to consider how we can improve the system to reduce the likelihood of appeals. Appeals will never disappear, because some people will not want to accept what has happened. What we can do is seek to make the system as good and as effective as possible.
Let me touch briefly on the work programme and the support. The hon. Lady made a valid point about the need to provide personalised support. The work programme is designed to offer providers the freedom to tailor a programme to the individual, and not simply implement a programme designed in Whitehall. One of the reasons why programmes went wrong over the past 10 years was that they were too centrally directed. Officials would say, "You will do this. You will have five interviews and a period of work experience." I want to trust the professionals, particularly those from the smaller, voluntary sector groups who probably work with some of the harder-to-help claimants, and give them the freedom to decide what works, rather than having to follow what Whitehall dictates.
Natascha Engel: We have only two minutes left, and I am really desperate to get an answer to the tribunal service question. I accept that we have lots of areas of agreement, but not, I think, when it comes to the tribunal service. This is not about the fact that some people will not accept that they are fit to work. Some 40% of people who appeal are successful. That means that they are told that they are fit to work, appeal, and are then told that they are not fit to work. That is a very serious number of people. What is the Minister doing to ensure that the tribunal system is up to the massive spike in numbers that it will receive?
Chris Grayling: First and foremost, I am trying to ensure that the cases do not get to the tribunal in the first place by making the assessment as effective and as accurate as possible. We also have officials working closely with the tribunal service to address that issue. We are running a number of pilots within Jobcentre Plus to look at ways in which we can improve the process and work more effectively with people who have been passed as fit for work to reduce the number of cases that will ever go to appeal. I am happy to share more of that with the hon. Lady as the weeks go on.
Let me touch on the last two points that the hon. Lady made. She asked where the jobs will come from. Some 280,000 new private sector jobs have been created in this country in the past three months, and the number of people claiming benefits has barely changed. That cannot be right, and it has to change. The private sector can create opportunities. Our job is to ensure that claimants are ready for them. As for the loss of £25 a week, sickness benefit should be for people who are sick. If there are two people sitting side by side in the Jobcentre, both of whom are deemed fit for work, it is not right if one of them is better off than the other. That is why we are clear that the proposals are a sensible step to take. At the end of the day, I want a system that treats people fairly and decently, and also helps them back into work. I do not believe that anybody is better off at home on benefits, doing nothing.
11.30 am
Elected Mayors
2.30 pm
John Stevenson (Carlisle) (Con): I am grateful, Mr Robertson, for the opportunity to debate what I believe is the very significant issue of elected mayors. It is a topic that, to all intents and purposes, flies below the radar. However, it has the potential to affect our democracy profoundly, not only at the local level but at the national level, in what I would like to think is a positive way. The number of Members here for this debate demonstrates that the topic is flying below the radar and yet, as I say, it could have a profound effect on our constituencies up and down the country.
At present, there are 13 elected mayors. They affect at least 50 constituencies and if there are a further 12 elected mayors, as proposed by the Government, another 50 to 100 constituencies would have an elected mayor in their area, affecting local politics and their debates. That would make a total of 150 constituencies, and if we reach that point there may be a critical mass.
The idea of a mayor is extremely well established, not only in this country but all over the world. However, in most respects there is a huge difference between our style of mayors and those in other countries. Our tradition is very much one of having a ceremonial mayor who carries out civic duties. Quite often the post is held by a councillor, usually in the last year of their term in office and who therefore is coming to the end of their career.
In most other countries that have mayors, however, the mayors exercise varying degrees of executive authority. In those countries, the large cities often have executive mayors, with the obvious examples coming from the United States, where the major cities, including New York and Chicago, traditionally all have mayors with executive powers. We can also look to our Commonwealth countries, such as Australia and New Zealand, or to other European cities, many of which have mayors who are executive and not ceremonial in the way that ours are. Often those mayors are seen as an integral component of local democracy. The most recent example of the election of a new mayor was in Wellington in New Zealand. That election was an extremely closely-fought battle, with the count going on for a number of days after the election was over. As a result, a great deal of publicity was generated. Therefore, I see no reason why mayors with real executive powers cannot become part of our democratic landscape and, in the time-honoured British fashion, become a traditional part of our democracy.
For completeness, I just want to cover the recent origins of the elected mayor concept in Britain. The idea was first introduced by the Labour Government under the Local Government Act 2000, which allowed local authorities to instigate a referendum for an elected mayor by means of a simple resolution of the council. The Act also allowed local residents to petition for a referendum. When local residents wanted to do that, they needed 5% of the electorate to sign that petition and only then would the council be duty-bound to instigate such a referendum.
That was the situation in 2000 but it was altered by the Local Government and Public Involvement in Health Act 2007, which allowed councils to introduce the new mayoral system by passing a simple resolution and
without the requirement to hold a referendum. However, to achieve that there would need to be a two-thirds majority on the council in favour of that resolution. That Act also stated that there should be no more than one referendum in any 10-year period.
I genuinely believe that, back in 2000, the Labour Government wanted the idea of elected mayors to catch on and become widespread. I believe that they thought that the idea of elected mayors was an opportunity to transform local government and they thought that such a transformation would happen. I also believe that they thought that elected mayors would become commonplace and that by now we would have many mayors up and down the country. In 2006, they actually expressed their disappointment that that had not happened.
So what success has there been? To be entirely honest, even as somebody who fully supports the concept of elected mayors, I must accept that the answer is that success has been very mixed. Since 2000, there have been 37 mayoral referendums. Of those 37 referendums, there was a yes vote in 13 with a no vote in the remainder. There are two possible reasons why that has been the case. First, is the fact that only a third of those referendums have been successful an indication that overall people are against the idea of elected mayors? Secondly and quite simply, there have been only 37 referendums, when there could have been up to 400, or at least 100 to 200, if the idea of elected mayors had taken hold. Therefore I must accept that the number of referendums that we have had is a bit of a disappointment, and that, of those that we have had, only a third have come up with an affirmative answer.
I acknowledge that the idea of elected mayors has had a mixed start, but I believe that there are obvious reasons for that, many of which can be overcome. Quite simply, at the outset the Blair Government did not push the idea of elected mayors in the way that I thought they would. I do not know what the internal politics of the Labour party or the Labour Government were at that time, whether people felt that it was not the right idea and it was consequently put on the backburner, but I genuinely believe that the Blair Government wanted the idea of elected mayors to succeed. However, for whatever reason they did not push the idea at that time and to all intents and purposes they lost interest in it. I also think that, at that time, none of the national parties-Conservative, Labour or the Liberal Democrats-were actively engaged in promoting the idea of elected mayors, although I think that that attitude has begun to change.
What is probably the most important factor of all is that there has been local opposition to the idea of elected mayors, coming from local parties of all persuasions, many-although I hasten to add not all-councillors and quite often from council leaders, local opposition leaders and indeed chief executives and senior officers on councils. Together, those people quite often stymie the hope of having referendums and particularly the hope of having successful referendums. Quite often, the lack of publicity about the idea of elected mayors, which in turn has prevented a proper debate about elected mayors and their genuine pros and cons, has reduced the success rate that I like to think could have been achieved. Finally, the threshold for a petition for a referendum is set at too high a level, at 5% of those on
the electoral register. That is just one of the issues that I will ask the Minister to address when he responds to this debate.
As I have said, however, matters are starting to change. The London mayoralty has undoubtedly boosted the concept of elected mayors and credit for that has to go to both Ken Livingstone and Boris Johnson. They have raised the profile of the idea of elected mayors. It affects London, but I think that it is now permeating out to the rest of the country. People see them as national figures as well as a figure for the city of London. I genuinely believe that this new Government are also starting to take a lead on this issue and I hope that the Minister will confirm that when he replies. Through Boris Johnson and Ken Livingstone, the London mayoralty, and the various elections up and down the country, there is growing interest in the idea of elected mayors in both local and national media, and also among local politicians and local people. Middlesbrough and Hartlepool are obvious examples of places with high-profile mayors who have made a difference. Furthermore, those voting in the recent referendum in Tower Hamlets chose to go down the route of having an elected mayor, which I hope is an indicator of the future, although I must say that there was a very interesting election in Tower Hamlets thereafter. However, other people can comment on the merits of that.
Circumstances have now changed and with increased awareness of the idea of elected mayors, among the public and at Government level, we have a real chance to change things. However, before I refer to the many advantages that I believe elected mayors would bring to our democracy, I will touch on some very basic reasons why change in local government governance is both desirable and necessary. Our present local government system was set up in the 1970s. Time has moved on and we now live in a very different world. Technology has also moved on, including the development of 24-hour media, as have people's expectations. Clearer and quicker decision making is now a necessity and, in many respects, it is part of everyday life. There have been changes to the way that councils run. We now have executives and scrutiny panels. However, I do not think that those changes actually go far enough to reflect the modern world and the way that we deal with things now. Given that background, elected mayors would help modernise local government enormously, and there are many clear-cut advantages to having them. They are open and transparent. Local people, not councillors, choose in an election who they want as their local democratic leader. It might not always give the result that we as politicians want, but that is what democracy is all about.
Elected mayors provide greater accessibility. It is obvious who is in charge. The mayor carries the responsibility for running the council and cannot hide behind the machinations of local politics. Four-year terms also go some way to help, as they give the individual time to implement programmes properly. It is interesting that a number of mayors, particularly independents, are being re-elected at the end of their four-year term. A mayor brings strong leadership-not always, but in most cases. Mayors have the authority to get on and do things in their local community. They also provide visible and clear leadership, which goes a long way to improve the clarity of decision making.
Ironically, having more elected mayors could enhance the role of councillors. I would like to think that there would be fewer of them. To take my county of Cumbria as an example, we have six district councils, one county council, one national park and 400 councillors to represent only 500,000 people. Clearly, if elected mayors were accepted in my part of the world, fewer councillors would be needed, but their role would be greatly improved. Some would still be involved with executive authority in the mayor's cabinet, but that would enhance their scrutiny of the mayor. It would also allow councillors to be more critical of a mayor from their own party, because they would not be bound by the three-line whip in quite the same way as under the present regime.
Mayoral elections to date have illustrated that mayors can bring personality as well as party politics into play. Again, that reflects the modern age. Personality is already a huge part of our democratic process, as evidenced clearly by the leadership debates during the general election. If ever there were a case of personality politics, that was it. Arguably, the same thing goes on with MPs up and down the country. Personalities matter, and I think that they bring something to the political system. Interestingly, of the 13 elected mayors, three are Conservative, three are Labour, two are Liberal Democrat, one is English Democrat and four are independent. That reflects the huge role that party politics will still play. Parties will still be the dominant force behind elected mayors, but the role allows room for independence, which reflects to a certain extent the politics that people want now. The evidence suggests and the experience in other countries reflects that main parties will still dominate mayoral politics, but there is room for others to get involved. That could make politics, particularly local politics, far more interesting and reconnect politicians with the general public. In many respects, it would be direct democracy.
Overall, in my view, elected mayors will bring better governance to local authorities, but could also affect national politics in time, effectively creating greater movement between national and local politics. A mayor with executive experience running a major authority could bring a lot to Parliament and national Government. Equally, a national politician could bring national experience and standing if elected as mayor of one of our major cities.
To summarise my view of the advantage of elected mayors, I quote the words of Michael Heseltine:
"To create dynamic local leadership and to attract high-calibre individuals, we believe that directly elected executive mayors for...authorities is the best governance model".
Ultimately, what matters to the public is effective democratic leadership. Although executive mayors have been going for only a short period and there are only 13 of them, the evidence suggests that they have been a success and have made a difference in many cases. They are far better known than their predecessors the council leaders, their councils often have higher profiles and they often campaign on their own initiatives, which they subsequently implement as mayors.
However, it is the future that matters. I welcome this Government's approach to local government and their move to decentralise and return power and responsibility to local authorities and communities. We are a hugely over-centralised country, so the forthcoming decentralisation and localism Bill is welcome news.
There is momentum for change not just here in Westminster but in all other parts of the country, and I certainly view localism as a way forward. Elected executive mayors can play a significant role in the localism agenda. My questions to the Minister therefore involve that issue, and I hope that he will give me a positive response.
The Government propose a potential 12 new elected mayors. What about York, Chester, Blackpool and my own constituency, Carlisle? Why should they not also be involved and have the opportunity to decide whether they want an elected mayor? Places with strong identities that might benefit greatly from an elected mayor will be omitted. Is the Minister willing to extend the number of places where referendums will be held and elected mayors will be possible?
What additional powers is the Minister willing to pass to such mayors? Are they to be glorified council leaders, or can we give them extra powers such as appointments to local bodies or additional tax-raising powers? Where a mayor is elected, will the Minister consider the size and role of the council? It appears sensible to reduce the number of councillors while giving them an enhanced role in scrutiny and more generally. Will the Government be considering that? These matters are being handled by politicians, but what about the people? Will the Minister reduce the number of local people required to petition for a referendum from 5% to 2%? That would allow individuals in places where local politicians are preventing a referendum the opportunity to petition and campaign for one.
Generally, do the Government want elected mayors established throughout the country? If that comes to pass, it will transform British politics in ways that many of us do not realise and which have a profound effect not just locally but nationally. The Government say that they are committed to localism. I hope that they are also committed to changing the governance of our local authorities through elected mayors. We now have an opportunity to create a renaissance in local government. As part of that, the time has finally come for elected mayors. I hope that the Minister will give me that confidence and assurance.
2.47 pm
Sir Peter Soulsby (Leicester South) (Lab): I congratulate the hon. Member for Carlisle (John Stevenson) on securing this debate on a subject that, as he rightly says, has been below the radar so far, but has the potential to make a profound difference to local government. As I listened to his thoughtful and well-reasoned contribution, I found myself in almost complete agreement with every word. As he may or may not know, I have something of a background in local government, having spent many years there, and much, if not all, of what he said rang true.
I believe, as the hon. Gentleman does, that the previous Government ought to have encouraged the introduction of elected mayors much more than they did, and I join him in welcoming the present Government's commitment to the extension-albeit a somewhat limited extension, as he pointed out-of elected mayors to other local authorities.
The hon. Gentleman is right to point to the experience of London. Of course, in many respects, it is different from many other parts of the country that might introduce elected mayors, but now that we have had elected Mayors of London from two different parties, we have seen the opportunities that being elected and having a distinct and individual mandate give for providing leadership to a locality. In many other parts of the country, candidates have come forward from established political parties and, in some cases, from outside to perform the role of elected mayor, and they have been able to provide leadership and revitalise local interest in local government. That is undoubtedly a good thing.
As I said, like the hon. Gentleman, I regret that the previous Government, having introduced the concept of elected mayors, did not push it more firmly. I do not pretend to have any more insight than him into the reasoning behind that, but it is water under the bridge. What we can do is consider the areas where elected mayors have been established, recognise how much of an impact they have made, and encourage others to follow their lead.
The hon. Gentleman referred to the fact that the previous Government, as well as making it possible for elected mayors to be established, required local authorities to change their governance structures. Local authorities moved towards a separation of the executive function from the scrutiny function. They argued that that would give greater transparency to decision making and make it more timely, and would ensure that there was greater scrutiny and more accountability.
Well, I have to acknowledge that that has not always been the reality of the situation; indeed, many local authorities have experienced changes that have led to less, rather than greater, transparency and accountability. That is to be regretted. Many councillors up and down the land who were not part of the executive function felt significantly disempowered and, for too many of them, scrutiny had become what those who are not part of the executive do. In many cases, the changes that have taken place have not been an effective use of their time and there has not been effective scrutiny of the executive function within their local authorities. As I said, that is very much to be regretted.
I welcome the fact that the Government have at least committed themselves to enabling and encouraging local people to have elected mayors in 12 of our largest cities if they wish, subject to a referendum. I hope that when the Minister replies, he will be able to tell us more about the additional powers that might be associated with that, because there is an opportunity for greater devolution to local government in those areas. I hope that that will be another step towards further devolution to local government more generally.
It is vital that where new mayors are established-whether under the existing legislation or under new legislation-the role of the back-bench councillor is considered. There needs to be genuine scrutiny enshrined in the new legislation and we need to ensure that mayors have a real job to do in holding the executive to account. It should therefore be possible to attract and retain councillors of good calibre-a problem that all parties have experienced-who are able to do their job effectively. They should be able to speak up for their local communities and also hold to account those who are in an executive position in their authority.
When the Minister replies, I hope that he will mention the existing legislation-the Local Government and Public Involvement in Health Act 2007-under which, I think, before the end of this calendar year, non-metropolitan districts and unitary authorities that are former non-metropolitan districts have the opportunity to opt for a mayoral system without the need for a referendum. They have the opportunity to opt for a mayoral system, as opposed to the so-called strong leader model.
I hope that the Minister will take the opportunity to encourage those non-met districts and unitary authorities to take that option, because under the strong leader model there will be-and, indeed, are already, in the authorities that have adopted it-individuals who exercise, in effect, mayoral powers without the mandate and the accountability that ought to go with it. It is surely undemocratic for a person with mayoral powers to be selected by the majority group-the controlling group on a council-after an election. They ought to be selected by their party, or put themselves forward as an individual from outside the party, and be elected at an election by the electorate. Surely that is the democratic way. I hope that the Minister will encourage the authorities that have the opportunity to do so to take that option and not wait for the new legislation.
As will be evident, I am very much a supporter of elected mayors, as they provide leadership not just to local authorities but to local communities. They have an individual mandate from those local communities to speak on their behalf, not just in the council chamber, but out in the wider world. Elected mayors fundamentally have a far greater accountability to the people they represent, and the system is much more democratic than any of the other arrangements we have seen in the past, or in recent years.
I hope that the Government's proposals for the 12 largest cities are just the beginning, as does the hon. Gentleman, and I hope that other places will follow. The elected mayor model is democratic and much more in tune with the sort of world we live in today than the structures of local governance developed over recent years or, in many cases, inherited from previous centuries.
I return to where I started and congratulate the hon. Gentleman on introducing the topic for discussion. I note that the debate is not well attended, but I am sure that, as the Government bring forward their proposals and develop the arguments in favour of elected mayors, we will have the opportunity to debate the concept on other occasions, including, perhaps, in Westminster Hall, but certainly in the main Chamber when the new legislation is introduced. I hope that other elected Members will join in making a powerful case for the democratic form of governance that is elected mayors.
2.56 pm
Martin Vickers (Cleethorpes) (Con):
I, too, congratulate my hon. Friend the Member for Carlisle (John Stevenson) on securing the debate. It is only proper that I should declare an interest in the sense that I am, and will remain for a few months longer, an elected member of North East Lincolnshire unitary council. As background information, I should say that I have served as a councillor for 25 years-and it don't seem a day too long. I have served both in a two-tier system as a former member of Grimsby borough council and, more recently-in fact,
for the past 11 years-as a representative on North East Lincolnshire council. That experience has certainly taught me that single-tier authorities are ultimately the way forward and that they should be led by elected mayors.
John Stevenson: Does my hon. Friend think that we should ultimately move to unitary authorities across the country and get rid of the two-tier system? That would allow elected mayor systems to develop in the various unitary authorities.
Martin Vickers: That is my personal preference. I accept the fact that there are geographical difficulties in large counties, in the sense that individuals find it more difficult to become local personalities when parts of the county could be 70 or 80 miles apart. For example, within Lincolnshire county council, the distance from Gainsborough in the north to Spalding in the south is about 60 or 70 miles. I can understand the difficulties, although far be it for me to suggest that Lincolnshire should be broken up into unitaries. That debate is for another day.
As politicians, we are here to articulate the concerns of our local communities. In recent years, there has been much talk of new politics. In the same way as beauty is in the eye of the beholder, "new" can mean whatever an individual chooses it to mean. However, we can transform politics by introducing more direct elections. As my hon. Friend said, there will be personality contests-he mentioned the Boris versus Ken show, which transfixed the nation-and whether we like it or not, personalities have always played a major role in politics. Leadership, in part, results from the individual personality of the person concerned.
I welcome the fact that moves are being made to introduce elected mayors into our big cities; but, like my hon. Friend, I would like to know why it is only happening in those places. In Lincolnshire-in the provincial towns of Cleethorpes, Grimsby and so on-we think that the big cities get more than their fair share as it is. We would like another advocate for our communities, and perhaps elected mayors in provincial areas, working in tandem with Members of Parliament, would be more of a thorn in the side of Governments, of whatever complexion, and we hope that that would be beneficial to local communities.
Much is made of the potential downsides of having elected mayors, such as the possibility that extremists would be elected, but why do we assume that the electorate would vote for extremists? The British people, on the whole, are moderate in their political views, and there is no real evidence that extremists would be elected. If they were, they would soon be found out and lose favour with the electorate. With regard to claims that individuals could be corrupt, I am sure that sufficient reserve powers could be included in any Bill to take care of that.
We have an opportunity to give our politics back to the people by having more direct elections. We need to break down the barriers. As both Members who have spoken in the debate acknowledged, there is an inertia in local authorities, and most councillors are particularly opposed to the concept of elected mayors because that would break down the rather cosy current arrangements. From the general public's point of view, that is exactly what should happen; we need to break down those cosy
arrangements and bring in people who truly represent their communities. We need more individuals to be elected as party candidates through open primaries, bringing more people into the electorate's choice. We need to reduce dramatically the threshold for initiating a referendum. Councils should still have the opportunity to initiate a referendum, but we need to make it much easier for the population at large to kick-start that process.
There is a fair amount of unanimity in the debate, and I agree that the present arrangements for scrutiny within councils have not worked. That is understandable, as back-bench councillors, under the present cabinet arrangements, really have only one opportunity to speak on behalf of their constituents, so they use meetings that should be for scrutinising the executive to bring up, for example, why the bus stop in the high street has been moved. I do not blame them for that, as I have done it myself. The proposal for directly elected mayors is an opportunity to transform local government, and I hope that the Minister will offer my hon. Friend and I some encouraging words.
3.2 pm
Chris Williamson (Derby North) (Lab): I, too, congratulate the hon. Member for Carlisle (John Stevenson) on securing the debate, which has been interesting, although sparsely attended, and I have enjoyed the contributions immensely. He summarised effectively the background to the present situation and the previous Government's proposals on executive mayors, as set out in the Local Government Act 2000 and the Local Government and Public Involvement in Health Act 2007. I agree with his comments on an enhanced role for councillors. Perhaps I should declare an interest, as I am still an elected member of Derby city council, which is a unitary authority. Having been a councillor for nearly 20 years, I absolutely believe that it is fundamentally important that we enhance the role of local councillors. I am not sure about his support for personality politics, which occasionally creeps into our political system. I think that politics should be more about values and what we stand for when we run for political parties or as independents, rather than the cult of personality.
John Stevenson: I take the hon. Gentleman's point, but does not he agree that personality politics has already entered our political system as a result of the televised leadership debates that were introduced in the run-up to the general election? The personalities of the leaders dominated the headlines for days.
Chris Williamson: Indeed, I do agree, but in a way that supports my point, because to some extent that obscured the policies and values that the political parties represented. It was more about the individuals who were speaking in those television debates. To some extent that is regrettable, but perhaps it was inevitable, now that the genie is out of the bottle.
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