[Mr James Gray in the Chair] — First-time Buyers

Motion made, and Question proposed, That the sitting be now adjourned.—(Mr Newmark.)

9:30 am
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Steve Brine (Winchester, Conservative)

It is a pleasure to serve under your chairmanship, Mr Gray; this is the first time that I have done so in a leading role.

I am pleased to have secured the debate, which covers an issue that is important to me and certainly to the people I represent in Winchester and Chandler’s Ford, as well as to people across the country. I am pleased that so many of my colleagues have turned out this morning. I suspect that the postbags of many right hon. and hon. Members suggest that the topic is important to their constituents, too. The issue is about the strivers in our constituencies. I am not sure where that term came from, but it seems increasingly to be a feature of the political spectrum.

It is frequently asserted that we are a nation of home owners, as well as a nation of shopkeepers. Home owning, or striving to own one’s house, makes financial sense. It brings independence and is a source of great pride for many. It was Anthony Eden who first set out the noble vision of a nationwide property-owning democracy, and for much of the 20th century home ownership levels steadily increased. That was a good thing. There has been a striking increase in recent years in the number of people, particularly in the younger generation, opting to rent instead of buying, as property prices have shot up, deposit requirements have rocketed, and the economic outlook has remained uncertain. People’s aspiration, however, one day to own a property of their own remains as strong as ever.

I had an acute reminder of that yesterday, when I was proud to cut the ribbon in the Dell—not that Dell—the old Dell in Willis Waye in Kings Worthy. There are 29 brand new homes, which have been built by Homes and Community Agency partner Radian Housing, with a nice mix of shared ownership and rental, constructed to the highest standard possible, using local architects. I was fortunate enough to meet some residents yesterday, and they do not see home ownership as an unnecessary burden; they are proud as Punch to live in the Dell. I am proud that we have a positive Conservative city council in Winchester, with a forward-thinking portfolio holder in Councillor Tony Coates, and people such as my colleague Councillor Ian Tate on the planning development control committee; they have a passion to help the people we represent to realise their aspiration to own their homes.

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Marcus Jones (Nuneaton, Conservative)

I congratulate my hon. Friend on securing this important debate. Opportunity for first-time buyers is extremely important to all Members, from all constituencies, so is my hon.

Friend a little surprised, if not concerned, at the lack of Opposition Members here to support the debate, which affects their constituents?

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Steve Brine (Winchester, Conservative)

Yes. My hon. Friend tempts me. The turnout in debates in the House and Westminster Hall is a matter of fact and public record, not my judgment; that is for others. However, I thank my hon. Friend for pointing that out.

I mentioned aspiration and I shall say the word again—as, I am sure, will many of my hon. Friends. That is the starting point for me. The Government should exist to help people to realise their aspirations: not through a handout—although, yes, sometimes—but often through a hand up. The debate is unapologetically, for me, about our values. Politicians do not talk enough these days about what they believe in. It is as if ideology has become a bad word, and it is suddenly a crime to say what drives us. Of course policy-making and implementation is about the head, but it must also be in equal measure about the heart. Why do we want to be in this place? Why did my party, and many hon. Members who fought seats for longer than I did to get here, work so hard to return our party to government and run the country, if not to pursue our mission? Part of that mission and why I wanted to come here was to help people to own their home. I do not accept that that is somehow to let people aim higher than they should be allowed to by the state. I know that Conservative Members utterly reject that.

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Mark Williams (Ceredigion, Liberal Democrat)

I congratulate the hon. Gentleman on securing the debate. Does he also accept that the question goes deeper than simply owning a house? The ramifications of denying first-time buyers the opportunity to buy property affect the community as a whole. Where I come from in west Wales the issue is that young people are moving away from our communities; they cannot educate their children in local schools, and there are other community aspects.

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Steve Brine (Winchester, Conservative)

Absolutely. We have often debated the future of sub-post offices, pubs and primary schools where falling rolls lead to changes and school reconfiguration. There is a need for new people to enter communities, to regenerate them. I ask hon. Members who are home owners to remember when they first walked into the first house they owned, and the excitement of that. We may remember how exciting it was as a child to play house; but that was playing house for real. I remember how exciting it was, and I want other people to experience that excitement. That is what the debate is about, which brings me back again to that word “values”.

I want to outline the scale of the current challenges to the UK housing market, and the difficulties that young families and first-time buyers experience in taking their first tentative step on to the property ladder. It is a daunting challenge. Since 2008 the number of first-time buyers has declined from a long-term average of about 500,000 a year to just 200,000. One of the key factors accounting for that is, of course, the astonishing rise in

average house prices relative to earnings in the past 20 years —even taking into account the slight decline in prices in more recent years. I emphasise the word “slightly” because the situation in the part of the world I represent may be different from that in some other constituencies.

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Andrew Bingham (High Peak, Conservative)

I congratulate my hon. Friend on obtaining this debate on an important issue that affects so many of our constituents. I am not an expert on house prices in his area, but High Peak is a particularly beautiful rural area, and consequently house prices are disproportionately high, so it is even harder for first-time buyers to get on the ladder.

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Steve Brine (Winchester, Conservative)

I thank my hon. Friend, who argues passionately for rural housing in his constituency. The changes that the coalition Government are bringing in—the neighbourhood plans that will be part of the localism agenda, which will work with the council’s local plan—are critical in achieving local buy-in to add stock sensitively and to increase supply in rural areas. That is not to impose, but to enable local planning, through the neighbourhood plan process, to increase supply, so that local people who have grown up in villages can afford to stay in them. That is critical. The new rules that the Government are bringing in, on local allocation, mean that we can make local homes for local people a reality. I know that my hon. Friend will press for that on behalf of the people he represents.

We know from figures from the Department for Communities and Local Government that between 2000 and 2007 the average UK house price more than doubled, from 106,000 to 214,000. For many first-time buyers, particularly those unable to access finance from the bank of mum and dad—a term that I suspect we shall return to over the next 90 minutes—those high prices have either delayed or ended hopes of owning bricks and mortar. In Winchester, the mean house price in the third quarter of 2011 was 368,500, whereas the mean price for England in the same period was just 245,000. The problem is particularly acute in my constituency.

It is a widely accepted fact of economic reality that house prices are high partly because housing is in relatively short supply in this country. As for the future, I know, having listened to Communities and Local Government questions on Monday, that the Government do not like to make forecasts of house building; but they must surely look carefully at what has happened in the past. In 2007 there were 178,000 housing starts, but by 2009—the last full year of the previous Government—that figure had crashed to just over 78,000. In 2011, the first full year of the coalition Government, it had risen to just over 98,000—a rise of 25%—but we are still clearly well short of where we want and need to be. Building more new, affordable homes should clearly be a priority. I hope, for all our sakes, that the new incentive-led, plan-led approach combined with policies such as the new homes bonus and genuine local buy-in through neighbourhood plans will make a significant difference.

As I have said many times in my constituency and in the Chamber, the stick approach to increasing supply has failed. Under the previous Government, house building fell to its lowest level since the 1920s. My aspiration for the new system of localism is simple: local authorities

will step up to the plate and stop looking to London for their orders and work with local communities to deliver the homes that their area needs.

When I talk to people in my constituency—I am sure that Members from across the House will recognise this point—it is clear that they recognise the facts; they understand that we need to build new homes because they know that the people who are looking for those homes and who are locked out of the system are their children and their grandchildren. My children are aged four and one so they are obviously a long way from owning their own home. None the less, that is what I want for them one day—actually at 5 o’clock this morning, I felt that it would be a good idea right now. I want them to be able to stay near mum and dad, perhaps not too near, but relatively near.

People in Winchester do not want housing estates forced on them that are so big that they can be spotted from the lunar surface, and that are without the support services a community needs when it accepts 200 or even 2,000 new homes. They want to be involved. When we involve people, we find that they take the right decision for their community. That is what localism is about; nothing more and nothing less.

I welcome the coalition’s plan to release public sector land with the capacity for up to 100,000 new homes, and the 400 million that the Treasury has put into the get Britain building fund to support firms in need of development finance. I look forward to hearing more from the Minister about her aspirations in that respect.

Although the housing shortage and high prices have conspired against first-time buyers, undoubtedly the biggest obstacle is the size of the deposit that is required before a mortgage can even be considered. The Council of Mortgage Lenders has estimated that the average deposit for a first-time buyer now stands at more than 26,000. That represents 79% of the average annual income from which the mortgage is paid.

A constituent wrote to me last month:

“All the mortgage providers we have spoken to have offered 5% deposit mortgages but these come with massive consequences, such as interest rates which would make monthly payments the same as one of our monthly salaries, or a family member/friend who would invest 35,000 for three years to stand behind the loan. I don’t know about you, but we don’t know anyone who could spare 35,000 that they wouldn’t touch for 3 years, do you, Steve?”

No, Steve doesn’t, and that is the problem; I wish I did.

As the credit crunch took hold in 2007, liquidity dried up and more restrictive lending levels took hold. Thus, even though house prices have started to fall slightly in recent years in some areas, challenging funding criteria have meant that ever larger deposits are required, making the dream of home ownership for many first-time buyers nothing more than a remote fantasy. Add to that the rising costs of living and job uncertainty, and the picture can appear bleak for aspiring home owners.

In preparing my remarks for this morning’s debate, I asked myself whether we had a Government who were prepared to wash their hands of these young people. Do we have a Government who prefer to walk on by, on the other side of the street, and consign a generation of young people to a life living with mum and dad, which can have benefits; sofa-surfing, which does not have benefits; renting in the social or private sector, which works for many; or even, in extreme cases, homelessness?

If I thought for one moment that this Government took that view and wanted to turn their back on young people, I would be their fiercest critic and we would be having a very different debate today. Yes, there are limits to what Government can do, especially with a national debt the size that we have, but there are a number of actions that can be taken to boost Britain’s housing market and to assist first-time buyers in getting a foothold on the first rung of the property ladder.

The most important step the Government have taken to support greater home ownership is their commitment to ensuring that interest rates are kept as low as possible for as long as possible. They are getting to work on tackling the national structural deficit. It is a factor that is easily overlooked, but without a credible plan to put the public finances on a stable footing, the inevitable higher interest rates that would result would also lead to higher monthly mortgage payments and increased repossessions. That key point should never be understated.

As well as maintaining the conditions necessary to secure a low interest base rate, the Government have also introduced a range of initiatives designed to support prospective first-time buyers to own their own home. With the sort of timing that I could not have planned for—for the record I did not—two key announcements were made this week. The NewBuy guarantee scheme tackles the deposit problem head on, and I am pleased to see that it is led by the Home Builders Federation and the Council of Mortgage Lenders.

At the launch this week, the executive chairman of the Home Builders Federation said:

“NewBuy will help thousands of people to meet their aspirations to buy a new home, freeing up the housing market and helping first-time buyers and those unable to take the next step on the ladder.”

Paul Smee, the director general of the Council of Mortgage Lenders said:

“These mortgages will help creditworthy borrowers. It is good news for home-buyers and potentially good news for jobs and the wider economy too.”

Mortgage applicants are typically required to give a deposit of between 15% and 20% at the moment, whereas NewBuy makes it possible for first-time buyers and existing home owners to get a mortgage on a new-build property with only a 5% deposit, without all the strings that my constituent told me about earlier. That new deal means that instead of having to save a deposit of between 30,000 and 40,000, first-time buyers will now need only 10,000. The scheme indemnifies lenders against a limited amount of any future losses, opening up mortgage lending and stimulating demand for newly built houses and flats.

Only new homes built by house builders signed up to the scheme will qualify, but I am told that most of the major and many of the smaller builders are in the process of registering. Yesterday, I was encouraging Radian Housing to be part of the scheme, and it told me that it already was, which was excellent news.

Under the scheme, individual home builders will partner up with one or more mortgage lenders who will offer loans of between 90% and 95% on their properties. Let me stress that NewBuy has nothing to do with sub-prime lending, when mortgages were given to people who could not afford the repayments. Mortgages of 95% operated perfectly well in this country for many

decades, and the criteria for lending are now much stricter. Nobody will get a mortgage who is not able to pay for it.

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Stephen Lloyd (Eastbourne, Liberal Democrat)

My hon. Friend is making an important point because there have been one or two concerns about that issue. Will he confirm that the Financial Services Authority will be watching this extremely closely? The scheme has been through a rigorous regulatory route, and there should be no concerns about comparisons with some of the sub-prime activity.

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Steve Brine (Winchester, Conservative)

Yes, the FSA is monitoring the situation very carefully. There are some new lenders coming on to the market who are keen to step up to the plate, and the FSA is treating them with all the due care and diligence that we would expect. I know that as chair of the all-party parliamentary group on Citizens Advice, my hon. Friend takes a great interest in the matter, and I thank him for coming along this morning.

Nobody will get a mortgage who is not able to pay for it, not only at today’s low interest rates but at interest rates that will possibly rise at some future point. NewBuy is most welcome.

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Sam Gyimah (East Surrey, Conservative)

I thank my hon. Friend for organising this debate. While we are on the sub-prime crisis, is it not the case that we need to ensure that we do not have a situation in which people are borrowing 120% of their salary, which they clearly cannot afford, or self-certifying their earnings? Those aspects of mortgage lending led to the sub-prime crisis. Here, the focus must be on affordability first.

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Steve Brine (Winchester, Conservative)

Absolutely. Affordability is the key word. One of the key lessons that must be learned from what happened in 2007 is that affordability must be at the heart of mortgage lending. That is why I am so pleased that the Council of Mortgage Lenders is backing this scheme. Obviously, through its lenders, responsible lending will be the watchword, but affordability is critical.

NewBuy is most welcome. I have taken great care to inform many of my constituents about it already and I understand that the website NewBuy.org.uk has, unsurprisingly, been very busy in its first 48 hours. Although I welcome it, I will just make this point to the Minister. Many first-time buyers will welcome any home, and a new build ticks many boxes, but I urge her to work with colleagues at the Treasury and in the Department for Communities and Local Government to explore ways in which we can extend NewBuy to not-so-new-buys because not all mature properties are thatched cottages worth a couple of million pounds, and sometimes first-time buyers do not want to choose a new build. There is much housing stock out there that could come on to the market, especially as we change the rules on assured tenancies.

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Mark Williams (Ceredigion, Liberal Democrat)

Does the hon. Gentleman welcome the initiatives taken by some local authorities to develop their own local authority mortgage schemes? My local authority, Ceredigion, is pursuing that, and it is also being pursued in Conwy—I say that to add a slightly Welsh dimension to this debate.

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Steve Brine (Winchester, Conservative)

I see absolutely no reason why such initiatives should not be developed; I suggest that they are a key part of localism. Perhaps I will rather unfairly pass the hon. Gentleman’s question on to the Minister,

because I see no reason why a responsible local authority setting up an accredited scheme such as that could not be part of the NewBuy scheme. I thank the hon. Gentleman very much for making that point.

I turn to right to buy, which, as we know, has been relaunched this week, with all the passion and enthusiasm of its creator, the former Member for Finchley. To this day, I meet people every time that I knock on doors on the big estates of Winchester who were given the chance to join the property-owning democracy by that lady and her policy when it was introduced the first time around. I am extremely proud that my party made that possible. The subject even comes up in conversation from time to time—started and prompted by me. I am extremely proud of that policy and we should never stop saying that we are proud of it.

I am delighted that the Government are ploughing ahead with their task of reinvigorating the right-to-buy scheme, by raising the maximum discount available from the current limit of between 16,000 and 38,000 to 75,000. Every home that is sold under the scheme will be replaced by an affordable home for rent. I am sure that the Minister will want to elaborate on the fine details, but I can report to her good news from the Queen’s own land of Winchester, where the Conservative-led Winchester city council has recently confirmed plans to build the first new council homes in the district since the 1980s. Those plans have been met with great excitement by local people. With 4,500 people on the city council’s waiting list, the plans are great news and, as the city’s MP, I could not welcome them more. I pay great tribute to the work that the Treasury has done with the Department for Communities and Local Government. I believe that it is a 19 billion deal to allow authorities such as Winchester to get themselves out of the housing revenue account—the so-called “tax on tenants”. That deal is making the new policy possible.

We often hear that the Government are taking us back to the 1980s and dare I say that that is not said in favourable terms by some Members? As a child of that decade, I can see no problem with a return to music that people can really dance to. Seriously, however, if that kind of time travel gives us back the right to buy, as well as new council homes in Winchester and across this country, I say, “Bring it on.”

Let me refer again to the new homes bonus, whereby local authorities will be financially rewarded for delivering new housing, with matched funding based on new council tax receipts. For the first time, a premium for affordable homes will be included and the next sets of allocations have already been announced. Winchester is due to receive more than 1 million in allocated funding, which I am sure will be welcomed by city councillors of all colours. May they use it wisely and to maximum effect; that would be my message to them from Westminster Hall today.

I would like to probe the Minister a little on one issue in particular before I close. In 10 days’ time, the stamp duty holiday for first-time buyers will end, which means that any first-time buyer who buys a home worth between 125,000 and 250,000 must pay the 1% stamp duty tax. Evidence given to me—I must say that it is from Charters estate agents in Winchester—suggests that first-time buyers are moving quickly to avoid the tax.

The head of mortgages at HSBC has reported that HSBC has seen a 20% increase in approvals for first-time buyer loans in the first six weeks of the year, as first-time buyers rush to take advantage of the stamp duty holiday.

I mentioned Radian Housing earlier. It operates the HomesinHants website and it told me yesterday that that website was receiving some 78,000 hits per day in January and February of this year compared with just 67,000 hits per day in the same two months of last year. It also says that many of the inquiries that it has received are from first-time buyers, who have been encouraged to get a move on by the stamp duty holiday.

I realise that there is a view in Government that this stamp duty holiday has not been a huge success everywhere, but I ask the Minister in her reply to the debate to expand on that issue some more. It seems logical to me, and constituents have reported as much to me as their local MP, that in some areas and in some markets, this holiday can provide a nudge to the market and free up cash for those who take the plunge to spend that extra money elsewhere in the economy. In saying that, I appreciate that the Winchester housing market is different from some other areas of the country, to put it mildly. Nevertheless, I look forward to hearing the Minister’s response.

I will make one final point that seems odd to raise in a debate about Government help for first-time buyers—about interest-free loans to help employees with the cost of a rail season ticket. To say the least, the amount available has not kept pace with fare rises on the service from Winchester and Southampton to Waterloo, for instance, and for many of my constituents this outgoing is now one of the largest that they face each month. I believe that the Government need to look urgently at the interest-free loan figure; I have tabled questions to that effect. I would welcome the Minister’s comments on that, which will probably come in writing after the debate.

In conclusion, giving people the chance to own their own home is one of the best things that a Government can do for their people. My parents’ generation saw owning a home as a rite of passage but it is more complicated than that these days, for many of the reasons that I have outlined this morning. In my opinion, young people have every right to believe that, if they work hard, do the right thing and save, they have a Government on their side and they can get on the property ladder. I welcome the steps that the Government are taking to reinforce and, yes, to lower the bottom rung of that ladder. I look forward to hearing from my hon. Friends in the debate ahead and, of course, to the Minister’s reply in due course.

9:55 am
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Iain Stewart (Milton Keynes South, Conservative)

It is always a pleasure to serve under your chairmanship, Mr Gray. I congratulate my hon. Friend Steve Brine on securing this important debate, and I am very happy to echo all the views that he has ably expressed this morning.

I will make a few comments in particular about the Government’s Firstbuy and NewBuy schemes, as they are of special importance to my Milton Keynes constituency and, indeed, to the whole of Milton Keynes. For Members who do not know, Milton Keynes is a new town that is

still very much growing; we have not yet reached our desired size. Indeed, we may become a new city in the fullness of time. We are awaiting the announcement of the diamond jubilee city with bated breath.

As I say, Milton Keynes is continuing to grow rapidly. We have more than 20,000 housing permissions already in place, and that is before we look at potential additional expansion areas. Figures from the National House Building Council show that monthly new starts in Milton Keynes run at a rate that is three to four times the national average. Despite the fact that there is certainly a good supply of new housing stock in Milton Keynes, there are still difficulties for people who want to get on to the housing ladder. As well as growing in housing numbers, the town’s economy continues to grow, so there is substantial inward migration to Milton Keynes, which of course puts additional pressure on the housing stock. For example, the new Network Rail national centre will open in Milton Keynes later this year. That is generating 3,000 jobs, about 1,000 of which will be generated locally, but about 2,000 people will come in from elsewhere in the country. That pushes up the demand for housing.

Also, there are issues from a demographic perspective. The first main expansion of Milton Keynes took place in the 1970s and 1980s, when, by and large, young families came to settle in the town. Now the children of those families are at an age when they want to get on to the housing ladder. So these two measures—the Firstbuy scheme and the NewBuy scheme—will have particular resonance in Milton Keynes, as they will help people on to the first rung of the housing ladder.

My hon. Friend the Member for Winchester referred to the Council of Mortgage Lenders, which has published a statistic that is very relevant to this debate: 85% of people aspire to own their own home. It is engrained into our national psyche that owning a home is desirable and, indeed, the right thing to do. Owning a home gives us a sense of stability and community. So it is absolutely right that the Government are taking all these steps to make owning a home as easy as possible, without—as my hon. Friend said—getting into the dangerous territory of unaffordable mortgages, which helped us to get into the financial mess that we are in. As I say, I will not repeat the very sound points that he made; I will just echo them.

I will also make some additional points about how these policies tie in to our localism agenda and our wish to develop sustainable communities. There has been a trend whereby we have had new housing developments, particularly flats, and a large percentage of the new properties have been bought up by people making buy-to-let investments. There is absolutely nothing wrong with that—it is a perfectly valid investment option—and there is absolutely nothing wrong with the private rented sector, which fulfils an invaluable role in the mix of housing stock that we have in our country. However, I have certainly noticed in Milton Keynes—it may be prevalent elsewhere, too—that so many of the properties, particularly the flats, in those new build estates are buy-to-let investments that there is a huge turnover of occupants. That makes it more difficult for a new community to build a sense of well-being and for the roots of community to be established. That is not impossible, but it is more difficult when there is a constant turnover of tenants. It is a question of balance.

I should like policies to assist a greater proportion of new estates, particularly new flats, to be owner-occupied, so that the bonds of community can more easily develop. That is a feature that characterised Milton Keynes when it first grew. It is often falsely characterised as a soulless place with identikit housing estates. The reality is different. There is a rich sense of community, generated by the people who came to the new areas of Milton Keynes at the outset and who wanted to build a new place together. Although the housing stock was new— 20 years before, the area was just open fields—a rich community quickly developed.

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Julian Sturdy (York Outer, Conservative)

My hon. Friend is absolutely right about the bonds of community. Does he agree that encouraging first-time buyers with the policies that the Government are proposing will have huge and positive knock-on effects down the line? He has talked about bonds within the community, but the policies would also free up more private and social rented accommodation, and that would have a real impact on homelessness, which is rising in North Yorkshire at the moment. Such policies would feed down the line and have positive knock-on effects across the board.

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Iain Stewart (Milton Keynes South, Conservative)

My hon. Friend makes a powerful point. I will be making a few additional points about how the policy will interact with the social housing sector. I congratulate my hon. Friend on making that point.

On localism and building sustainable communities, we need to get away from simply building new flats as the primary housing stock, which was a feature of the old top-down system. Local authorities were given targets for new houses, and the easiest way to fulfil the target was to build blocks of flats. There is absolutely nothing wrong with flats; they have their place. I live in a flat in my constituency—there is nothing wrong with it—but the situation has got out of proportion.

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Graham Evans (Weaver Vale, Conservative)

Does my hon. Friend agree that when local authorities give planning permission for such developments, the future of a community that involves children should be considered? We need appropriately sized houses for families. First-time house buyers will presumably get married and start families. Once people start families, we get community cohesion with schools, pre-schools and play schools and so on. That really does create a family community on new housing estates.

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Iain Stewart (Milton Keynes South, Conservative)

My hon. Friend makes an excellent point. The new neighbourhood plans in the Localism Act 2011 will help enormously. Having a proper mix of housing stock in an area will build up a sense of community.

My last point concerns how we can develop policies in future. I absolutely agree with the scope and direction of the two policies I have mentioned and the right to buy. As my hon. Friend the Member for York Outer mentioned, there is a link with the social housing sector. Even with additional help, taking out a full mortgage will still be beyond the means of some people. My wish is to see a much more flexible transition from social housing to owner-occupancy. We have had the shared-ownership scheme for some time, which has been successful up to a point, but it is a little limited in its scope. As we

move forward, I want a scheme—this is a long-term plan over 20 or 30 years—whereby it will be easier for people who cannot afford a full mortgage at a particular point in their life but might be able to afford, say, a quarter of the equity of the house to take that. I want a flexible scheme so that as people’s circumstances change, they might be able to build up more and more of the equity to reach full owner-occupancy later on. There are many suggestions about how we get there. I just want to put that on the table for the Government to consider and to build on what has been an excellent set of policies to help young people on to the ladder.

I will conclude my remarks now; I know that others wish to contribute. Once again, I congratulate my hon. Friend the Member for Winchester on securing this excellent debate.

10:05 am
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Sheryll Murray (South East Cornwall, Conservative)

I, too, congratulate my hon. Friend Steve Brine on securing this debate today. Buying a property for the first time is a huge undertaking for anybody, but doing so has become increasingly difficult, as we have heard, in the current economic climate. This issue affects my constituents in South East Cornwall. We have heard that it also affects the constituents of many hon. Members.

First-time buyer numbers have tumbled to levels not seen since 1974, with only 200,000 recorded first-time buyers in 2011, compared with 400,000 in 2005. People trying to get on the property ladder are struggling to do so, owing to the increase in house prices. The average UK property price increased from 163,000 to just below 165,000 in 2011. This correlates with the rising price of deposits, with many people needing to save for years to cover the cost.

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Caroline Nokes (Romsey and Southampton North, Conservative)

Does my hon. Friend agree that we should be worried about not only the falling number of first-time buyers, but the age of those first-time buyers? That is evidenced by the increase in deposits required. People have to get to a much greater age before they manage to save up the deposit.

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Sheryll Murray (South East Cornwall, Conservative)

I was going to come to that point a little later. In fact, my hon. Friend is probably psychic. This is not purely an issue that affects young people; the average age of first-time buyers is 35.

The major issue is the fact that house prices are continually rising. Prices on the Nationwide index rose by 0.6% in February, and prices were 0.9% higher in February compared with a year ago. The house price to borrower’s income ratio has been gradually rising since 2007, making it harder predominantly for first-time buyers. Another issue is that the number of mortgage approvals has remained generally flat since early 2010, at below half pre-recession levels. Housing starts have increased since the recession, but still remain below pre-recession levels. The Government have recognised this issue. They have pledged to alleviate the struggle for first-time buyers, and I congratulate the Government on that.

In November, the Conservative-led Government launched a scheme to underwrite mortgages worth hundreds of millions of pounds for new homes. A central part of the new housing strategy is the 400 million get Britain building fund, which pays for the construction of up to 16,000 new homes. The fresh drive could result in a further 100,000 homes being built, so creating 200,000 jobs.

I also congratulate the Government on the two new initiatives that were launched this week, which will be crucial to aid first-time buyers. The NewBuy scheme makes it possible for first-time buyers and existing home owners to get a mortgage on a new build property with only a 5% deposit, as opposed to the 15% or 20% that we are used to. This deal means that where buyers have been typically required to save a deposit of between 30,000 and 40,000, they will now need only 10,000. The other scheme—it has been mentioned by previous speakers—is the right-to-buy scheme, which will enable council tenants to buy their homes at a discount and increases the maximum discount cap for tenants to 75,000. That will provide tenants who have the right to buy or preserved right to buy with a real incentive to buy their home, and that is no bad thing.

The schemes will make a big difference to the lives of constituents such as mine in South East Cornwall, where things are particularly hard for first-time buyers. Cornwall is a popular tourist destination, which attracts more than 5 million visitors each year. That has artificially raised house prices in my constituency, as it has become attractive to affluent people from all over the country buying homes or second homes. The average house price in Cornwall is 216,000, according to the Land Registry for England and Wales. That does not seem too high, but compared with the annual average wage in my constituency, it is very expensive. Average annual earnings in Cornwall are just under 21,000, well below the averages for the south-west and for Britain. That makes it hard for first-time buyers to come up with a deposit for a house or flat, as they are competing with wealthier holidaymakers who can afford properties in South East Cornwall. That is where the NewBuy scheme will have a positive impact.

The story was different 20 years ago. When I moved to my village from Stoke-on-Trent, I could buy a property that needed renovating. Although even then there was a massive difference in property prices, I had the opportunity to buy my own home. Sadly, young people in South East Cornwall do not have that option, as the older properties have already been sold and renovated. The situation is different from when I purchased a property in the 1980s.

As a Government, we are doing what we can to help first-time buyers. I am confident that the figures will become more encouraging after the Government’s introduction of these fantastic incentives.

10:11 am
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Paul Maynard (Blackpool North and Cleveleys, Conservative)

It is a pleasure to serve under your chairmanship, Mr Gray. I congratulate my hon. Friend Steve Brine on securing the debate. The subject is important in a week when the Prime Minister has made two significant announcements. At a time when the Liberal Democrats are taking policies in

my manifesto and planting a nice yellow flag on them as though they had always owned them, I want to ensure that we claim both those policies as having been born, brought to fruition, made aware and brought to life in the Conservative party, with a big blue sticker on them.

I am proud of what this party has done for first-time buyers, not just since I have been an MP but since I was born, and even since the party was founded. We have always been the party of the first-time buyer. I make no apology for that, and I am proud of it. I know that our critics—sadly, they could not arrive today—normally say that we are opposed to social housing and that we look down on it. Far from it; as my hon. Friend Iain Stewart pointed out, we see the importance of the tenancy escalator. We see social housing as a springboard or trampoline, not quicksand from which one should never escape.

There is a reason why that is in our party’s DNA: we are real people with lived experiences. In my family, on my mother’s side, I had relatives living in Myrtle Gardens, a modernist estate in the heart of Liverpool. It was rather like the Karl Marx-Hof in Vienna but, in that part of Liverpool, possibly more left-wing. In the 1930s, it was a model of its time, but by the 1980s and the Toxteth riots, it was a shadow of its former self. What happened? Along came Lord Heseltine, who made sure that Myrtle Gardens was rebuilt and sold off to local people at prices that they could afford, which turned that estate around. In the heart of Liverpool, the Conservative DNA flickered, and we should be proud of that as well.

Council estates should be more than just assemblages of houses where we put people for social engineering purposes, as many on the left have always sought to do. My home village of Weaverham, where many people bought their houses in the 1980s, was two-thirds council estates, mostly for people working in the local Imperial Chemical Industries plant. Looking around, I found that they built a community from within the houses that they bought; they did not rely on someone else to do it for them.

It is clear that after 13 years of Labour rule, the challenges that we face are far different. As other speakers have pointed out, numbers of first-time buyers are falling sharply, from 50% of all house buyers in May 2009 to only 20% now. My hon. Friend Sheryll Murray cited the age of the average first-time buyer as 35. I heard 37. Maybe we will hear an upwards bid from the Labour spokesman, although I doubt it. That is Labour’s legacy.

Perhaps the most shocking legacy that we inherited was 50,000 statutorily homeless people. We do not mention that figure often enough, as my hon. Friend Julian Sturdy pointed out. Because the social housing market did not work as it should, we inherited 50,000 people trapped in temporary, substandard accommodation. That is not a legacy of which the Labour party should be proud for one second.

It is no wonder that groups such as Priced Out exist to campaign for people of my generation—20 to 35-year-olds—who are being priced out of the housing market, unable to afford a first house. I was fortunate. I bought in the last housing development in Greater London where prices were still under 100,000. I got in just in

time. Another year or two and I would have been the sort of sofa surfer that my hon. Friend the Member for Winchester discussed.

Why should my generation be denied opportunities that previous generations had? We should enable people, not tell them how to live their lives. It is a cultural battle as much as a political or economic one, because it is about the belief that housing policy is somehow about social engineering. It most certainly is not. It is about enabling people to choose how to live their lives. Home ownership is a natural objective for 86% of people, according to the Department for Communities and Local Government. We should not sneer at that or think that it prevents our wider dreams of creating a new Jerusalem. Far from it. True communities come from families having a stake in the society in which they live. That is the nub in terms of policy.

When those on the left criticise our NewBuy policy, I want to take them to Westminster Gardens in Bispham or Hawley Gardens in Thornton in my constituency. The criticism is that we are doing it just for the sake of the house builders. I want to take them around those new estates. Westminster Gardens was being built five years ago, when I was first elected to fight the seat. It is still being built; it is what is called a stalled development. Those who think that we are just trying to benefit house builders should speak to the residents of that estate and find out what is actually going on there.

A stalled development means that the local council will not adopt the roads, so they are left with substandard paving and road quality. They are left with dangers to small children from building sites and higher numbers of road traffic accidents and injuries. Merely to say, “Oh, you’re just doing it for the sake of the house builders” shows once again the failure of the left to engage with people’s lives as they are lived. Once again, it is only seeing the schematics, which is deeply unfair to the people investing in those estates who want them to be completed.

More concerning still is how our social housing market is blocked up, as my hon. Friend the Member for York Outer said. Many social tenants now are not moving through the system. That is why large numbers are stuck in temporary accommodation: there is not sufficient turnover. Labour has almost destroyed the right to buy by tweaking criteria, lowering thresholds and trying to prevent people from buying their council homes. I am sure that Labour Members pay lip service to the concept, but they do not believe in their hearts that owning one’s own home is a good thing. They look on it with suspicion, distaste and almost distrust, which angers me.

I could easily do cheap politics—

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Owen Smith (Pontypridd, Labour)

You have been for the past half hour.

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Paul Maynard (Blackpool North and Cleveleys, Conservative)

I am sure that the hon. Gentleman will get a chance to have a go at me later, and I look forward to hearing it, but since he encourages me, I will talk about union leaders occupying social housing and the fact that here in the royal borough of Westminster, there are 2,000 social tenants who earn more than I do as a Member of Parliament. Perhaps that should give us pause for thought. Perhaps we should reconsider how we use social housing and what it is for. I do not think that it is there to give Bob Crow a pleasant place for life.

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Paul Maynard (Blackpool North and Cleveleys, Conservative)

I agree entirely. Perhaps we would like to see a gesture from leader of the National Union of Rail, Maritime and Transport Workers as to what he will do in future.

We need to use our social housing stock better, which is why I welcome the Prime Minister’s announcement on enhancing the right to buy. We have to stop seeing our social housing stock as ghettos that we create. When I first moved to London, into the housing development that I mentioned, as ever, the housing developer built the required proportion of affordable housing at the end of a cul-de-sac; there were two rows of cheaper housing, as it were. It became ghettoised and stigmatised, as is always the case. We need to move beyond that and to think of social housing as a resource for the use of the community, not areas of a town or village that are regarded as somehow less worthy. That has always been my concern about the social engineering aspect of housing policy, which many Labour Members seem to want to create—communities that they can somehow control. That strategy is desperately wrong.

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Owen Smith (Pontypridd, Labour)

I am listening with interest to—perhaps “enjoying” is the wrong word—the hon. Gentleman’s comments. In his tour de force on the history of the left and its attitude to social housing, will he return to Nye Bevan and the great period of the invention of social housing in the aftermath of the second world war, and point to who on the left, in the Labour party, thinks of social housing as just a matter of social engineering?

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James Gray (North Wiltshire, Conservative)

With regard to first-time buyers, of course.

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Paul Maynard (Blackpool North and Cleveleys, Conservative)

I am grateful to Owen Smith for mentioning Nye Bevan, because in the interest of brevity, I had crossed out my paragraph on him. I shall reintroduce it into my speech.

It was well known that what Nye Bevan wanted to do—

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James Gray (North Wiltshire, Conservative)

Order. The hon. Gentleman might like to return to the subject under debate, namely, Government help for first-time buyers. Nye Bevan can wait for some other time.

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Paul Maynard (Blackpool North and Cleveleys, Conservative)

Thank you, Mr Gray. I shall bear that advice in mind.

It is vital that the receipts from the new right-to-buy initiative are reinvested in affordable rented social housing, as I know has been made clear. The key aspect of the issue is the turnover of tenants in social housing. There needs to be an escalator. People may start off in a vulnerable situation needing full tenancies, but they need to be able to move swiftly and quickly on and escalate as high up as they wish. If that leads to home ownership, that is a good thing. However, we need to have fluidity in the social housing market, which we have not had under, I would suggest, any Government. The changes that the Government are announcing this week and those that are contained in last year’s housing Green Paper mark the start of trying to regard our housing stock as an asset for the whole community that is not geographically restricted.

Two of my favourite architects are Alison and Peter Smithson, a married couple who built many modernist buildings—probably many of them in Milton Keynes. Some of their views were bizarre, and they had a vision for housing. While they wanted to see the rubbish chute replace the village pump, somehow they believed that putting us all in high-rise blocks would enhance the bonds of community. As a Conservative—

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James Gray (North Wiltshire, Conservative)

Order. I am sorry, but I fear that the hon. Gentleman is launching into something of a tour de force on the whole of housing policy. We have to focus. Two other hon. Members are trying to catch my eye before I call the Front Benchers. Perhaps he could focus his attention specifically on Government help for first-time buyers and possibly, out of courtesy to the two other hon. Members, wind up his remarks quite soon.

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Paul Maynard (Blackpool North and Cleveleys, Conservative)

Thank you, Mr Gray, for your help. I shall therefore come to an end by quoting one of our predecessors, Mr David Eccles, a Member of Parliament for Chippenham, who said in 1948:

“Men are partly selfish and partly idealist, and they give their best when they believe they have a reasonable chance to put something in their pockets and to realise a fragment of their dreams.”

That is what the Government have been doing and what we need to keep on doing. I shall give way so that the two following Members have their chance.

10:24 am
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Mark Pawsey (Rugby, Conservative)

It gives me great pleasure to follow the passionate remarks of my hon. Friend Paul Maynard. I compliment my hon. Friend Steve Brine on securing the debate. Like him and many other Members present, I am prompted to contribute to it both to represent my constituents and out of concern for the ability of my children’s generation to get on to the housing ladder. I have four children aged between 13 and 26, who will wish to buy their own home and rather sooner, I suspect, than the children of my hon. Friend the Member for Winchester.

The Government can support first-time buyers in two ways: through financial support to enable them to get started, and through support for the development process. We have heard accounts from many hon. Members this morning about why action is needed. There has been some dispute about the average age of first-time buyers—it varies between 33 and 37—but we know for sure that it is much older than it was for my generation and my parents’ generation.

As recently as 2005, 65% of first-time buyers were aged under 30. By 2011, that had fallen to 22%. As a consequence, young people are remaining in rented accommodation for longer, often permanently, against their will. Many remain at home with their parents, as I know from personal experience, and it is leading to a culture change among our younger people. That has happened because, in the first instance, house prices have risen beyond the reach of many people; they are outside the multiple of average earnings—significantly higher than previously. The second issue is about lenders’ deposit requirements, as lenders react to problems caused

in earlier years by the granting of high loan-to-value loans. The differential in my constituency is rather smaller than the problems faced by my hon. Friend Sheryll Murray; in my constituency of Rugby, first-time buyers are looking to find sums of 25,000 as deposits. That is a significant sum for people getting started. It is ironic that the fall in house prices—something that we consider desirable from an affordability perspective—is exactly what has caused lenders to look for larger deposits, as they try to avoid making loans that exceed the value of the properties against which the loans are secured.

It is important to debate the matter because first-time buyers are drivers in the housing market. They enable others at the next stage of life to move on, and the supply of housing is in itself an important driver of economic growth.

Many colleagues have referred to Government initiatives, such as the Firstbuy initiative and the NewBuy guarantee announced only yesterday. There is also local support for first-time buyers provided by local authorities. My council in Rugby is helping first-time buyers. It announced, just a week or so ago, 1 million in its budget for 2012 as part of the local authority mortgage scheme, which will enable 50 first-time buyers in Rugby to make a start on the housing ladder.

I want to focus my remarks on the supply side. We can do whatever we like about supporting demand, but if we do not take action on supply, there will be no point. The Government’s housing strategy told us that in 2009-10, there were 115,000 new build housing completions in England. However, household projections are growing at a rate of 232,000 a year. That means that the housing that we are currently building supplies only 50% of the requirement. The cumulative position is worse, because the Chartered Institute of Housing tells us that there is a backlog of something like 1.9 million houses, or a total of 8% of all households, built up over previous years. Therefore, even if we build at the rate of existing household formation of 232,000 a year, we will not go anywhere near providing the number of houses that we need. Development therefore needs to happen quickly.

The Government can and are doing several things to make that happen. The national planning policy framework, which I understand is due to be announced on Budget day, with its presumption in favour of sustainable development, will encourage more land to be made available. We need our local authorities to be progressive and to develop plans that make land available for housing development, working with neighbourhood plans. People often say that local people do not want new housing, but in my opinion, whether existing communities accept new housing depends on the kind of question they are asked. If we ask them, “Do we want to build houses in an area that does not currently have housing on it?”, most people will say no. However, if we ask people whether they want housing that will enable young people to buy their first-time home and allow retirees to downsize, that usually gets the answer yes.

Neighbourhood planning will enable local people to have their say in achieving that. I am delighted that my authority takes a very positive attitude towards development. Work is about to start on a site with 1,300 new homes—the Gateway site by junction 1 of the M6 —and a site with 6,200 new homes in a sustainable

urban extension is also being developed in my constituency. I urge Members and local councillors to encourage their councils to take as positive an attitude to new housing development as my local authority.

The Government can do other things to improve supply and they are taking action. There is the build now, pay later scheme, which will free up land for development. The Government objective is for that to deliver 100,000 new homes. Cash flow is an issue for builders, and that scheme will enable builders to buy the land out of the proceeds of a sale. The new homes bonus is a simple yet powerful incentive. It means that local authorities, such as mine, which promote and welcome growth will share in the economic benefits of development and use the funds derived from that to provide communities in which people want to live. The community infrastructure levy encourages a more positive attitude from local authorities to development, because it means that the development itself will pay for the infrastructure that goes along with it and that it will not be a burden on the local council.

A further reason why local authorities should support housing growth is that it can support existing town centres. Recently, the Portas report has dealt with the decline of many town centres. If populations remain stable, town centres will need to shrink as people spend more on the internet and go out of town. An alternative is to defend an existing town centre and allow for additional housing growth. I am delighted that my authority is taking that route.

I know that this is a debate about first-time buyers, Mr Gray, but I want to talk for a moment about people known as second-steppers, who want to move from their first home. It is crucial that those people who have started a family and want to move up from their first to their second home can do so, because if they cannot, it creates a block for first-time buyers. Lloyds Banking Group says that 61% of second-steppers want to move but have been stuck on the property ladder for 12 months. They often have the same problem as first-time buyers in that there is a limited supply on offer to them. However, crucially and often uniquely, they have to cope with the problem of negative equity as prices have fallen over the past couple of years.

In today’s market, many of those second-steppers would have bought close to the peak and, having got on the first rung of the housing ladder, they are finding it increasingly difficult to get off it. People can benefit from Firstbuy if they are moving to a new home, but there is no particular scheme to support second-steppers. I would like the Minister to consider providing some help for that group.

I welcome the Government’s initiative for first-time buyers. Schemes are being introduced that will assist people to get on to the property ladder. I commend my local council for its commitment to both the supply and demand side of support and for ensuring that land is available. I ask the Minister to consider second-steppers who want to move on.

10:33 am
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Graham Evans (Weaver Vale, Conservative)

I will keep my contribution short to give the Minister and shadow Minister time to have their say. I congratulate my hon. Friend Steve Brine on

securing this incredibly timely debate, given the announcements made by the Government this week. I recognise his comments about having a young family who climb into the bed—normally my side—at 4 o’clock in the morning to warm their cold feet. I look forward to the day when they will move away—not too far, but far enough.

If there is any such thing as a British dream, it definitely involves owning one’s own home. I was born and bred in a council house on a council estate. During the 1971 Macclesfield by-election, I remember a parliamentary candidate knocking on our door. I went to the door with my mother and a man was there with his blue rosette. It was Nicholas Winterton saying, “Good evening Mrs Evans are you aware of the Government’s right-to-buy policy?” She was not, but we were after that and, in 1972, we bought our council house.

Most people think that that was a Thatcherite policy, but it was, in fact, the Ted Heath Government of 1970-74 who introduced it. As my hon. Friend Paul Maynard said, it is in the Conservative party’s DNA to give people the right to buy. However, for millions of people, achieving that dream seems further away than ever. One of the most important things that any generation can do is build enough good new homes for the next generation. However, the previous Government presided over a fall in house building to its lowest peacetime level since 1974. Inevitably, that led to a sustained decline in home ownership and soaring housing waiting lists.

The figures are most depressing. The number of first-time buyers fell from around 501,000 in 1997 to 185,000 in 2009. That is the lowest figure since records began. The average age of a first-time buyer without financial assistance from the bank of mum and dad is, as was mentioned by my hon. Friend the Member for Blackpool North and Cleveleys, 37. Admittedly, that age is somewhat exaggerated by the recording of divorcees buying a home on their own rather than jointly for the first time. However, it still highlights the current gloomy outlook for many young people in my constituency who hope to get on to the property ladder for the first time.

Luckily for those striving to own their own home, the coalition Government are pursuing an unashamedly ambitious housing strategy to help boost opportunity in our society. The Government are supporting an innovative new build indemnity scheme led by the Council of Mortgage Lenders and the Home Builders Federation that will allow home buyers to secure 95% loan-to-value mortgages for new build properties. That will help people in two simple ways: it will increase access to affordable mortgages, and it will encourage more homes to be built, driving down the long-term price of houses.

The Government are also investing 500 million in a new Firstbuy scheme that will help thousands of people longing to be home owners to get a foot on the housing ladder by contributing to their deposit on new build homes. Crucially, as announced on Monday, the coalition is also breathing new life into the hugely successful right-to-buy policy. That policy was so popular because it gave millions of people the chance to own their home when they had previously thought it impossible—families such as mine.

Labour disgracefully made repeated cuts to right to buy and deliberately reduced discounts and restricted eligibility. The new proposals to increase discounts dramatically will make it considerably easier for people living in social housing to buy their home. Under the new plans, for every home purchased under right to buy, a new affordable home will be built in its place. That should allow for a further 100,000 extra affordable homes to be built and help create a significant number of new jobs.

Finally, the Government have also created the new homes bonus. That multi-million pound programme rewards communities when they accept more house building in their area, creating a huge incentive to build the new homes we desperately need. Critically, the programme also applies to empty properties brought back into use, which will help end the scandal of thousands of good quality homes lying empty while people are left in limbo for years stuck on housing waiting lists.

It is very clear that there are many exciting developments that will help bring the dream of home ownership much closer to realisation for so many of our constituents. I am very proud to support the Government, who are absolutely committed to making that happen.

10:38 am
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Owen Smith (Pontypridd, Labour)

As ever, it is a pleasure to serve under your chairmanship, Mr Gray. It was a slight disappointment to me that you forced us to forgo what I am sure promised to be a stimulating aside on my great hero Nye Bevan, but perhaps we can hear that another day. I, too, congratulate Steve Brine on securing a very entertaining debate and on giving me the opportunity to spend so much time with so many entertaining, warm and welcoming Government Members.

The debate is prescient given the announcements—or perhaps I ought to say re-announcements—earlier this week about the NewBuy scheme. I will come on to that in a moment. We have had an interesting range of passionate contributions. There has been a rerun of the golden greats of the Tory past—Thatcher, Heseltine, Eden—and I even heard about building a new Jerusalem. There were times when I could almost hear “Jerusalem” playing as the backing track to some of the tales of bucolic English home owning.

We have also heard some facts today, and I would like to add to some of them to provide some context. Let us be clear: there is a crisis in housing and home building. It is not new. It did not start under this Government. It has been going on for a long while and it is certainly getting worse. We need to be honest. Some of what the Government are doing is intended to help the crisis, but it is far from certain that they will be successful. As the Opposition, we intend to ask searching questions about what is intended and what will be achieved.

The facts are that, under this Government, house building is down, homelessness is up and it is harder to get mortgages. Rents in the private rented sector, where many have been forced to go, are climbing. In part, that is because the Government’s broader economic strategy is not working. The construction industry is being hit particularly hard as an effect of that failure to get the economy moving. Far from criticising the Government for seeking to assist the construction industry, the Opposition are urging them to go further.

Total construction, in terms of output, has declined by 2 billion since the Government came to power. New work output by the construction industry is down almost a quarter, by 23%. It is not getting better—it is getting worse. The previous two months, December and January, were the worst two months since May 2010. Compared with the last 18 months of the Labour Government, all house building has fallen by 11%. Completions, where a house builder finishes a house and brings it to market, are now at their lowest levels since the second world war, having fallen by 10% under this Government. That is not a new trend; it is an ongoing trend, but it is getting worse. The 60% cut to Labour’s affordable homes programme has meant that only 454 affordable homes were built in the past six months. Most shocking perhaps is that homelessness rose by 14% and rough sleeping was up by 23% in 2011. Those are the facts and Government Members need to remember them.

First-time buyers are key to getting the market moving. Government Members noted that the number of first-time buyers has decreased significantly over a long period, down from 700,000 per annum in 2004 to 350,000 in 2010. Why? There was a lot of comment about that. Ultimately, it is due to a squeeze between incomes and prices. House prices are high, and incomes have been depressed over a long period. As Mark Pawsey pointed out, the reason for that is supply—we are not building enough houses. The number of houses in the market is very limited and successive Governments, including mine, have not done enough to arrest that. The current Government should not kid themselves that they are getting anywhere near arresting the problem.

There is also a problem of affordability, caused by the squeeze on earnings, limited supply and the contraction in mortgage lending that has occurred since the credit crisis. All those factors have combined to drive up the average deposit required by first-time buyers to approximately 100,000 in London and more than 50,000 across the UK as a whole. The average age of unassisted first-time buyers has risen from 37 to 44 right across the country in that same time period.

Labour understands—and understood—that something needs to be done to address that, which is why we set out to address supply. Between 2005 and 2010, we delivered 256,000 additional affordable homes in England. Contrast that with the scale of ambition shown by the current Government, who propose to build just 170,000 affordable homes—80,000 fewer affordable homes—in a comparative five-year period between 2010 and 2015.

What about helping first-time buyers get on the ladder? Hon. Members will have no doubt read in The Daily Telegraph this morning about the effect of the stamp duty holiday, which was introduced by Labour and is being cut by the Government. Although a couple of months ago, the Chancellor dismissed the stamp duty holiday as wholly ineffective, it has led to a 20% increase in recent months in the number of first-time buyers applying for mortgages. That indicates clearly that, far from being an ineffective measure, it was working and the Government needed to give it time to bed in and not abandon it, which is what they have done.

The Government have also abandoned Labour’s HomeBuy Direct scheme, which was funded to the tune of 380 million and designed to help 10,000 first-time buyers by providing a 30% reduction on the loan over

five years. The Government have replaced that scheme with their own far less generous scheme, which is worth just 250 million, and offers only a 20% reduction. Other than that, the two schemes are largely similar.

The latest wheeze is the mortgage indemnity scheme, which was re-announced this week. It was first announced in November. It is designed to help a further 100,000 mortgage holders get on the property ladder through effectively giving them a 9% reduction—or indemnity—in the volume of their mortgage, thereby reducing the cost to the lenders and allowing them to offer 95% mortgages. There are many problems with that, but one is that 95% mortgages were already being introduced into the market at lower interest rates, in certain instances, than the ones announced by the Government. Barclays, Nationwide and some of the other lenders involved are lending at an average of 5.3% and 5.4% over the period on the 95% mortgage, whereas 5.25% was already available from the Leeds building society on precisely the same terms. We need to ask whether the scheme does what it says on the tin.

What guarantee is there that the scheme will actually assist first-time buyers? It is open to all prospective buyers up to 500,000. How can the Government be sure that this will help first-time buyers? How can they be sure that it will go to those families who are most hard pressed, as opposed to those who are slightly better off and can perhaps afford to raise a mortgage?

Finally, how can the Government reassure us that this will address the underpinning cause of the crisis in our housing market—the lack of supply? Can the Minister offer us any guarantees that this will lead to a dramatic increase in the number of houses being built, or will it simply displace activity, both in the mortgage market and in the house building market, that would otherwise have happened naturally as the economy bounces back?

10:47 am
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Chloe Smith (The Economic Secretary to the Treasury; Norwich North, Conservative)

I start by joining the round of congratulations to my hon. Friend Steve Brine. He has not only secured an important and topical debate, but spoken with real passion. I pleased to respond on behalf of the Government, both to him and to those who have also contributed with passion, whether from Blackpool, Milton Keynes, Cornwall or elsewhere. We have heard about homes, homelessness, history and our hopes for our children. We have heard about stalled development and proper community development, which I will touch on briefly. If Mr Gray will forgive me, I will also insert a small piece of history from my own constituency of Norwich North. I believe that the Mile Cross estate was the first council estate in England built outside London, something that I am very proud about. I shall stop there, before Mr Gray tells me to sit down.

My hon. Friend the Member for Winchester highlighted the package of support that the Government have introduced to help people own their home, and I will set out our progress on that. Before I do so, I will deal with some of the questions that were asked about the detail, principally by my hon. Friend. He asked whether NewBuy could be extended to existing properties, not just new properties. NewBuy builds on an industry-led scheme. That is very important, because it builds on support

from both builders and lenders. It makes homes affordable, it stimulates economic activity, and, crucially, it increases supply.

The Home Builders Federation estimates that new build could deliver 25,000 additional homes in three years, supporting in turn up to 50,000 additional jobs, which I think all hon. Members will agree represents a real boost to the economy at a time when it is most needed.

On new versus existing, it is important to state that home building and the supply of new homes at present is not meeting the demand in the economy, so there is a pressing need for new build in that sense. A scheme focused on existing homes would be different and could have different financial consequences.

My hon. Friend also asked about the first-time buyer discount on stamp duty land tax, as did Owen Smith. Hon. Members will be aware of a review by Her Majesty’s Revenue and Customs in November 2011, which brought forth some staggering numbers that they may not be aware of. The review indicated that only 1,000 of the additional first-time buyers who bought a property between April 2010 and 2011 would not have purchased it without the relief. That 1,000 figure is derived from the 118,000 first-time buyers who used the relief, of whom it is believed 117,000 would have done so anyway. Hon. Members will agree that those remarkable numbers suggest that the relief was not effective in increasing the numbers of first-time buyers entering the housing market.

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Chloe Smith (The Economic Secretary to the Treasury; Norwich North, Conservative)

Before the hon. Gentleman asks me further questions, I must address his point about the cost of furthering the relief for a year being estimated at 150 million. I hesitate to give way to him, because in his comments and the questions that he asked me, he once again showed his party’s rather tenuous grip on credibility—if he thinks that such a sum represents value for money in helping first-time buyers and other purchasers. He then quibbled about whether the scheme that I shall outline really helps first-time buyers. He must ask serious questions if he thinks that 150 million spent in that way furthers that aim with no dead weight.

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Chloe Smith (The Economic Secretary to the Treasury; Norwich North, Conservative)

If the hon. Gentleman would like to justify that, I am happy to hear him.

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Owen Smith (Pontypridd, Labour)

I would have to look at the numbers before lending them any credibility. It would also make sense for the Minister to concede that her comments are based on numbers predicated on a scheme that has not yet ended. She is talking about November numbers, whereas the scheme runs through to March. The Council of Mortgage Lenders suggested that there has been a 20% increase in the intervening period, which will radically change the figures.

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Chloe Smith (The Economic Secretary to the Treasury; Norwich North, Conservative)

The hon. Gentleman knows as well as I do that the scheme ends on 24 March 2012. No doubt some will try to get in before then. Indeed, a review has

to take place at a certain point and, on the broad thrust of a year, if figures such as those I mentioned have been achieved, it is unlikely that it would continue to be a sustainable way to support first-time buyers.

Let me turn now to the point of the debate, which is to query how we can best support those who wish to enter home ownership. There has been a clear correlation in recent decades between wider economic problems and volatility in the housing market. The best thing that we can do, first of all, to support the housing market is improve the country’s financial and macro-economic stability. That is why we are taking action to get public finances back on an even keel. Only through that action will we give people the confidence to invest in new homes and allow the building industry to go ahead and build the homes that we need.

We need to tackle the underlying structural issues that have had such negative consequences for the housing market. That is why the Government are taking action to improve stability in the credit markets and are reforming the planning system. Without such reforms we will face cyclical problems, time and again, of the sort experienced in recent years. However, we understand that we need to help people now, which is why we are taking action to help first-time buyers and other purchasers own their own home.

The effects of the recent financial crisis were particularly pronounced for first-time buyers, as mortgage lenders have cut back on low-deposit products. I can confirm, from Government figures, that the average age of an unassisted first-time buyer is 37, compared with 33 before the crisis. The Government are taking action now to help first-time buyers and others to attain home ownership.

On Monday, the Prime Minister launched the NewBuy scheme, which will deliver a significant increase in housing supply—I have already put numbers to that—and access to affordable mortgages for those without large savings who wish to purchase a new home. The scheme is not aimed at borrowers who cannot afford the mortgage, but at borrowers who lack the savings to fund a deposit, giving creditworthy borrowers a leg-up in the property market. I should like briefly to note hon. Members’ comments about second-steppers, who are important and have serious contributions to make in our effort to get the housing economy moving.

Detail on products is available to Hon. Members who wish to look for it, but I can confirm that although prior to Monday there were no 95% loan-to-value new build mortgage products on the market, today buyers will now be able to purchase a new build property with a 5% deposit. Builders are partnering with lenders to offer 90% to 95% mortgages. Three lenders are offering new mortgage products in that arena. We expect more builder-lender relationships and associated mortgage products to be confirmed over the coming weeks and months. This means that, in total, the Government have made provision to help up to 100,000 families and young people to buy their own home.

We are committed to invigorating the right to buy, which hon. Members have applauded in today’s debate. On Monday, the Prime Minister announced that we will support social tenants who aspire to own their own home, by raising the discounts to make it attractive to do so across England. Right to buy has already helped nearly 2 million people since its introduction, but discount rates were reduced by the previous Government and the

number of sales fell dramatically. From 2 April the discount limit will be raised to 75,000 across England, so in London, for example, it more than quadruples the current limit. It will help thousands of people realise their home-owning aspirations. However, we are also committed to ensuring that it does not erode the social housing stock, which is why for every home bought under right to buy a new affordable home will be built.

NewBuy and right to buy sit within a broader suite of options intended to help first-time buyers and others into home ownership. Firstbuy, which was announced in Budget 2011, is a fixed-term measure designed to support the housing market, given constrained credit availability and challenging economic conditions. Under that scheme, the Government and around 100 house builders are together providing some 400 million to assist almost 10,500 first-time buyers to purchase with a 20% equity loan a new build property in England by spring 2013. We have had more 4,250 reservations since the scheme opened in September. The three largest participating house builders have reported sales of more than 1,200 homes in the first four months. Hon. Members will agree that those results show that the Government are taking action now, as needed, to support those who wish for the first time, or indeed at other times, to be a home owner and to continue to build the kind of communities that we all aspire to see throughout the country for our children and grandchildren.

Once again I thank my hon. Friend the Member for Winchester for his reasoned, thoughtful and passionate contribution to the debate that he has given us the opportunity to participate in. I thank other hon. Members who have made equally passionate and inspiring contributions on what we all hope for those we represent.