Housing Association Grants

Part of Clause 45 – in the House of Commons at 8:15 pm on 14th June 1988.

Alert me about debates like this

Photo of Mr Clive Soley Mr Clive Soley , Hammersmith 8:15 pm, 14th June 1988

That is where we come to the "Catch 22" and that is why we distrust the Government so much. We keep hearing them say, "We are going to increase housing benefit," but they have cut it eight times since 1979 and the evidence in the leaked documents from Downing street is that they will cut it again. The problem for the Government is that sooner or later—to be fair to the Minister of State, I think that he understands this although I am not sure that the Secretary of State does—they will not only have to increase housing benefit, they will have to do something radical about the way in which it is structured because, even if one doubled, trebled or quadrupled housing benefit overnight, that would still not help many people because of the way in which the tapers work.

Unless the Government can come up with a more sensible form of housing finance reform, they will be trapped. They can say to the country, "Do not worry; we will increase housing benefit," and those people who are in the know will say, "Hang on a minute; they have cut it eight times already," and those who are not in the know will say, "They will have to do that by a large amount to make it manageable." In early April, many people, who suddenly had their benefits cut, realised that that was happening to the extent of £10 or £20 per week—not by small amounts. When the Government and the Minister for Social Security and the Disabled did an about-turn on that after pressure had been put on them, they realised that they had hurt far more people far more deeply than they had thought.

If the process goes through, we need to know whether people on low incomes will be able to stay in some areas. The Minister knows that the Campaign for Homes in Central London, supported by the hon. Member for Southwark and Bermondsey, myself and the Minister's hon. Friend the Member for Hornchurch (Mr. Squire), has put to him in letters and on a visit that I was unable to attend, that the problem in London is so acute that unless the Government do something dramatic to increase the supply of low-cost rented accommodation, that shortage will continue to have a dramatic effect on London's economy because it is no longer possible to find the low-cost accommodation that is necessary if one is in a low-income job. It is fine if one already has accommodation, but, if one is second generation and is about to leave home, one does not get anything. Similarly, if one is trying to move to London to find work, one does not get anything.

I visited Reading some months ago to look at some of the properties that were being offered to people who were coming from the north to work around that area. The accommodation offered was appalling, and at a high rent. If we ask where such people will live we discover more of the hidden nightmares of the Government's housing policy. Some large building companies, for example, are encouraging their employees to sleep on site because that provides the company with night watchmen as well as enabling those people who have travelled down for the working week to have somewhere warm and dry to sleep at night—usually in one of the portakabins. When we see that that is happening in one of the world's richest countries, we ask, "What on earth are we doing?", but the Government drive on with all the blind stupidity that they can muster to plough through a system that is almost consciously designed to make the situation worse.

We want to know how the Government are going to change housing benefit. If the Minister says, "We have given a pledge to increase housing benefit," as I said earlier, that begs the second part of the question: what are the Government going to do about the tapers? Will the tapers be reformed and revised so that they are made more effective and people do not get the sharp cut-off that they do at the moment? Is that what the Government are talking about? If so, when are we going to hear about it? Will it be in the form of yet more legislation on the hoof with provisions being presented to us suddenly as though they have just been dreamt up in one of the Minister's back rooms late at night with the thought, "We will shove this in the Housing Bill when it is going through Parliament so that we can dodge the Committee system. We do not need to bother with all that because we have a big enough majority to get it through."? Is that really what the Government will do?

I turn now to the effects of the provisions on some housing association tenants. I take as an example a family —a couple with two children under the age of 11, living in a newly built flat in Cambridgeshire, with a net household income, including child benefit, of £151·59p a week. If housing association grant is limited to 65 per cent. of scheme cost, the weekly rent required will be £46·61—about one third of that figure. Is that supposed to be an affordable rent? Is the Minister saying that what he means by an affordable rent is one third of a family's income? Or are we talking about 20 per cent. perhaps? Is that affordable?

9.15 pm

A single nurse aged 31 living in a one-bedroom modernised flat in Islington has a net income after tax of £117·31. If the housing association grant is limited to 75 per cent. of scheme cost, the weekly rent required will be £48·15—about 40 per cent. The Minister will probably remember—he was not present, needless to say, but he probably picked some of it up from the media—that I gave a press conference a month or so ago when the Government were giving their increase to the nurses. I demonstrated that with market rents a nurse in west London would be worse off financially by a significant sum —I cannot remember the exact figure now, but it was over £10 a week—simply on the basis of market rent, even taking into account the recent rise. So market rents, and presumably affordable rents, on the housing association basis, will leave nurses worse off in many cases than they were before. So much for that theory.

Pensioners are devastated by what has happened recently. The housing benefit cuts were cruel and vengeful. I remember at my advice night a 75-year-old couple—he was war-disabled—telling me that they had lost £7.51, I think it was. They were heating their house by paraffin. He was one of the people who talked to me about a land fit for heroes. When one hears things like that, one wonders what sort of a society the Government are creating.

A pensioner couple aged 68 and 66 living in a one-bedroom flat in a new sheltered housing scheme in Cardiff have a net household income, including the state pension, the husband's occupational pension and the wife's part-time earnings, of £130·48. If the housing association grant is limited to 40 per cent. of scheme cost, the weekly rent required will be £47·39.

We have three examples taken from the southern area of Britain—Wales, Cambridgeshire and London—that demonstrate that if the Government plough on in their mindless way it will mean that people will be expected to spend between one third and one half of their income on rent. That will be the normal pattern of affordability for many areas of Britain.

If we suddenly turned the situation round and treated those who were purchasing their homes in the same way —expecting them to bear that burden throughout the period during which they were paying the mortgage—there would be uproar in this country. Sadly, it is because people in rented accommodation, particularly private tenants, have a less effective voice in British politics than those who purchase that the Government have been able to get away with ignoring them.

This goes back to what the hon. Member for Southwark and Bermondsey said when he opened this debate, about the lack of interest in some areas. I would be the first to concede that, as the hon. Member for Mid-Staffordshire (Mr. Heddle) said, The Independent, The Guardian and one or two other newspapers have done good work on housing issues, but the vast majority of the British press have not shown any interest at all in the Housing Bill, and they are thus ignoring a very large section of the community who are being devastated by this Government.

One of the most important concepts that the Government have argued—the Minister put it first in his opening remarks—is that of attracting private money into housing associations. I have made it clear on a number of occasions that I am not fussed about housing associations taking private money. That is fine. However, if they are pushed so far up market that they are unable to provide for the groups which they were set up to provide for, the Minister, as I have said on a number of occasions, will have busted wide open any consensus on housing in this country, because he will have put in the front line some of the most vulnerable in society. He has ignored the fact that the desperate need at the moment is for good, low-cost, rented and purchased accommodation. It is not available for the vast majority.

The Government say that they will encourage private investment. If private investment results in housing associations going so far up market that they cease to provide for the low-income groups for which they were set up to provide, they cannot expect to be bailed out by a future Labour Government. They cannot expect to be bailed out when rents set independently of the landlord are reintroduced by a Conservative Government or by a Labour Government, as will inevitably happen, for the reasons which I have outlined. They will get their fingers burnt.

If genuine money is invested in low-cost, rented accommodation, that will be good and I will support it. If building societies are interested, that is fine, too. What gives the game away is the Government's move in the Budget to invent the business expansion scheme. What do we find? We find Rachmanism paid for by the taxpayer. Even Conservative Back Benchers are worried that that is wide open for abuse. I raise that point because it is relevant to the crisis that the Government have created by cutting back so dramatically on the provision of public housing, including housing provided by housing associations, and by failing to increase supply in the private rented sector. Indeed, they have actually cut back the private rented sector by 500,000 homes since 1980. By doing all this the Government have produced a crisis which they can only address by short-term crisis measures, of which the business expansion scheme is one.

I predict that we will have other measures. I fear that the Government are still trying to avoid their responsibility to face the fact that, as long as they subsidise the purchase sector and fail to subsidise the rented sector, they will continue to drive people into purchase, even when they want to rent, and they will continue to dry up the rented sector, public or private. As a result, the housing crisis will continue to get out of control. At first the position will only be noticeable when we walk along the streets at night and see the homeless begging or sleeping rough, or when we see people queueing up for council housing.

The Government try to kid everybody that council housing is unpopular, but people want to get out of the private sector into housing association and council accommodation. That is what is happening, despite the Government's constant attacks on local authorities and on housing associations which have made it continuously difficult for them to provide the quality of management which should be expected in any rented section, public or private.

The position will continue to get worse. People who were not previously affected are now suffering the long-term consequences of house price inflation. There is a link running through the housing problems. As I indicated earlier, as housing finance is more and more distorted, it is not just homelessness that goes up and the supply of low-cost rented accommodation that goes down, but house price inflation goes up, too. Several of my hon. Friends have raised that point. The three things are so interwoven that they demonstrate almost beyond any need for me to spell it out that the Government have no housing policy. Their policy is a shambles, a mess and a racket.

To his credit, in Committee, the Minister tried to pick up some of the bits for his right hon. Friend the Secretary of State for the Environment. Then he trotted out other bits and pieces which were an offensive act against the House. He did that in a way that showed the desperation which he feels about the needs of housing. Sadly, the problem will not go away. Whichever Government are in power in a couple of years' time, they will have to pick up the bits of this wretched mess, and, by God, it is a mess. We will support the amendment proposed by the hon. Member for Southwark and Bermondsey.