Homelessness and Mortgages

Part of Opposition Day – in the House of Commons at 4:41 pm on 16th November 1992.

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Photo of John Battle John Battle , Leeds West 4:41 pm, 16th November 1992

We, too, welcome the debate. There is nothing in the motion with which we disagree. It is particularly welcome at this time, coming so soon after the autumn statement. The autumn statement day ought to be remembered as the day when unemployment passed, in real terms, the 4 million mark. According to the original calculation of the figures, before the Government's 30 changes to massage them down, on 12 November this year unemployment passed 4 million. I mention that at the beginning of my speech because rising unemployment is the primary cause of homelessness and the housing market crisis.

The scale of the housing crisis is daunting and worsens day by day. However, the Government try to put on a brave front and say that they are coping with it. Since the late 1970s, homelessness has more than doubled. In England alone, 147,000 households were accepted as homeless by local authorities in 1991. Many more were turned away as ineligible. More than 1·5 million are on local authority waiting lists. They comprise what could be described as the hidden homeless, often living in overcrowded and inappropriate circumstances. It is estimated that in 1991 an additional 80,000 single people were homeless but ineligible for help. In the past 18 months, more than 100,000 families have had their homes repossessed.

Not surprisingly perhaps, fewer than 100 families have had their homes saved by the Government's "intended" mortgage rescue scheme, which was announced this time last year. The Government promised us at the Dispatch Box that 40,000 households would be rescued. That never happened. More than 200,000 households are now more than six months in arrears with their mortgages; more than 1 million cannot afford to move because their homes are worth less than they paid for them.

Recently, the Bank of England estimated that further small falls in property values would add an additional 500,000 households to that total. In September this year, after the general election, the Department of the Environment disclosed that a record number of 62,780 homeless families were living in sometimes terrible quality temporary accommodation. As we now know, since 1979 the proportion of national expenditure, in real terms, spent on housing has more than halved. There has been a significant cut in expenditure. I say "significant" because the cut amounts to £5·3 billion—ironically, exactly the figure of accumulated capital receipts that local authorities have in the bank. To this day, the Government are preventing them from spending that money on housing.

What is the Government's response to the housing crisis? I submit that it is feeble. When we look at the small print of what we were offered in the autumn statement, we see that we have been short-changed. Barely six months ago, on 23 March, during those heady days of the electioneering period, the Secretary of State for the Environment asserted: House sales under the Conservatives are picking up.' All this, we were told, would change on 10 April if there were a Labour Government. We were also told that the recovery—I am tempted, Madam Deputy Speaker, to insert the word "sic"—in the housing market would be devastated, just as it was getting under way. The Secretary of State for the Environment was echoed by the Prime Minister on 31 March, when he said: We're going to make life easier for people buying their home. Our policies will mean a stronger housing market.[Interruption.] The hon. Member for Brecon and Radnor (Mr. Evans) may mutter, "Hear, hear", but what every other hon. Member and everybody else in the country knows is that exactly the opposite is true. People were truly conned on 9 April. Families now face the worst housing crisis in our society since the war. It is tempting to add that all the Government's special offers have been heard before and have been found to be second-hand and shoddy goods.

The latest evidence from the Joseph Rowntree Foundation report, which was published last week, shows that further small falls in house prices threaten to double negative equity. It points out that four out of every 10 Londoners who bought their homes in the past five years now have properties worth less than their mortgages. Basildon now has a negative equity rate of 60 per cent. —an average shortfall of £6,500 for every household. That is where the rent-to-mortgage pilot scheme was undertaken. In those circumstances, I cannot imagine that it is going down well in Basildon.

What of the scale of the Government's response? The Government amendment is remarkable in its complacency. It says that the Government are keen to promote the growth of owner-occupation. Many commentators on housing and economic policy now submit that, at 69 per cent., owner-occupation in our society is unsustainable because there are not sufficient homes for people who need to rent. The Government do not seem yet to appreciate that fact. The amendment refers to widening choice for tenants. It does not refer to the fact that under the Housing and Urban Development Bill which is being considered in Standing Committee the Government are taking away tenants' rights in order to push through compulsory competitive tendering.

The amendment refers also to the targeting of public expenditure. It is tempting to add that that may be the only truthful statement in the amendment. It is true that resources are being targeted, because existing resources are being wrapped up and disguised as new money when in fact they prove to be old money.

The moves on interest rates are welcome. They will give hard-pressed home owners some relief, if the interest rate reduction is passed on, but that relief will apply only so long as people have a job and continue to be able to pay their mortgages. The question that many people are asking is whether this will be enough to revive the housing market. Many people think that they live simply one pay cheque away from redundancy and worry that their home may be the next to be repossessed.

The autumn statement was trumpeted in the press as offering extra money, but the Secretary of State was careful to use that weasel word and say that money had been "earmarked" rather than to suggest that new money was available. We discover from the fine print that that was a sleight of hand—a clever piece of news management to create the impression of new money. The Government are simply juggling the figures in a remarkable creative-accounting exercise.

What does the figure of £1·75 billion mean? It is tempting to ask the Minister, in the light of his statement, how firm that promise is. We are glad that the Government are at last coming around to our common-sense arguments on the need to use capital receipts, but it is not clear whether that promise of funds will be realised.

The autumn statement is based on illusion—the £1·75 billion in estimated capital receipts is not there. The Government have acknowledged that only £1·1 billion of that money will be available for housing, and only capital receipts that may be available in the next 12 months will be available as extra expenditure.

What will happen to the £5·5 billion of receipts that is sitting in local authorities' banks? Why cannot those funds be released?