Housing

Part of STATUTORY INSTRUMENTS, &c. – in the House of Commons at 3:47 pm on 26th January 1994.

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Photo of Jack Straw Jack Straw Shadow Secretary of State (Environment) 3:47 pm, 26th January 1994

This is the difficulty that the hon. Gentleman and all his hon. Friends faced last year. If it was right to unfreeze capital receipts last year—notwithstanding the way in which the PSBR is defined—why is it wrong this year, when the housing crisis is even worse?

What lies behind the Government's prohibition is an irrational hatred of council housing. They believe that there is only one legitimate form of housing tenure: home ownership. They have a one-club housing policy, which is as profound a failure as their one-club economic policy. Labour believes in real choice among different forms of housing tenure, which is why we have published proposals for flexible tenure.

Potential owners should be given more flexible choice in regard to home ownership. Shared ownership schemes should be offered by social landlords, allowing people to own as much of a home as they can afford while paying rent for the rest. They could then "staircase" up to full ownership as income and circumstances permit it; we believe, however, that they should be able to "staircase" downwards as well. Reducing the mortgage element that people pay and turning mortgages into rent is surely better than turfing families out of their homes when they cannot manage mortgage repayments.

If there is to be real choice between different forms of tenure, we need a healthy private rented sector. Conservative Members routinely pay lip service to that; yet the proportion of households renting private homes has halved since 1979 and there are more than 800,000 empty private homes. Since 1989, deregulation has been a profiteers' charter, just as deregulation in 1957 did not lead to an increase in the private rented sector—as Conservative Ministers then claimed—but led to a collapse in that sector, and to Rachmanism.

In a speech last week, launching what was described as a swingeing attack on the Government's housing policy", the chief executive of the Halifax building society spoke of a polarisation of tenures between owner-occupation and housing association or local authority renting. Little choice exists. Britain suffers from the lack of a viable alternative to social renting or owner occupation. Labour has presented proposals to encourage the development of a new, socially responsible private rented sector.

Home owners and potential buyers have not been helped by the Government's one-club policy, either. They have been given precious little protection against the unscrupulous and irresponsible behaviour of some mortgage lenders. Many thousands of households are trapped in homes that are worth less than they paid for them, with mortgages that they cannot afford. Labour wants tougher regulation of mortgage lenders, and better advice and protection for home purchasers.

The measures that I have outlined have been demanded for years by housing organisations, building firms, home owners and tenants alike. They are common-sense measures, which ought to be utterly uncontroversial. Not long ago, even a Conservative Government would have based their policy upon them. In 1924, the first Labour Government had to establish the basis for a common-sense housing policy, and it will be our job after the next election to re-establish it.

Although it was often a matter of intense debate, for many decades after the war a broad post-war consensus existed between the parties about the balance and purpose of housing policy right up until 1979. There were mistakes as Government and councils tried to make up the massive deficit of houses caused by bombing and slums beyond repair, but those mistakes were shared.

Today, almost every Conservative speech on housing is peppered with references to 1960s tower blocks, as though they were a Labour invention, but it was the 1944 Abercrombie plan agreed by the wartime coalition which had the idea of tower blocks, and the 1951–55 Conservative Government who began the error of forcing tower blocks and industrialised buildings on councils whether they wanted them or not. New subsidy arrangements by the Conservative Government in the mid-1950s encouraged tower blocks against the building of traditional homes by increasing the subsidy on buildings of six storeys or more.

Under pressure from private construction firms, the then Conservative Housing Minister, Sir Keith Joseph, became an evangelist for tower blocks, telling the House in November 1962 and again in December 1962 of the necessity to take advantage of industrialised techniques which make smaller demands on available labour in order to meet this larger programme".—[Official Report, 13 November 1962; Vol. 667, c. 22.] At least at that time, both sides recognised the importance of a mix of tenures. Whilst the majority of people—an increasing number—rightly wanted to own their own homes for the rest of their lives, there would always be a need for affordable, decent homes to rent which had to be provided through councils and housing associations.

That broad consensus changed in 1979, with the first election of the present Administration. The Conservative manifesto of that date committed the incoming Government to legislating on the right to buy and to measures to revive the private rented sector. It was wholly silent on any positive role for the social housing sector.

Since 1979, council house building has been virtually abolished, but building by housing associations has only spasmodically reached levels attained by Labour. The overall consequence is that the number of social housing units being built each year has dropped from 100,000 a year with Labour to 35,000 —or one third—under the Conservatives.

Nor has private housing fared much better. Overall starts are down 110,000, from 270,000 under Labour in 1978 to 160,000 under the Conservatives in 1992. During that period, public investment in housing has halved, at today's prices, from £13 billion in 1978 to £6 billion in 1991–92 and it is still falling, with a cut of £500 million imposed by the current Housing Minister on even the parsimonious plans for next year proposed by the current Home Secretary.

What is crazy about Government policy on public housing is that, as investment has been halved, personal subsidies, so derided by the Conservative party, have shot up. In the wake of massive and unjustified increases in rents, housing benefit costs have risen by 55 per cent. in real terms in just five years, now standing at £7.3 billion —£1.5 billion more than we invested in housing—while the social security bill for the payment of mortgage interest alone has risen fourfold in real terms in five years and now tops £1.1 billion.

The consequence is greater misery in all tenures than any of us can remember for owner-occupiers, tenants, the homeless and building workers, 500,000 of whom have lost their jobs. More than 1 million home owners are trapped in their own homes, unable to move because their houses are worth much less than they paid for them and much less than their mortgage. Some 35,000 people are more than six months in arrears; 60,000 families lost their homes in 1993 through mortgage repossessions; waiting lists have increased by 200,000 and number of homeless people has gone up threefold.

Council rents have been forced up at 2.5 times the rate of inflation, and housing association rents are now so high that, as the Environment Select Committee reported: Welfare ghettos are now being created where only those on housing benefit can possibly afford to reside, and once there are forced to stay on the dole rather than to take lower paid work available. The Government talk about rolling back dependency on the state, but they have increased dependency on the state with every policy. In 1979, only one in 12 people of working age was dependent on the state. It is now down to one in six. Many of those people are desperate to get back to work, but are trapped on the dole by the insane housing and social policies of the Government.

That situation is almost entirely of the Government's making. Had they established a system by which councils were able to reinvest the proceeds of council house sales in renewing and rehabilitating the social housing stock, a substantial part of this crisis would never have happened. Had they not switched from investment to personal subsidy, they would have saved the public purse millions of pounds and not created welfare ghettos.