Homes for All: Five-year Plan

– in the House of Commons at 3:30 pm on 24th January 2005.

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Photo of John Prescott John Prescott Deputy Prime Minister, Office of the Deputy Prime Minister, Deputy Prime Minister and Secretary of State for Local Government and the Regions, Deputy Leader of the Labour Party, Member, Labour Party National Executive Committee 3:30 pm, 24th January 2005

With permission; Mr. Speaker, I should like to make a statement about the Government's five-year strategy, "Homes for All".

May I begin by offering my apologies to Mrs. Spelman and to the Liberal spokesman for the delay in providing copies of my statement? The computer failed, and my words of persuasion failed totally to convince it to speed up the process. Nevertheless, it is a complicated statement, and I want to offer my apologies to both of them.

As the House is aware, the Government have been drawing up a series of five-year plans as we continue to modernise our country. Today, I am presenting the Government's new five-year strategy, "Sustainable Communities—Homes for All." We will: provide more homes to buy or rent through responsible growth; continue to improve the social housing stock; promote greater home ownership; and give more people a share in their home. "Homes for All" offers choice, opportunity and fairness. It is a comprehensive strategy to deal with the housing challenges that face this country.

For decades, Britain has faced major long-term problems in housing. We inherited: a boom and bust economy, with 15 per cent. interest rates and hundreds of thousands of people suffering the misery of negative equity; a £19 billion backlog of repairs to social housing; a record number of rough sleepers and families in bed-and-breakfast accommodation. For decades, the number of households has increased while the supply of new housing has fallen. This has widened the wealth gap and priced millions of people out of home ownership. Successive Governments have failed to deal with these long-term challenges.

Our priorities in the first five years were to deliver economic stability, tackle the backlog in housing repairs, and remove the obstacles to increasing housing supply. That is what was intended in our policy. I am proud of what we have achieved: there are more than 1 million fewer non-decent homes than in 1997; rough sleeping is down by two thirds; and we have virtually ended the use of bed-and-breakfast hotels for homeless families and children. In the private rented sector, we have improved investment and quality and tackled the problem of bad landlords. Labour economic stability has replaced Tory boom and bust, with low interest rates, low unemployment and low inflation. Only by making progress on these issues have we been able in our second term to take action to increase housing supply and to give more people choice and opportunity in housing.

The number of households has been increasing faster than the growth in population, while the supply of new housing has been falling. The number of single person households has more than doubled from more than 3 million in 1971 to about 6.5 million today. Ten years ago, house prices were three and a half times people's annual salary; they are now six times the annual salary. Sons and daughters cannot afford to live where they were brought up. Nurses and teachers cannot afford to buy homes near where they work. As house prices rise, more people are priced out of the market. This is not just a housing problem; it is a matter of fairness, opportunity and social justice.

That is why I announced the £38 billion sustainable communities plan to the House two years ago. The plan provided for 200,000 extra homes in London and the wider south-east, increasing the total to 1.1 million new homes by 2016. Kate Barker's review of housing supply supported that decision. It said that the undersupply of housing was threatening economic stability and people's quality of life. The review also said that we needed a step change in housing supply, meaning an extra 70,000 to 120,000 new homes a year. The Barker review concluded that many people on moderate incomes in high-demand areas were unable to buy a home.

The case for sustainable growth is clear and unambiguous. The sustainable communities plan and this five-year strategy will achieve growth in a fair and responsible way. Responsible growth means concentrating more housing in our four growth areas in the wider south-east; modernising the planning system to make more land available for housing; encouraging environmentally sustainable homes; using brownfield land; and protecting the green belt. Responsible growth also means providing an infrastructure, because we are creating communities, not just housing estates. We are investing extra resources in schools and hospitals, and making more than £3 billion of new transport investment in the growth areas—the Thames gateway, Milton Keynes and the south midlands, Ashford and the Stansted-Cambridge corridor. It is all about creating sustainable communities with more affordable housing. Today I am announcing the provision of £40 million for sustainable communities in other areas, to support extra housing growth and promote regeneration.

I am also announcing important changes to our planning policies. We are extending our stricter controls on density to cover more areas of high demand, in the east of England and the south-west. Development on brownfield land has already increased from 56 per cent. in 1997 to 67 per cent. in 2003, and today we are further encouraging the use of such land. Our new planning guidance will help local authorities to release unwanted industrial land to be used for housing and other purposes.

We are using less land to provide the homes that people need. We are already doing that in London and the south-east, where we are providing for 1.1 million new homes on less land than the last Government set aside for 900,000 homes in 1997. We have added 19,000 hectares to the green belt, an area the size of Liverpool. Now I am proposing a new green belt direction that will further strengthen protection of the green belt. Local authorities will have to seek my endorsement for its development.

We also want more affordable homes in rural areas. For the first time we will allow local authorities to ring-fence land so that it can be used for rural affordable housing to meet local needs. Today I am announcing a review of the way in which existing home owners apply for planning permission for home improvements. The number of such applications has doubled in 10 years to more than 300,000, which has put additional strain on the planning system. I believe that we can reduce the amount of red tape and make the planning system more effective, while still safeguarding the rights of neighbours and protecting the environment.

In parts of the north and the midlands, long-term industrial decline and people's changing aspirations have led to low demand for housing. Some 850,000 properties are affected, the value of people's homes has been devastated, and communities have been undermined. We are investing £1.2 billion in nine market renewal pathfinders to help lift housing markets in many of the worst affected areas. That investment could also attract billions of pounds of private investment.

I am making £65 million available to new areas such as Tees Valley, West Cumbria and West Yorkshire to tackle their problems of low demand. The plan offers more fairness, opportunity and choice to our 4 million social housing tenants. We are providing more affordable homes, more decent homes, more choice in regard to where people want to live, more help with jobs and housing and more opportunities of home ownership.

Following the recent spending review, we will provide 75,000 new social rented homes over the next three years. By 2008, we will have doubled our annual investment in new affordable housing to £2 billion since 1997. That is in addition to the £18 billion that we have invested in the improvement of our existing social homes since then, to correct the disinvestment incurred by the last Administration. Over 1 million people have benefited: many have new kitchens, bathrooms and central heating. I realise that the houses are not new, but they are certainly new homes to the people who live in them.

We aim to halve the number of households in temporary accommodation within five years, and we are on track to meet our commitment to bring every social home up to a decent standard by 2010. We are making available £500 million in new private finance initiative credits to allow local authorities to work with housing associations and the private sector to build new affordable homes. We are offering social tenants more choice to rent or buy, and we have already improved tenant participation considerably. We are offering tenants more information and more involvement in the decisions that affect their homes.

Local authorities such as Newham and Sheffield have been running choice-based lettings schemes, which have been very popular with tenants. Now I want to work with all local authorities to expand choice-based lettings, so that we can create a national system by 2010. I want the system to include housing associations and private rented homes. It would give information not just about renting, but about the cost of buying a share in a home, and it would give more people a chance of finding a decent home with employment. So we are establishing a new scheme called MoveUK, which will help tenants to find a new job as well as a home. MoveUK will extend our existing location schemes to help tenants find a new home and a better quality of life in another area. We are offering social tenants more choice and more opportunity. Our plan means that local authorities will continue their excellent work in delivering the decent homes programme and continue to invest in new social housing, while offering more choice, managing housing better and using their land for low-cost homes.

We know that many social tenants want to own a share in their own home. Since 1970, home ownership has increased from 50 to 70 per cent. and has continued to grow in every region. Average interest rates are half what they were under the previous Government. Cheaper and more stable mortgages have enabled over 1 million more people to buy their home under this Government, but there are still many more who want the opportunity to own a home. By offering more people the chance to own, or to buy a share in, their home, we will widen opportunity and narrow the wealth gap between those with housing assets and those without.

The House will be aware that 80 per cent. of social tenants already have the right to buy their home. The right to buy and the right to acquire will continue to be available. They have helped to boost home ownership, but have led to the loss of 1.8 million homes from the public sector, at a cost of £40 billion in discounts. I have capped the level of discount in 41 areas of housing crisis, but elsewhere, the right to buy still gives a discount of up to £38,000 for each home and the right to acquire a discount of up to £16,000. On average, it costs us £75,000 in grant to replace each home sold. I asked Baroness Dean to chair a taskforce, which made recommendations on how to promote sustainable home ownership while protecting the social housing stock. I am grateful for its valuable work and for her recommendations.

Today's new five-year plan offers a comprehensive package of schemes to help social tenants and first-time buyers to become home owners. We have two different approaches: HomeBuy, which will offer up to 300,000 council and housing association tenants the opportunity to buy an equity share in their home at a discount; and the first-time buyer initiative, which, together with our key worker and other low-cost home ownership schemes, will help 80,000 families into a home of their own by 2010.

HomeBuy is significantly different for several reasons. It will protect the social housing stock—we consider that essential—because social landlords will have first refusal to buy the home back if the owner moves on to the private sector. It will help more people—up to 300,000 tenants—and it will be more cost effective. We will consult on a range of options for discounts, up to the level of the right to acquire. Moreover, tenants will be able to buy as little as half their home, increasing their share over time if they want to. That will be particularly helpful to tenants who are unable to afford, or who do not have, the right to buy. Unlike the right to buy, HomeBuy will treat local authorities and housing associations equally, allowing both to retain full receipts from the sale of homes and thereby creating a level playing field.

Today's housing plan will widen the opportunity to own or to part-own. In addition to our HomeBuy scheme, I am announcing, as I mentioned, a radical new first-time buyer initiative. Our key worker programme has already helped more than 13,000 key workers such as nurses and teachers, who have been priced out of the housing market. The new first-time buyer initiative will help even more key workers and people on low incomes who cannot afford to buy a home. When they are ready to move on, the social landlord will have first refusal to buy the home back, so that it can be offered to another first-time buyer. The scheme will use surplus public land for new homes. The first-time buyer will pay a price that reflects the cost of construction, and the public sector landowner will keep a share that reflects the value of the land. In due course, the first-time buyer will be able to increase their share up to full ownership, if they want to.

To begin with, the first-time buyer initiative will use land owned by the Government and their agencies, but I want to encourage other public and private sector landowners—in urban and in rural areas—to use their land for new affordable housing. We have been encouraged by our talks with the Council of Mortgage Lenders about how the private sector can support and extend the initiative. Separating the cost of land and the cost of construction through the initiative will be a big help in driving down the purchase price for the home buyer, but we still need to reduce construction costs, which have gone up more than three times faster than retail price inflation in recent years. Such costs are certainly higher than in other European countries.

I have said that it is possible to build a home for £60,000. Apparently, that was a controversial statement, but now it is clear that it is possible. So I am asking English Partnerships to hold a competition, challenging the contractors and house builders to produce a well-designed, environmentally efficient home for £60,000 without sacrificing safety or quality. Next week at the sustainable communities summit in Manchester, English Partnerships will exhibit a house that shows that high standards can be delivered at low cost—[Interruption.] I invite the hon. Members mumbling below the Gangway to come and see it.

The five-year plan is the next step in creating sustainable communities—mixed use, mixed tenures, designed to the highest standards, using less land to build more homes and helping thousands of key workers and first-time buyers to get a home of their own. It means more homes and more home ownership, with extra help for first-time buyers. The five-year plan offers choice for all; fairness for all; opportunity for all; homes for all; and homes for all in sustainable communities. I commend this statement to the House.

Photo of Caroline Spelman Caroline Spelman Shadow Secretary of State for Communities and Local Government

I appreciate the apology that the Deputy Prime Minister gave, but I had only just about enough time to count the 20 pages of his statement.

We need to be clear that the statement is necessary because of the crisis in housing—a crisis that has spiralled out of control and is largely of the Government's own making. Under this Government, homelessness has increased by a third, and record numbers of people are living in bed-and-breakfast accommodation. It is disingenuous to single out families with children, because overall the number is a record. The amount of social housing being built has nearly halved and the resultant hike in house prices has taken home ownership beyond the reach of a whole generation of young people.

The stealth taxes introduced by this Government have had a disastrous effect for first-time buyers. The 70 per cent. increase in council tax, the extra £1,200 stamp duty facing the average first-time buyer and the abolition of mortgage tax relief all combine to make home ownership a near impossibility for hundreds of thousands of people each year. The Halifax review, published on Saturday, could not have been more damning, as it showed that nine out of 10 towns are now unaffordable for first-time house buyers.

Perhaps the Deputy Prime Minister could start his reply by offering an apology to all those people who took the Prime Minister at his word when he claimed to understand

"the very human aspiration to own your own home".

There are two key themes in this statement: the proposal for a pale imitation of right to buy for housing association tenants, and the Deputy Prime Minister's scheme to produce £60,000 houses on public land. That is ironic, given that in 1995 the Housing Corporation funded the provision of nearly 17,000 low-cost homes, whereas under Labour that has fallen to fewer than 3,500.

I have to admit some surprise at hearing what the Deputy Prime Minister had to say on the sale of equity in social housing. At the last Labour party conference, he declared that housing association homes were "not for sale". He said that

"it ain't going to happen".

Well, now it is being spun in the media that it is going to happen. His Minister of State said this morning that people could buy an equity share. Will the Deputy Prime Minister clarify whether that will be up to 100 per cent.?

This statement represents not so much a change of heart as a change in who has control over the Government's housing policy. The Chancellor of the Duchy of Lancaster, Mr. Milburn, is well known as an admirer of the long-established Conservative policy of allowing housing association tenants to buy their homes, and the Deputy Prime Minister has consistently been opposed to it.

Let us look at the implications for housing association tenants. Are not the Government guilty of treating housing association tenants as second-class citizens by limiting their right to buy equity? Did the Deputy Prime Minister really mean that they could buy as little as a 50 per cent. stake in the equity of their home—or will that be the minimum threshold? On a practical level, will he confirm that housing association tenants who have bought an equity share will have to secure permission from the charity or association before doing any work on their homes? Will that not effectively remove one of the main advantages of home ownership?

I must say that if I were a housing association tenant, I would be pretty confused about these proposals. Will such tenants have the right to buy on the same terms as council tenants? If they will, why do the Government not just adopt Conservative proposals for a full right to buy and the right to shared equity all the way up to 100 per cent.?

As for the associations themselves, the proposal denies them the significant capital receipts from outright sales that are crucial if they are to invest in new stock. What measures will the Deputy Prime Minister implement to deregulate housing associations, because without more freedom and flexibility, they will simply find themselves with a declining asset base without the flexibility to respond that our policy would give them? Conservative Members have pledged to reduce the eight regulatory regimes that oversee housing associations and reduce the costs imposed on them by the Government so that they can invest and innovate to generate new housing stock.

Let us turn to the other principal aspect of today's announcement: the provision of cheap houses for key workers. How does the Deputy Prime Minister define "key worker"? Just recently, I received a letter from a nurse who works in a GP practice, yet does not qualify for the Government's much-vaunted key worker scheme. Surely that is absurd.

How can the Deputy Prime Minister explain the inconsistency between the Chancellor's plans to sell off land in public ownership and his plans to build cheap homes on that land? By the Government's own arithmetic, the market value of the land will be about £71,000 per plot, so building 60,000 key worker homes—the figure touted in the press—under the scheme on publicly owned land will mean that the Treasury will forgo £4.2 billion of asset sales that were already pencilled in over the next few years. That represents a sizeable chunk of the total asset sales identified by the Lyons report, and it will create an even deeper black hole in the Government's finances, which could only be bridged with more third-term tax rises. Why are the Government obsessed with building key worker ghettos on public land when good shared equity schemes can make good-quality homes affordable for all?

Up to now, the Government's sole answer to the housing crisis has been to concrete over more and more green fields in the vain hope that supply will eventually match demand and bring house prices down. Today's announcement is essentially an admission that that approach, on its own, is doomed to fail. How can the Deputy Prime Minister expect to be taken seriously on the green belt? He has expanded it in areas where, in the words of the House of Commons Library,

"development pressure is not greatest," while allowing more than 170 permissions to concrete over the green belt. How can he possibly portray himself as the "guardian" of the green belt?

Yet still, the Deputy Prime Minister is determined to steamroller ahead with plans to impose massive housing targets on the countryside. The statement advocates again sustainable communities. What does he understand by the word, "sustainable"—surely not slapping down hundreds of thousands of new homes in a region of the United Kingdom that has 30 per cent. less water resources than 10 years ago?

There are many ways in which the Government can help people to get on to the housing ladder, but the statement misses nearly all of them. A five-year-plan, published probably just months before a general election, will fool no one. It is merely another example of the Government talking the talk to hide eight years of complacency and failure to act. Today's announcement is a fudge and a hastily assembled compromise that will do little to help the increasing number of people who are priced out of the housing market. If ever there was a case of too little, too late, this is it.

Photo of John Prescott John Prescott Deputy Prime Minister, Office of the Deputy Prime Minister, Deputy Prime Minister and Secretary of State for Local Government and the Regions, Deputy Leader of the Labour Party, Member, Labour Party National Executive Committee

It is a great pity that Mrs. Spelman does not do the research to substantiate her allegations. As for a housing crisis, I do not think that anyone doubted that there was one in 1997 when we came to office. There was negative equity, the public sector had been robbed of 1.8 million houses—[Interruption.] Can you shut up for a second while I explain the position? [Interruption.] I am talking to the hon. Member for Meriden.

When we fought the election in 1997, one of the major concerns was the crisis in housing caused largely by boom and bust in the economy. Housing paid the price. Housing investment in the last five years of the previous Administration was slashed by half; it has doubled under ours. The lowest amount of house building for decades occurred at that time. Please do not tell me that there was not a housing crisis and a problem of credibility.

The hon. Lady talks about the council tax and says that we increased it by 30 per cent. in real terms and that, in the four years before we came in, they had cut it by 7 per cent. That is just untrue. Those are some of the facts that she must consider before making accusations in the way that she has.

The hon. Lady talked about building on brownfield land. We have increased that from 57 to 67 per cent., whereas the previous Administration argued whether they could go to 60 per cent., as anybody who remembers the debates in 1997 will know. We have done very well.

On housing density, if the hon. Lady is concerned about the south-east, surely the Conservatives should have raised the density levels required in the south-east in the way that I did—from 25 to 30 per hectare, and it is has now gone up to 35. Therefore, the extra 200,000 houses in our programme can be built on the same amount of land as she planned for 900,000. Using land more efficiently and using brownfield is the way to proceed, and that is exactly what the previous Administration did not do.

On the housing association capital receipts that the hon. Lady mentioned, the housing associations will receive, as they did before, the full receipts. In fact, I have gone a little further. It has always been a common complaint that local authorities are not treated the same as housing associations in regard to capital receipts returns from the sale of homes. On this occasion, we are now giving the returns to the local authorities so that they, like housing associations, can have the full receipts from the sale of homes. That creates the level playing field that I have constantly been asked for.

The hon. Lady will know that council receipts are something like £2 billion this year. According to the Conservative party's policy document, that will be used in all other housing investment areas. She should talk to the shadow Chancellor, because he presumes that the £2 billion that is used at present will be available to him when he calculates the costs. Again, the figures do not add up.

The hon. Lady has a cheek to talk about capital receipts, because the previous Government held back capital receipts. They did not even allow local authorities to replace the housing that was being taken out of the public stock. Indeed, one of the first things that I did when I came to office was to get hold of those capital receipts and begin to improve the stock of all the 2 million houses that were not of a decent standard. In those circumstances, she should look at the consequences of her policies, least of all now that the James report seems to suggest that the Conservatives will slash another £500 million out of the housing programme. When they launched their programme in November, they probably did not tell her that the James report was coming out in January and would effectively slash her proposals in the new housing document.

I thought it was quite offensive when the hon. Lady talked about key worker ghettos. [Interruption.] Did the hon. Lady say that? Did she say that? We introduced a key worker policy when there was not one under the previous Administration, and I have seen an example of it today in Ealing. It is a tremendous development built by both the public and private sectors, and I talked to one of the ladies there. She was absolutely delighted, because she could not have paid the full price. Some 40 per cent. of tenants and key workers in that area are in that position and no one would describe it as a ghetto. I suggest that the hon. Lady go out and have a look at it. The record of the previous Administration was deplorable. They created the crisis and now she is saying that, although everybody agrees that we need more houses, we do not want them in the "nimby" south-east. People in that area do want houses and we will provide precisely what is wanted.

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister)

I thank the Deputy Prime Minister for the statement. Although it was inconvenient not to have a copy much beforehand, there have been so many leaks in the press that much of what he said was hardly news.

May I, unusually, congratulate the Deputy Prime Minister on one thing: his victory over the Chancellor of the Duchy of Lancaster? I welcome the fact that, with his proposed HomeBuy policy, the Deputy Prime Minister has effectively adopted the Liberal Democrat right to invest policy for housing association tenants. Is he aware that the Minister for Housing and Planning wrote to the Liberal Democrats last April expressing interest in our proposed right to invest, which is strikingly similar to HomeBuy? Does he recognise that such schemes can both help people on to the ladder of home ownership and protect the future of social housing? Will he give an assurance that, under HomeBuy, housing associations will be able to reinvest all capital receipts in new social housing?

Given Britain's affordable housing crisis, is not the real challenge to build more homes, not to cut funds going into housing, as the Conservatives propose? Will the right hon. Gentleman confirm that there are serious doubts about the legality of extending the right to buy to housing associations, as many are charities and few are owned by the Government? Does he agree with the National Housing Federation that it would cost the taxpayer about £1 billion a year to subsidise the sell-off by housing associations and undermine their future ability to build the social housing that we so desperately need?

On the Deputy Prime Minister's proposal to use surplus public sector land for new home building, are not his plans rather timid and cautious? Why has he failed to secure more land from Departments such as Defence and Health? Why is Whitehall clinging on to so much unused land when people are crying out for affordable homes? Why has he limited his scheme to Government land ownership? Why is he not prepared to co-operate with the mutual sector and establish new community land trusts that could ensure that the land was properly used for new homes?

During the passage of the recent Housing Bill, ODPM Ministers eventually accepted our arguments for new powers to tackle the scandal of empty homes. When reusing empty properties offers a cheap, fast and sustainable way to provide affordable housing, why are the Government dragging their feet on the regulations needed to introduce those new powers?

On homelessness, will the right hon. Gentleman confirm that his new target to halve the number of homeless households in temporary accommodation by 2010 will simply take us back to the numbers inherited by Labour in 1997? Is he proud of that? Will he reassure the House that the target will not be met by changing the definition of "homeless", as some have proposed?

It has taken the Government far too long to wake up to Britain's affordable housing crisis. Although the Deputy Prime Minister has done well to resist the Minister for the manifesto, his strategy falls far short of the new approach that Britain's families need.

Photo of John Prescott John Prescott Deputy Prime Minister, Office of the Deputy Prime Minister, Deputy Prime Minister and Secretary of State for Local Government and the Regions, Deputy Leader of the Labour Party, Member, Labour Party National Executive Committee

I repeat: do not believe everything you read in the press. I say that constantly. The hon. Gentleman can be assured that I do not talk to the press. I can't stick 'em, frankly. Did they get that right? The hon. Gentleman should judge by the statement that I made today, not by the tittle-tattle he gets in the press. I have made a balanced judgment about what is the best policy.

As for adopting Liberal policy, why is it that whenever Liberal Democrats see something similar to their thinking they automatically call it Liberal policy? The hon. Gentleman referred to a proposal for dealing with empty homes. That came from the Empty Homes Agency. He is a jackdaw, pinching one of the agency's ideas and claiming it for the Liberals. It does not matter how many times he proposes different policies, because he is never going to be in power to implement them. He has the luxury of being able to say what is popular without doing it.

The hon. Gentleman made a number of serious points that I will address. Receipts will be kept by local authorities. The hon. Gentleman will recognise that that is a new departure. Housing associations will be able to do that for social housing. That is absolutely right. I do not think that my thinking should not stop there, but it is an interesting step towards levelling the ground.

I recognise the point made by the hon. Gentleman—I do not think that Mrs. Spelman does—that there was tremendous controversy when the previous Conservative Administration tried to introduce the right to buy in housing associations. That is why we ended up with the right to acquire and the legislative problems that went with it—the proposals were thrown out by Conservative Members in the House of Lords, if I recall correctly. We will wait and see what happens. The Conservatives can forget about the past and propose something for the future. They can ignore the fact that they gave us the housing crisis that we are trying to deal with now.

I agree with what Mr. Davey said about land. I hope that he will understand that I had arrived at the idea before I heard what he had to say about what should be done with land. Land is an important factor—the more of it we own, the better. He will have noticed that I have bought 100 plots of land—or rather, the Government have—from hospitals. I had better get that right in case somebody goes to the Register of Members' Interests. I have bought more plots from the Ministry of Defence and I am in the market to buy many more through English Partnerships, which acts as the agency. The aim is to increase the amount of land that is available and to use it much more effectively.

I do not accept what the hon. Member for Meriden seems to want to do, which is to get a quick buck by selling off land. Perhaps we should own the land and use it much more effectively than at present, so that the price of land does not mean that the cost of the house increases. There is another factor. I have found myself constantly asking my right hon. Friend the Chancellor of the Exchequer for more subsidies for the housing programme. Prices were being forced up as a result of increases in land prices—land that was often sold at the market rate by Government Departments. We have shown that it is far better to change that policy. This does not include every piece of land that is owned by the Government, but certainly some of it. If we build houses on that land, we will separate the land from the construction price, with mortgages relating to the building. There is an equity share. I do not think that this approach has been proposed before. However, I have done it, and I think that it makes a lot of sense because prices have increased so much that it is beyond the ability of many to purchase, even if they want to. It is common sense for the community to use its land in the way that I have described to provide housing.

At the same time, the land and the house return to the public sector. They will not be lost to the public sector. People can use this as a first rung on the ladder and then move on to the private sector once the increase in the value of the land is available for a deposit. I am also giving that right to social tenants. There were tenants who could not afford the full market price or the right to buy. A greater opportunity will be presented for these people to get a house. We all know that having a house and owning an asset makes a difference to our quality of life. Many people borrow against it and the growing differential in wealth is between those who have houses and those who do not. What we are proposing will make a change.

Photo of Kevin Barron Kevin Barron Labour, Rother Valley

My right hon. Friend knows that in the Yorkshire and Humber region 10 years ago, only about 7 per cent. of first-time buyers paid stamp duty. Now, more than 70 per cent. of first-time buyers pay stamp duty. It is rumoured in today's press that the Chancellor of the Exchequer will consider that before making his pre-Budget statement. Is the Deputy Prime Minister prepared to add his support to introducing a rebate on stamp duty for house buyers who invest in energy efficiency measures, as proposed in my private Member's Bill? That would not only help first-time buyers to get into the market but assist the Government in hitting their climate change programme targets.

Photo of John Prescott John Prescott Deputy Prime Minister, Office of the Deputy Prime Minister, Deputy Prime Minister and Secretary of State for Local Government and the Regions, Deputy Leader of the Labour Party, Member, Labour Party National Executive Committee

I appreciate the point made by my right hon. Friend. I say to him, as anyone would on the Treasury Front Bench, that judgments about tax changes are best left to my right hon. Friend the Chancellor.

I understand the difficulties about stamp duty and I know how strongly people feel about it, but it still represents only about 1 per cent. of the total purchase price. My priority is to get construction prices down so that people can afford to buy a house. Taxation matters will be dealt with by my right hon. Friend the Chancellor.

Photo of David Curry David Curry Conservative, Skipton and Ripon

Has the Treasury changed its policy on the disposal of public assets? Until now, public bodies have been required to get best value from the sale of property. If that is no longer true, that could affect their ability to raise money for use in, for example, the health service. Will they be compensated for that? The Deputy Prime Minister said that as little as 50 per cent. could be bought. Is that intended to be the minimum purchase? If that is purchased at a discount, people will sell it, by definition, at market value, otherwise there is no point to the scheme. The housing association might well find itself constantly repurchasing at market value to own the same house. Given that only 30 per cent. of those who live in housing association properties are in work, is that a realistic proposition?

Photo of John Prescott John Prescott Deputy Prime Minister, Office of the Deputy Prime Minister, Deputy Prime Minister and Secretary of State for Local Government and the Regions, Deputy Leader of the Labour Party, Member, Labour Party National Executive Committee

As usual, the right hon. Gentleman makes a serious point. He is thinking about the transferability of value, which will obviously be part of the debate. We do not envisage that happening, but we are issuing a consultation document. We will pay serious attention to the point. In regard to best value land, the matter is agreed with the Treasury. That does not alter the fact that most of the land will still be operating under best value. It is interesting to consider whether it is best value for the community for people to get a home. At the end of the day, if we go for best value in everything, what happens is that the land is sold at a very high price and houses are built on it. The people who provide the social housing that is included in the mix through section 106 come to me and say, "Look, if you want this, given the cost of land and housing, you will have to pay a subsidy." In some cases, grants for key worker homes are up to £80,000. This is ever escalating. I think that there is a better way of doing it, instead of fuelling market prices by selling land at the top price.

Photo of Laura Moffatt Laura Moffatt PPS (Rt Hon Lord Falconer of Thoroton, Secretary of State), Department for Constitutional Affairs

I welcome the proposals in today's statement, especially as they give local authorities a level playing field. I congratulate my right hon. Friend on the relinkage of jobs and housing which, just as the 1947 Labour Government did with the new town project, gives people opportunities through a job and a home. Does he agree that many people, particularly in the Conservative party in West Sussex, do not want to make sure that everyone still has a good chance of a home? They have turned their backs on many people who desperately need houses and embraced silly rhetoric about concreting over the south-east. They are not getting down to the real issue and good young families cannot secure housing in West Sussex, because those people are happy to treat the matter as an election issue.

Photo of John Prescott John Prescott Deputy Prime Minister, Office of the Deputy Prime Minister, Deputy Prime Minister and Secretary of State for Local Government and the Regions, Deputy Leader of the Labour Party, Member, Labour Party National Executive Committee

Sustainable communities are not only about building housing but providing the supporting infrastructure in education, health and transport systems. The extra investment that we are putting into the new growth areas does precisely that and will also be critical in providing jobs. Our approach to new towns reflected that and our new community growth areas will certainly do so. I have mentioned the possibility of giving more information to people who are considering moving to a different area. They might want to move from my hon. Friend's constituency up to Hull, where houses and jobs are available. We will therefore provide more information, as it is important to connect jobs as well as housing to quality of life. Too often in the past, we have given people houses, but there were no jobs, so we had to pay housing benefit, and those people just existed. That was the policy, in particular, under the previous Administration.

As for the Conservatives' arguments about concreting over the south-east, the fact that density has increased and that I can build 200,000 more houses on the same land on which they envisaged 900,000 suggests much more effective land usage. We can build more houses without taking any more land. That is an intelligent approach to the housing problem. The previous Administration got into a mess because they did not have any commonsense policies.

Photo of Mr Teddy Taylor Mr Teddy Taylor Conservative, Rochford and Southend East

Does the Deputy Prime Minister agree that it will cause misery for the whole population if extra houses are provided in already overcrowded areas without the provision of additional facilities such as roads and health services? Does he agree that, in Southend, where we have a serious housing problem and a large number of houses in multiple occupation, providing additional houses would simply make the already appalling traffic congestion worse unless the Government make provision for the ring road that we have needed for a desperately long time?

Photo of John Prescott John Prescott Deputy Prime Minister, Office of the Deputy Prime Minister, Deputy Prime Minister and Secretary of State for Local Government and the Regions, Deputy Leader of the Labour Party, Member, Labour Party National Executive Committee

The hon. Gentleman makes a good point. In the growth areas, including the Thames gateway near his constituency, we are putting those things together. However, he raised the problem of growth in established towns, and the question of whether facilities will be available to make that growth sustainable. I announced today another £40 million for growth areas that require such investment if they are to be sustainable. The transport infrastructure fund that we announced was intended to ensure the proper investment necessary for sustainable communities, so that more and more people are not packed into an area where the services cannot carry them. It is a serious point, and we are addressing it.

Photo of Mr Peter Bradley Mr Peter Bradley PPS (Rt Hon Alun Michael, Minister of State), Department for Environment, Food and Rural Affairs

The Deputy Prime Minister mentioned the problem of sons and daughters who cannot afford to live where they were brought up. That is certainly the case in many rural communities in my constituency and elsewhere. Does he acknowledge that the issue is not just how many new homes are provided, but where they are provided? Does he accept that the sequential test has the unfortunate consequence of directing the provision of affordable housing to market towns and often away from the villages where it is desperately needed? Will he review his policies and draw up proposals to remove the barriers to the provision of affordable housing in rural communities, where there is support from the community? That is the only way to guarantee their sustainability.

Photo of John Prescott John Prescott Deputy Prime Minister, Office of the Deputy Prime Minister, Deputy Prime Minister and Secretary of State for Local Government and the Regions, Deputy Leader of the Labour Party, Member, Labour Party National Executive Committee

My hon. Friend makes an important point about the distribution of housing, particularly in rural areas, whether in market towns or villages. There is a responsibility on the Housing Corporation and now the regional housing boards to achieve a balance in the amount of housing and where it is situated. As regards rural areas, I proposed in my statement that local authorities that have land should start ring-fencing it to ensure that the homes are affordable to people who live in the area. We hear in the news that some planning bodies have decided to restrict houses being built in the area. That will not help the people who live there. All it will do is restrict the existing problem. The previous Administration introduced the right to buy in some rural areas, with the restriction that the homes should be sold only to people who live in the area. As I learned from visits to the Lake district and other areas, the house is indeed sold to someone who lives in the area, but usually a wealthy person who wants the property as a holiday let. It does not necessarily go to the young person with a job who wants to stay in the area. We have started introducing some restrictions, but the rural case is important. My proposal today to local authorities is that, if they have some land, why do they not consider providing houses at a price that people can afford, so that they can live in the area, help towards its prosperity and maintain the sustainability that comes from a family living together?

Photo of Patrick McLoughlin Patrick McLoughlin Opposition Deputy Chief Whip (Commons)

May I ask the Deputy Prime Minister for clarification? Page 7 of his statement, in subsection C, on HomeBuy, states:

"And tenants will be able to buy as little as half of their home, increasing their share over time if they want to."

Is that up to 100 per cent.?

Photo of John Prescott John Prescott Deputy Prime Minister, Office of the Deputy Prime Minister, Deputy Prime Minister and Secretary of State for Local Government and the Regions, Deputy Leader of the Labour Party, Member, Labour Party National Executive Committee

Yes, it can be to 100 per cent. if tenants so wish, but eventually they may want to buy the house or move on and use the value from the house to buy one in the private market. There were similar schemes previously which allowed that. The difficulty is knowing whether the share should go below 50 per cent. As the hon. Gentleman knows, in these circumstances there are always difficulties with accepting responsibility for maintenance, particularly in the low income groups for which the policies are designed.

Photo of Frank Dobson Frank Dobson Labour, Holborn and St Pancras

May I congratulate my right hon. Friend on resisting the advocates of extending the right to buy to housing association tenants, with the damaging effects that that would have had in areas of high housing need? May I also congratulate him on reasserting the point that providing people with somewhere decent and permanent to live takes a higher priority than the right to buy?

Photo of John Prescott John Prescott Deputy Prime Minister, Office of the Deputy Prime Minister, Deputy Prime Minister and Secretary of State for Local Government and the Regions, Deputy Leader of the Labour Party, Member, Labour Party National Executive Committee

I am grateful for my right hon. Friend's comments. Having read the press reports, I do not confirm that there was a battle going on about that at all. It made for good, exciting press chat—[Interruption.] Well, nobody quoted anybody who said anything. It was always attributed to a high source, a low source or some other source, but never an actual quote of anybody saying it. It was one of those media battles. The priorities that my right hon. Friend mentioned and the importance of getting houses to people who need them are what concentrate my mind.

Photo of Hywel Williams Hywel Williams Shadow PC Spokesperson (Work and Pensions), Shadow PC Spokesperson (Health), Shadow PC Spokesperson (International Development)

I welcome the Deputy Prime Minister's statement with its support for Plaid Cymru's long-standing policies of extending shared equity, separating the costs of houses and land, and ring-fencing land in rural areas for low-cost housing for local people, but could he tell the House who described those policies last month as being spiteful, desperate, extreme and on the margins of politics? I see that the Deputy Prime Minister is puzzled, so perhaps I can extend to him a kindness and whisper the name of the rightly obscure deputy social justice Minister in the Welsh Assembly Government, Mr. Huw Lewis. What will the Deputy Prime Minister do to inform this personage of this latest policy flip-flop?

Photo of John Prescott John Prescott Deputy Prime Minister, Office of the Deputy Prime Minister, Deputy Prime Minister and Secretary of State for Local Government and the Regions, Deputy Leader of the Labour Party, Member, Labour Party National Executive Committee

Who is he? As a Welshman, I find that I can get into enough trouble going into Wales and getting involved in Welsh politics, without getting involved in that here. Let me quote what Jim Coulter, chief excutive of the National Housing Federation, said today about the plan. He said:

"Right-To-Buy is unrealistic and extending it is an irrelevant policy. If the government comes forward with social home-buy, this will provide more choice for tenants and allow for investment in sustainable communities."

Shelter has equally come out in support of the measure. It makes the point that we need to build far more houses to deal with the real problem of supply and demand, but anyone who understands the problem will know that it will not be solved in two or three years. However, we are moving in the right direction. I will leave others to judge whether I have pinched one of the Welsh nationalist policies, but at least we appear to agree.

Photo of Steve Pound Steve Pound Labour, Ealing North

I thank my right hon. Friend for his visit to Ealing this morning and assure him that he has made many new friends in Northolt, including Sharon Williams, the young woman whom he referred to obliquely earlier. When the Conservative Front-Bench spokesman uses expressions such as "key worker ghetto", immense offence is caused to police officers, teachers and health workers, such as those whom my right hon. Friend met today. Will my right hon. Friend say from the Dispatch Box that those of us on the Labour Benches talk about key worker communities, and never ever ghettos?

Photo of John Prescott John Prescott Deputy Prime Minister, Office of the Deputy Prime Minister, Deputy Prime Minister and Secretary of State for Local Government and the Regions, Deputy Leader of the Labour Party, Member, Labour Party National Executive Committee

I very much agree with my hon. Friend and I was pleased to make that visit with him this morning and to meet Sharon Williams, who was delighted to have an equity share in her home, and she expressed it forcefully. She will react strongly to being described as living in an area called a key worker ghetto. That language is offensive to people who desperately want a home in a decent area—something that was not provided by the previous Administration.

Photo of John Prescott John Prescott Deputy Prime Minister, Office of the Deputy Prime Minister, Deputy Prime Minister and Secretary of State for Local Government and the Regions, Deputy Leader of the Labour Party, Member, Labour Party National Executive Committee

The hon. Gentleman asks why. [Interruption.] The hon. Gentleman says that they want to live in a proper community. If he does not think that the place that I visited this morning was a good community, and certainly not a ghetto, I invite him to go and look at that joint public-private project that is building a wonderful sustainable community, with all the facilities that are needed and the jobs, and the hon. Member for Meriden will have to withdraw her remark. It is not a key worker ghetto, by any stretch of the imagination.

Photo of John Maples John Maples Conservative, Stratford-on-Avon

May I take the Deputy Prime Minister further down the avenue opened by Peter Bradley about the shortage of housing in rural areas, particularly in villages in the southern half of the country where the price has been driven up by demand from outsiders for attractive properties, perhaps for first homes but often for second homes? What he has announced today may well help in market towns, but I do not think that it will help in villages, which often need small schemes of five to 10 units, administered by a local housing trust and available only to people with a strong connection with the area. That often makes sense for a local landowner, who, even if he does not want to give the land, could sell it for more than its agricultural value, although obviously less than its full development value. It makes sense for everybody. It is permissible under planning guidance, but does the Deputy Prime Minister think that more could be done to promote and encourage such schemes?

Photo of John Prescott John Prescott Deputy Prime Minister, Office of the Deputy Prime Minister, Deputy Prime Minister and Secretary of State for Local Government and the Regions, Deputy Leader of the Labour Party, Member, Labour Party National Executive Committee

I do think that more could be done, and I hope that we can begin to encourage such thoughts rather than people rejecting the use of land in such ways. I am not talking about large developments, or even medium-sized developments of 50 to 100 houses, but of plots that would take two or three houses. A youth hostel in the Lake district that I visited recently had a piece of land that it wanted to put three or four houses on, two for workers at the hostel and another two for people from the village. It was denied permission by the planning board, and I thought that that was particularly stupid. If we consider such land, we can provide more housing, albeit in small parcels. Asking local authorities to consider such land use along with my ideas about producing cheaper housing might help in the rural areas, and we will do what we can to achieve that.

Photo of Vera Baird Vera Baird Labour, Redcar

I strongly welcome the allocation of a share of £65 million to Tees Valley for housing market renewal, which will help with regeneration that is sorely needed in wards such as Grangetown and South Bank in my constituency. As my right hon. Friend will be aware, the Tees Valley authorities have set up Tees Valley Living to plan some regional regeneration and we are, as it were, ready to go now the allocation has been made. When may we know what share of the £65 million will be ours? To enhance progress, can it be paid straight to Tees Valley Living, rather than through the regional housing board? Granted that the pathfinders originally got an average of about £60 million and our problems in Tees Valley are deep, I hope that, in the end, we will not be treated as Oliver Twist was if my colleagues and I are obliged later to come and ask for yet more.

Photo of John Prescott John Prescott Deputy Prime Minister, Office of the Deputy Prime Minister, Deputy Prime Minister and Secretary of State for Local Government and the Regions, Deputy Leader of the Labour Party, Member, Labour Party National Executive Committee

I think that the announcement will be shortly, and that the money will go direct to the pathfinder, as it is the pathfinders that are playing that part. Without indicating the conclusions that we have come to, I hope that that may play a part in the development of my hon. and learned Friend's area.

Photo of Adrian Sanders Adrian Sanders Liberal Democrat, Torbay

The Deputy Prime Minister referred to the planning system as the mechanism for making more land available for new homes. How much land is that likely to realise and how does that arrangement compare with the idea of land value taxation as a way of releasing more land for development?

Photo of John Prescott John Prescott Deputy Prime Minister, Office of the Deputy Prime Minister, Deputy Prime Minister and Secretary of State for Local Government and the Regions, Deputy Leader of the Labour Party, Member, Labour Party National Executive Committee

I do not know precisely how much land would be available. Certainly, there is more than enough for the resources that I have to be able to purchase to utilise in this way. I shall write and give the hon. Gentleman a more informed opinion, if I can, and tell him exactly where we are in purchasing in these matters. It is often difficult comment because we are the middle of commercial contracts, and I hope that he will understand that, but I will write to him.

On the hon. Gentleman's second point, Barker made some interesting comments and I cannot help feeling sympathetic. Public investment often creates an awful lot of value for other people, but not the community. There is a good argument, but we said that we would report back on the Barker recommendations in the autumn.

Photo of David Drew David Drew Labour/Co-operative, Stroud

My right hon. Friend was wise to ignore the siren voices calling for the right to buy for housing associations, because more than anything, it would have done enormous damage to the exceptions policy in rural Britain. Does he accept that there is a need to look for innovative schemes in rural Britain and particularly at the idea of the community land trust, which was mentioned from the Liberal Democrat Benches but has come from the co-operative movement? Will he look carefully at the sites that he has made available through his deal with the Department of Health, because many of them would be appropriate in looking to take forward that type of exciting scheme?

Photo of John Prescott John Prescott Deputy Prime Minister, Office of the Deputy Prime Minister, Deputy Prime Minister and Secretary of State for Local Government and the Regions, Deputy Leader of the Labour Party, Member, Labour Party National Executive Committee

Yes, my hon. Friend is absolutely right. As I understand it, we are exploring the possibilities in his constituency. When I looked at the amount of land being sold by the Department of Health, I saw that it was in plots. There were large amounts and small amounts spread throughout the United Kingdom. We are looking at the possibilities in using that land and to see how we can put houses on it and meet the real need that exists, particularly in rural areas.

Photo of George Young George Young Chair, Standards and Privileges Committee, Chair, Standards and Privileges Committee

The Deputy Prime Minister said in his statement that we also want more affordable homes in rural areas, and he is absolutely right. Why then has he made it more difficult for local authorities in rural areas such as Test Valley to do exactly that, by unilaterally ending the programme funded under local authority social housing grant, funded out of their capital receipts, which has resulted in a decimated programme of affordable homes? Will he reconsider that decision and reintroduce that programme?

Photo of John Prescott John Prescott Deputy Prime Minister, Office of the Deputy Prime Minister, Deputy Prime Minister and Secretary of State for Local Government and the Regions, Deputy Leader of the Labour Party, Member, Labour Party National Executive Committee

The view that we took in the Department was that the programme was an inefficient way of dealing with the matter, and we put more resources into doubling the investment. As the right hon. Gentleman knows, he was in a Government who halved that investment over a period, which was certainly not very helpful to his rural constituents.

Photo of Karen Buck Karen Buck Labour, Regent's Park and Kensington North

I congratulate my right hon. Friend on the careful balance that he has struck between promoting home ownership, improving housing conditions and meeting housing need. Does he agree that London has 60,000 homeless households and 500,000 children in chronically overcrowded accommodation in large part because of the halving of the number of social homes during the past 20 years, which has led to the absurdity of councils re-renting ex-right-to-buy properties to house homeless families? Will he ensure that housing associations have not only an expectation, but a duty to repurchase the equity stake that they have sold, so that we retain social housing stock in all communities? We should not repeat the errors of the past, when the largest and most attractive homes in the best neighbourhoods were sold first, leaving the poorest concentrated in the worst housing.

Photo of John Prescott John Prescott Deputy Prime Minister, Office of the Deputy Prime Minister, Deputy Prime Minister and Secretary of State for Local Government and the Regions, Deputy Leader of the Labour Party, Member, Labour Party National Executive Committee

My hon. Friend has consistently come to me to discuss the problems of housing, on which she is an acknowledged expert. She was one of the first to say to me that the right to buy was creating problems in her area. We made her area one of the emergency housing areas to deal with profiteering—people bought properties and made a profit by re-renting them out under different conditions. My hon. Friend knows that my right hon. Friend the Minister for Housing and Planning has been examining in new housing legislation how to keep the flexibility to judge whether an area is in housing crisis and whether we should take action.

My hon. Friend put her finger on the main point—insufficient social housing. If we doubled our investment in social housing, it would still be nowhere near enough to solve the problem. The amount of money that I get buys fewer and fewer units because of escalating prices, which was the problem with the right to buy—the properties cost an awful lot to replace and a lot of subsidies were given out in grants to pay for the policy. We are rightly changing that situation and making it clear that houses should remain in the public sector in those circumstances.