Social Home Buy

Oral Answers to Questions — Deputy Prime Minister – in the House of Commons at 11:30 am on 9th February 2005.

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Photo of Iain Wright Iain Wright Labour, Hartlepool 11:30 am, 9th February 2005

If he will make a statement on social home 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

Our new home buy scheme will offer more social tenants the choice to own a home. Tenants will be able to buy as little as half their existing home at a discount, with the opportunity to increase their share and become full owners over time. Home buy will put home ownership within the reach of up to 300,000 more social tenants. Unlike right to buy, the social home stays in the public sector and the local authority will be able to invest the full 100 per cent. proceeds in new housing, rather than 25 per cent. under the present right to buy scheme. We will consult on the details of the scheme before Easter.

Photo of Iain Wright Iain Wright Labour, Hartlepool

I welcome the Deputy Prime Minister's comments because social home buy provides people on low incomes with a real stake in their home and their communities. It provides a great opportunity to regenerate areas of low demand and exclude unscrupulous and profiteering private landlords. Does he agree that the siting of such schemes and homes is vital? I am thinking particularly of previously run-down town centre areas. Social home buy needs to ensure that such areas once again become vibrant places to live and that the doughnut effect of all new homes being located in the suburbs is avoided.

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. Indeed, our policy since 1997 has been to achieve greater growth in towns. Our first job was to reverse the increase in out-of-town shopping, which we have done, and for the first time more retail shopping is now being done in town centres than outside towns. That has brought a new lease of life to the centres of cities and towns. The home buy policy, which is our current housing policy, as well as the brownfield policy and sequential testing have all led to exactly what my hon. Friend wants—the rebirth of towns, for which he is a doughty champion, especially in Hartlepool.

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

At the heart of the Government's plans to solve the housing crisis is the provision of cut-price houses for £60,000 each. The Swedish retail giant, IKEA, has a name for properties of that sort: it calls them Bokloks. Given that the land that they would be built on has already been earmarked for sale by the Chancellor and the definition of "key worker" is at best muddled, does the Deputy Prime Minister agree that the term "Bokloks" just about sums it up?

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

Once again, the hon. Lady shows her ignorance of what is actually happening. If she had gone to the sustainable development conference, she would have seen the £60,000 house on display. It was a wow at that conference. The industry told me that it could not be built. We not only built it and displayed it at the conference, but it has now gone to Allerton Bywater and will be part of the development of a pit site of houses available at £60,000. It is a reality, and a lot of people who want to buy their homes welcome the fact that we have thought of new ways to provide affordable homes. That contrasts very well with the press report that I have seen in Kent on Sunday that the hon. Lady's first statement on housing arising out of the James review was that she would cancel the plans to build 130,000 new homes in Kent. That kind of message to the people in Kent and the south-east who are desperate for homes shows quite a contrast with what we are trying to do.

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

The Deputy Prime Minister knows that the size of the discount for social home buy is crucial in understanding what that policy means and how it will operate, and he is rightly consulting on that. However, will he say now who will pay for the discount? Will it be the housing association or the taxpayer? If it will be the housing association, does he accept that social landlords will end up building fewer affordable homes, when we need more? If it will be the taxpayer, what provision did the Treasury make for that in the spending review?

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 financing is the same as we had before. If the housing association pays, it will be compensated by the Housing Corporation, whose funds come from the Government. There are varying amounts of subsidies, as the hon. Gentleman knows. The right to buy subsidy can range up to £40,000, which is the reason why we have lost 1.8 million houses from the public housing sector. The right to acquire subsidy is down to £16,000. As he rightly says, we are consulting on the subsidies involved, but it is important that by allowing people to buy equity in such situations, they can afford the mortgage price, and that is available to about 300,000 more people, whereas if I had extended the right to buy to the right to acquire situation, it would have benefited only 60,000 people. We are giving more choice to more people and meeting their demands.

Photo of Mr Lawrie Quinn Mr Lawrie Quinn PPS (Mr Douglas Alexander, Minister of State), Foreign & Commonwealth Office, PPS (Mr Douglas Alexander, Minister of State), Department of Trade and Industry

Will the consultation that my right hon. Friend has announced on this welcome policy also allow people who live in rural areas who are equally under pressure in trying to get the first foot on the ladder and very much in need of good social housing to be included in the roll-out of the policy?

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, those people certainly will be included. In fact, one of the great difficulties of the previous Administration's policy on rural housing was that they limited it in certain circumstances where they believed that there was a housing crisis. The houses were supposed to be available to people in the local area. The trouble was that the younger people usually did not have the money to buy the houses, which usually went to people who lived in the area who used them for holiday lets. That is not acceptable. The opportunity extends to rural areas, but I go further and call on all local authorities to do the same. Indeed, to be fair, my mate the Mayor of London has just discovered an awful lot of plots of land that he can build on. Local authorities and Government agencies could go round looking for those plots of land and take this opportunity to build good, high-quality houses—by the way, the £60,000 house is up to the highest standards, saving energy and water—and give a real opportunity to people in rural areas.

Photo of Howard Stoate Howard Stoate PPS (Rt Hon Estelle Morris, Minister of State), Department for Culture, Media & Sport

My right hon. Friend knows that one of the main issues that affects public sector recruitment in areas just outside London, particularly in Kent Thameside, is the cost of housing there. Will he show how his policies will make more houses available, particularly to those key workers in nursing, teaching and the police whom we so desperately need if we are to continue the regeneration of areas outside London?

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 mean the real Opposition.

We will keep to the building programme. The second thing that we would do is to provide the opportunity for key workers to buy using that form of equity. Under the present key worker policy, we pay up to about £100,000 in subsidy to provide a house to maintain a hospital or teacher service. Frankly, that is not the best way to use money. With the equity shares that we are now using or by separating the construction price from the land price and using the Government land that we keep to our advantage, we allow key workers to have a mortgage price that they can afford.