Backbench Business — [25th Allotted Day] — Social Housing in London

Part of Business of the House – in the House of Commons at 2:15 pm on 5th May 2011.

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Photo of Clive Efford Clive Efford Labour, Eltham 2:15 pm, 5th May 2011

I will in a moment. Calm down. [ Interruption. ] Hon. Members will notice that I was more restrained in my comment.

Those people did not lack aspiration or exhibit all the problems that people have given as reasons for not investing in building social rented accommodation. We have lost sight of the issue. It has been suggested that such people lack aspiration and that such areas become concentrations of high unemployment, low educational attainment and high levels of crime, particularly antisocial behaviour among young people. Such circumstances become self-fulfilling prophecies as a result of people having to be housed according to priority need.

Over the years, the housing supply has been constantly reducing. Because of the right to buy, the amount of social housing for rent went down consistently, in spite of the new building that was taking place, until only a couple of years before the previous Labour Government left office. The only time there was an increase was from about 2008 onwards as a result of the investment of the previous Labour Government. Just as we got to the end of our last term in office, we actually got it and finally started to invest in building again, and so the building of council housing began again. There were projects in my constituency and my local authority was successful in bidding for money to start to build council housing again. That is what we have to get back to. It will be no good the Minister’s coming to the Dispatch Box and saying that it has all been bad under both Tory and Labour Governments. We have to get this right for future generations.

We have heard about the flexibility of having 80% of market rents. To give them credit, many registered social landlords and housing associations are saying that going for 80% of market rents would fundamentally change their ethos. It would mean that they were no longer providers of social housing and they believe that they would be wrong to go down that route. To accept rents of 80% of market rents would be to accept the principle that people who live in social housing should subsidise the future development of social housing—that they should pay for it rather than the general taxpayer or anyone else. For many years, people buying private housing got enormous subsidies. A myth has built up that there are huge subsidies for council housing, but the housing revenue account has paid its own way for decades. Even my local authority, in its response to the consultation on social housing rents, made the mistake of believing that there was a cost to the taxpayer of providing social housing.

It cannot be right, at a time when the Government have stated that they want to cut the housing benefit budget, to introduce a policy of moving social housing rents towards market levels. That has to be counter-intuitive. The people who cannot afford to find rented housing in the private sector or to buy will, by the very nature of the problems they are facing in their lives at times of crisis when they search for social housing, be likely to get priority and be on lower incomes, so that policy is likely to have an impact on housing benefit if rents of 80% of market rents are encouraged. At the same time, the changes in housing allowances and the new 30th percentile rate will increase the amount that people will have to contribute to their rent if they are in the private rented sector. That will force many people who live in central London to move to areas such as mine where rents are lower, relatively. That is bound to increase the demand for housing there, which could have an impact on the private rented sector and, again, have a negative impact on rent levels if demand goes up. If the private rented sector refuses to rent to people on housing benefit, what will happen to those people and what will be the consequences for local social housing and the level of demand? How will the council deal with that?

What the Government propose in their social housing strategy does not add up or make sense and will have very contradictory outcomes in many areas. The fundamental problem behind what we are dealing with is supply. Some hon. Members have argued that we should have flexible rents that change as people move through social housing and that people should move into the private sector as they gain employment and increase their income. I do not agree that people should be in social housing only at times when they have a low income and that they should be encouraged to move through the system. Such arguments about the management of social housing are to do with the fact that we are managing a limited supply of housing. That is the fundamental problem and we have to increase that supply.

One issue with which we have faced problems in the past—successive Governments have been at fault in this regard as well—is the supply of land. We have put too many obstacles in the way of local authorities’ supplying land to build social housing. In fact, we have often put incentives in their way to dispose of it. We end up in the curious situation whereby local authority land is sold to a private developer for it to build a housing estate, so that we can try to get a residual amount of properties through that development for social housing under planning gain—usually through a housing association whose rents are higher than the local authority’s target rents. That is certainly the case in my area. That approach has failed to deliver the number of properties that we needed over the past two decades, and is a major contributory factor to the huge shortage of social housing in London.

I do not blame private developers. They do what private developers do. They swim in the sea of regulations that we create for them. The profits that they can make from private developments—buying the land, developing it and selling it on—are absolutely huge. We have failed to tap into those profits to recycle resources and invest in future social housing. As a consequence of that policy, until only a few years ago we saw, effectively, a year-on-year reduction in the units of social housing available for rent. So we need to ensure that the land is made available, and that local authorities are encouraged and given incentives to make that land available for future developments.

Where there have been developments they have often been of the wrong type, in which the properties are not available to local communities. Shelter did a study of eight local authority areas. One was Tower Hamlets, and although that is not my local authority the report makes very interesting reading. Between 2006 and 2010, 10,430 properties were built in Tower Hamlets. Barclays bank, whose headquarters is in Canary Wharf in Tower Hamlets, has just paid out over £1 billion in bonuses to its staff. I wonder what that £1 billion could have done for the 21,000 local people on the housing waiting list in Tower Hamlets if it had been invested in local housing.

Of the houses that were built in the four years between 2006 and 2010, 8,500 were in the private sector and just under 2,000 were built by housing associations. None were local authority builds. Fifty-four per cent. of the properties in Tower Hamlets have been built since 1966, and yet there are 21,000 on the waiting list. There is a very high vacancy rate in the new-build properties in private ownership. So we have been building houses at a heck of a rate in Tower Hamlets, but we have not been building them to meet the housing crisis there. I am not attacking the local authority; I am not attacking anyone. As I have said, it simply highlights the fact that the policy is completely and utterly wrong.

I have a development in my constituency, the Kidbrooke Regeneration. I visited some of the brand-new properties that had been built as the first phase of that development— beautiful properties. The price is £300,000 for a two-bedroom property overlooking one of my local parks. I asked who the target market was for those properties—who was expected to buy them. Was it local people living in big three or four-bedroom houses who were nearing retirement, whose children had moved on and who wanted to downsize to a comfortable flat? I was told “There may be one or two of those, but mainly we’re advertising abroad.” In that regeneration we have knocked down 1,900 local council properties. About 30% or 35% of the 4,400 properties will be social housing, provided through a housing association. Most of the private properties will be targeted at people who are not local.

I am not attacking the developer; it works in the market that is out there, and is trying to maximise its profits, as any company would. However, clearly we need to look at how we encourage development, and who we encourage it for, if we are ever to deal with the lack of supply that is at the root of all the problems that we are debating today.