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Cost of Living: Energy and Housing

Part of Bills Presented — Finance Bill – in the House of Commons at 4:24 pm on 5th June 2014.

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Photo of Hilary Benn Hilary Benn Shadow Secretary of State for Communities and Local Government 4:24 pm, 5th June 2014

Only 500 of those homes have been built. The problem is not the planning permission, because more than 19,000 houses with planning permission are waiting to be built; they are simply not being built. What is the structural problem? In part, it is because 30 or 40 years ago two thirds of houses in this country were built by small and medium-sized builders, but by 2012 that figure had fallen to a third. That is a profound change in the structure of the house building market. As the number of small builders has declined and as the big firms have grown even bigger, it has become easier for the dominant firms to buy up land. As Kate Barker found in her report 10 years ago—many Members know that this is true—it is not always in the interests of those big builders to build out the sites on which they have got planning permission as quickly as possible or as quickly as the nation needs.

The truth is that to get the number of houses we require to be built, there has to be a change in how the housing market works—something that Ministers have simply failed to acknowledge. We have to get more firms into house building to build homes and to provide competition, because the high cost of housing is driven by the high cost of land. That is why, compared with the rest of Europe, we have really expensive homes with really small rooms in this country. Not enough land has been released for housing development and, by the time land is given planning permission, it is often prohibitively expensive. That creates an incentive to bank land rather than to build on it.

Those who argue that land banking is not a problem forget what the Office of Fair Trading found in 2008. It said that strategic land banks bought with options, which accounted for 83% of land banks, were worth 14.3 years of production, and that that would be enough to build 1.4 million homes, which would be a welcome addition. What is more, under the current system there is very little that local authorities can do about land banking. Compulsory purchase order powers are little used because they are complex, legalistic, difficult and so on, so authorities, on behalf of the communities that they represent, have no effective way of bringing land forward to the market. That is why we would create greater transparency by ensuring that developers register the land they own and have options on—[Interruption.] The Secretary of State is chuntering, but he is in favour of transparency, so will he support that measure?

We want to give councils and communities the power to charge developers escalating fees for sitting on land with planning permission to incentivise them to build and, if they do not, to release the land. The Secretary of State has denounced the idea, but of course it was supported by the hon. Member for Grantham and Stamford before he was given the job of Planning Minister. As a last resort, we would give local authorities the power compulsorily to purchase land and to assemble land so that we could make progress. The purpose of all those measures is to address the imbalance of power between local communities and developers. I say to Ministers that the land market and the housing market are not working and that is why there is this fundamental problem. There is not enough competition and I do not understand why a Government that includes a party that prides itself on being an apostle for competition is doing nothing about that.

My final point is about how we can get consent and get the houses built in the right place. I congratulate the local authority of the hon. Member for Fareham on the leadership it has shown—he outlined that for the House this afternoon—in recognising that there is a need for more housing and saying where it would like it to go. That is the essence of the deal. We have a much better chance of getting communities to come forward and take responsibility for meeting housing need in their area if they think that the sites they identify are where the housing will go. As we have heard in debates in this House on many occasions over the past two or three years—this is the reason the Planning Minister sometimes gets a tough time—it does not work like that. Developers say that the land is brownfield and too expensive, that they cannot build a lot there and that they want to go for a greenfield site. That has to change.

The fundamental problem with the Gracious Speech is that it does not get why so many people voted the way they did or did not vote at all on 22 May. It does not get the costs and insecurity that many people have to live with, whether they are caused by zero-hours contracts, the bedroom tax, high energy bills, insecure tenancies, unaffordable house prices or having to go to a complete stranger and say, “Can you help me because I can’t feed my family this weekend?” That is the truth. The Government are unwilling to use the power of this House to help people in those circumstances. In the end, the public will judge, but if we want to restore faith in democracy we must use our democracy to help people who find themselves in that position.