Housing: Five-Year Plan

Part of the debate – in the House of Lords at 6:45 pm on 24th January 2005.

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Photo of Lord Rooker Lord Rooker Minister of State (Regeneration and Regional Development), Office of the Deputy Prime Minister, Minister (Office of the Deputy Prime Minister) (Regeneration and Regional Development) 6:45 pm, 24th January 2005

My Lords, with permission, I will repeat a Statement made earlier today in the other place by my right honourable friend the Deputy Prime Minister on the publication of the Sustainable Communities: Homes for All document. The Statement is as follows:

"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 which we face in 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; and a record number of rough sleepers and families in bed-and-breakfast accommodation. And, for decades, the number of households had increased, while the supply of new housing had fallen. This widened the wealth gap and priced millions of people out of home ownership.

"Successive governments had 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.

"I am proud of what we have achieved. There are more than a 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 with 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. It was only by making progress on these issues that we have been able in our second term to take action to increase housing supply and give more people choice and opportunity in housing.

"The number of households has been increasing faster than growth in population, while the supply of new housing has been falling. The number of single-person households has more than doubled from over 3 million in 1971 to about 6.5 million today.

"Ten years ago, house prices were 3.5 times people's annual salary. Now, they are 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. That plan provided for 200,000 extra homes in London and the wider south-east, increasing the total to 1.1 million in the wider south-east by 2016.

"Kate Barker's review of housing supply supported that decision. It said that 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 infrastructure because we are creating communities, not just housing estates. We are investing extra resources in schools and hospitals and over £3 billion of new transport investment in the growth areas.

"The growth areas—the Thames Gateway, Milton Keynes and the south Midlands, Ashford and the Stansted/Cambridge/London corridor—are about creating sustainable communities with more affordable housing. Today, I am announcing £40 million for sustainable communities in other areas to support extra housing growth and promote regeneration.

"Today, 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 been increased from 56 per cent in 1997 to 67 per cent in 2003. Today, we are further encouraging the use of brownfield land. Our new planning guidance will help local authorities release unwanted industrial land to be used for housing or other purposes. We are using less land to provide the homes that people need. We are already doing this in London and the south-east, where we are planning to provide for 1.1 million new homes on less land than the last government set aside for 900,000 homes in 1997.

"We have already added 19,000 hectares to the green belt, an area the size of Liverpool. Now I am proposing a new green belt direction which will further strengthen the protection of the green belt, so that local authorities will have to seek my endorsement for 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 also announcing a review of the way existing homeowners apply for planning permission for home improvements. The number of such applications has doubled in 10 years to over 300,000 and this has put additional strain on the planning system. I believe that we can reduce 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: 850,000 properties are affected and it has devastated the value of people's homes and undermined communities. We are investing £1.2 billion on 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. Today, I am making £65 million available to new areas, such as the Tees valley, west Cumbria and west Yorkshire, to tackle their problems of low demand.

"This 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 over where they want to live, more help with jobs and housing and more opportunities for 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 compared to 1997. This is in addition to the £18 billion that we will have invested in the improvement of our existing social homes since 1997 to correct the disinvestment of the previous administration. That will benefit over a million people, many with new kitchens, bathrooms and central heating. I realise that these are not new houses, but for the people that live in them they are new homes.

"We also aim to halve the numbers of households in temporary accommodation within five years. We are on track to meet our commitment to bring every social home up to a decent standard by 2010. We are making £500 million of new private finance initiative credits available 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 considerably improved tenant participation. We are offering them more information and more involvement in the decisions which affect their homes.

"Local authorities such as Newham and Sheffield have been running choice-based lettings schemes, which have been very popular with tenants. I now want to work with all local authorities to expand choice-based lettings so that we can create a national system by 2010. I want this system to include housing associations and private rented homes.

"It would give information not just about renting but also the cost of buying a share in a home, and it would give more people a chance of finding a decent home with employment.

"We are establishing a new scheme called "MoveUK", which will help tenants 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 delivering the decent homes programme, continue to invest in new social housing, offer more choice and manage housing better and use their land for low-cost homes. We also know that many social tenants want to own a share of their own home.

"Since 1970, home ownership has increased from 50 per cent to 70 per cent and it 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 people who want the opportunity to own a home. By offering more people the chance to own or 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 boost home ownership, but have meant the loss of 1.8 million homes from the public sector and have come at a cost of £40 billion in discounts.

"In 41 areas of housing crisis, I have capped the level of discount. But elsewhere the right to buy still gives a discount of up to £38,000 for each home and the right to acquire gives a discount of up to £16,000. On average it costs us £75,000 in grant to replace each home that is sold.

"I asked Baroness Dean to chair a task force which made recommendations about how to promote sustainable home ownership while protecting the social housing stock. I am grateful for the valuable work and useful recommendations.

"Today, our 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; namely, 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 programmes, 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 because social landlords will have first refusal to buy the home back if the owner decides to move 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.

"Tenants will be able to buy as little as half of their home, increasing their share over time if they want to. This will particularly help tenants who are unable to afford the right to buy or who do not have the right to buy. And—unlike right to buy—it will treat local authorities and housing associations equally, allowing both to retain the full receipts from the sale of homes, therefore creating a level playing field.

"Today's housing plan will widen the opportunity to own or part own. In addition to our HomeBuy scheme, I am announcing a radical new first-time buyers initiative. Our key worker programme has already helped over 13,000 key workers, such as nurses and teachers, who have been previously priced out of the housing market.

"This new first-time buyers scheme 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 it back, so that the house 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. 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 his share—up to full ownership if he wants it.

"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 rural areas—to use their land for new, affordable housing.

"We are encouraged by our talks with the Council of Mortgage Lenders about ways in which the private sector can support and extend the first-time-buyer initiative.

"Separating the cost of land and the cost of construction in the first-time buyer initiative will be a big help in driving down purchase prices for the home buyer, but we still need to reduce construction costs, which over recent years have gone up more than three times faster than retail price inflation, and certainly higher than those in Europe.

"I have said that I believe you can build a home for £60,000, and it is now clear that you can. So I am asking English Partnerships to hold a competition challenging 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 you can deliver high standards at low cost.

"This five-year plan is the next step in creating sustainable communities: mixed use and 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, and homes for all in sustainable communities. I commend it to the House".

My Lords, that concludes the Statement.