Affordable Housing

– in Westminster Hall at 12:00 am on 19th June 2003.

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[Relevant documents: Affordable Housing—Third Report from the Committee on the Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions, Session 2002–03, HC75-I, and the Government response thereto, Cm 5783.]

Motion made, and Question proposed, That the sitting be now adjourned.—[Paul Clark.]

Photo of Joe Benton Joe Benton Labour, Bootle 2:30 pm, 19th June 2003

Before I call the first speaker, let me say that many hon. Members wish to speak and I should like to include all of them. We shall need some 40 minutes for winding-up speeches, so I appeal to all speakers to be as brief as possible so that we can get everybody in.

Photo of Mr Andrew Bennett Mr Andrew Bennett Labour, Denton and Reddish

I welcome the new Minister for Housing and Planning to his place on the Front Bench. I was glad to learn of his appointment. Having had two Ministers with responsibility for housing and planning in the House of Lords, it is nice to have one based in the House of Commons. I hope that my hon. Friend will last longer in the job than the previous two incumbents, and that this afternoon's debate will prove useful to him. Given the crisis in affordable housing, I wondered whether it might have been better if he had gone out and dug some foundations or laid a few bricks, but I welcome him none the less.

I put on record my thanks to all who helped the Select Committee with our report: the Clerks to the Committee, the advisers and all the people who sent in evidence and allowed us to question them. They all helped us to produce what I believe is a good report, based on the evidence that we received.

I pay tribute to one of the members of the Committee as it was 12 months ago, my hon. Friend Ms King, who chivvied us into carrying out the inquiry. Throughout the spring of last year, we considered empty homes, going to places such as Bootle and finding out about the problems in the north of England. My hon. Friend made the point very vigorously that both overcrowding and empty homes were to be found in London, and she persuaded us to visit her constituency to see the problems in Tower Hamlets. During that visit, I saw in London far worse overcrowding than any that I have seen in the United Kingdom for many years. We were firmly pressed into examining the issues surrounding affordable housing. Unfortunately, the inquiry went on for a long time and my hon. Friend left the Committee before it was finished. However, I do not think that she will complain about the report.

When we looked into affordable housing, we learned that there is still far too much housing misery in this country and that we are nowhere near producing the number of houses that is needed. We also have to face the fact that the more we encourage people to choose the schools and hospitals they use and tell them which are the best, the more likely it is that there will be an acute housing shortage in one area, but surplus houses in another a few miles away. It is important that we ensure that all our schools and hospitals are good enough for everybody, so that we do not create the idea that certain neighbourhoods are attractive and others less so.

Let me describe the scale of the problem. The evidence that the Select Committee received showed that we need 85,000 new affordable houses each year, but in 2000, only about 17,000 were built; by 2001, that figure had fallen to only 14,000, and it is now 13,000. We are miles away from providing affordable housing on the scale on which it is needed. We need a step change. The Government announced the sustainable communities plan, which was supposed to achieve that step change, but I understand that the Housing Corporation is talking about not getting anywhere near to building 85,000 affordable homes a year for the next couple of years; if we are lucky, we might get some way towards 30,000. I hope that my hon. Friend the Minister will say what progress is being made on achieving that step change.

The sustainable communities plan identified sites where there was to be a certain amount of affordable housing. Then, there was to be extra affordable housing. When we considered the plan in a recent report, we were rather alarmed to find that the Government did not seem to have identified the problems on each of those sites. I hope that the Minister will take one of the sites, whether Milton Keynes or Ashford, and say what the critical problems will be and what the Government are doing to overcome them.

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown Shadow Spokesperson (Communities and Local Government)

I am grateful to the Chairman of the Select Committee for giving way. His report was excellent and drew attention to a number of issues, not least the fact that resources for the Housing Corporation are exactly the same now as they were in 1995, yet the Government have withdrawn £400 million of local authority social housing grant. Surely the situation will be worse than the hon. Gentleman predicts: we will struggle to maintain the existing scale of housebuilding, let alone increase it.

Photo of Mr Andrew Bennett Mr Andrew Bennett Labour, Denton and Reddish

That is obviously the Opposition's view. I would have been happier with that intervention had the hon. Gentleman said that a future Conservative Government would be committed to coming up with much more public expenditure, but I get the impression that there is a certain reluctance among the Opposition to make such a commitment. Before we go too far into yah-boo politics, perhaps we should ensure that a future Conservative Government would make money available.

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

Let me see whether I can intervene in a spirit that is not yah-boo. Does the hon. Gentleman agree with the Local Government Association cross-party proposal that the Government should defer the abolition of local authority social housing grant, because its abolition is preventing the building of affordable homes that are already in the pipeline and that could be provided in the next two or three years? Will he call on the Minister to delay that abolition?

Photo of Mr Andrew Bennett Mr Andrew Bennett Labour, Denton and Reddish

The hon. Gentleman has made the point; the Minister will obviously have listened to it. I simply emphasise that we need to put in place a road map, to use a not a very helpful expression, so that we can go through the sites and see what is holding things up—whether it is the water supply, gas, electricity or road or rail links—and how long the planning will take. That would enable us to see the way forward. I have a suspicion—the Select Committee will consider the matter fairly soon—that the Government have not been spending the money that they persuaded my right hon. Friend the Chancellor of the Exchequer to put to one side. The first problem is to ensure that the money that is already allocated is spent. Then, we need to get more resources into these areas.

We must also ensure that the resources are better spent, because a huge amount of evidence shows that the building industry is not serving the nation well. There is much more scope for new types of building and especially for greater use of prefabrication. I know that people sneer at the idea of prefabs, but there are possibilities in ensuring that more building is done on a factory site. That means that, say, the kitchen arrives completely fitted out, is slotted in and perhaps has bricks put round the outside of it. We must consider concepts such as the skyhouse, which people are talking about for the Thames gateway. When the Committee considered tall buildings, we were not totally convinced that it was necessary to build up in order to get a huge amount of extra office or housing space. That could be provided by groundscrapers, but we should at least consider whether a building like Canary Wharf could provide a large amount of housing.

We should also consider the serious point that affordable housing means higher densities, so we will have to look at the cost of providing community facilities in such areas. It is fashionable for people to sneer at and criticise much of the housebuilding done in the 60s and early 70s and to say that it did not last. Some of it did not last because of poor architecture, but in the vast majority of cases, the problem was that money was not available for maintenance. If we are to have high-density housing, the Government must consider how it will be maintained. In the centre of Manchester, for example, there has been a huge building renaissance, but much of what has been built is for middle-class people and therefore not affordable. The people who live in those areas pay service charges that are two or three times higher than their council tax. Anyone whose income is well above average can afford to pay such services charges, but we must take into account the fact that sufficient money is needed to look after communal areas in affordable housing properly.

I turn to the other issues in the report—I shall follow your injunction to be brief, Mr. Benton. There was a scandal in Tower Hamlets and other places where people were pushed into exercising the right to buy by speculators who lent them money. When the period in which they had to guarantee to remain in the house had elapsed, the people were squeezed out—some went back on to the housing waiting list—and their dwellings were sold off at a considerable profit. The Government have made some progress in sorting out the problems of right to buy, but will the Minister, first, state the position in respect of implementing the restrictions on right to buy and whether they will apply across the country? Secondly, is he certain that local authorities are enforcing the regulations? I have not come across many examples of a council taking action when someone has exercised the right to buy and passed the property to someone else.

Photo of Mr Kerry Pollard Mr Kerry Pollard Labour, St Albans

My constituency has some of the highest property prices in the UK, yet the neighbouring constituency, Watford, where house prices are 10 per cent. lower than in mine, is included in the new right-to-buy regulations whereas mine is not. I urge the Minister to think carefully about that. The house prices in my constituency are the highest in the whole of the east of England by a considerable margin.

Photo of Mr Andrew Bennett Mr Andrew Bennett Labour, Denton and Reddish

That is not really an intervention for me but for the Minister, who is not jumping to his feet, but my answer to it would be yes.

We must look carefully at the right to buy. Although it should be restricted because the more the right to buy is exercised, the more supply of affordable housing declines, we must consider the rights of the people living in those properties. They should be able to participate in what owner-occupiers in most parts of the country—although not those in low-demand areas—take for granted: that the price of their house will go up and up and that they are therefore gaining a significant capital asset.

Photo of Mr Andrew Bennett Mr Andrew Bennett Labour, Denton and Reddish

I will, but the more I give way, the fewer hon. Members will get the chance to speak.

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

I wonder whether my hon. Friend will comment on the absurdity of local authorities re-leasing council flats that were sold under the right-to-buy programme and placing homeless families in those properties, where the rents are now £300 a week compared with the £60 or £70 a week that would be paid if the property was still being rented from the council?

Photo of Mr Andrew Bennett Mr Andrew Bennett Labour, Denton and Reddish

I am sure that the Minister is listening to these points. Knowing my hon. Friends, I am also sure that they will be knocking on his door and nobbling him in the Tea Room to drive those points home.

Not only do we need to sort something out about the right to buy, but we need to come up with schemes to allow people to own part of a house rather than all of it. The report stressed the fact that part ownership, part rental schemes have to be re-worked out for every development that comes along. I hope that we can quickly put more rules in place for such schemes.

The Committee also studied the way in which, when houses are built for sale, money can be made available to come up with a certain proportion of affordable housing as part of an agreement under section 106 of the Town and Country Planning Act 1990, as substituted by the Planning and Compensation Act 1991. Again, the Government really must get their act together and sort something out on section 106 agreements. They had the idea of introducing a tariff to make it clear how much money would have to be paid over for every development: one could then tell whether money was to go towards new road access, new schools and other facilities, or towards affordable housing. However, the Planning and Compulsory Purchase Bill has been delayed, so we need new rules on section 106 agreements to be put in place so that a developer who goes for a piece of land will know what he will have to pay as part of a section 106 agreement and will be able to take that into account when he negotiates the price of the land with the owner. Most developers' profit margins cannot be squeezed much more, but there is one flexible element—the price the land is sold for in the first place. We therefore need information about section 106 agreements.

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown Shadow Spokesperson (Communities and Local Government)

I hope that this will be the last time that I intervene on the hon. Gentleman. Does he agree that uncertainty about when the Government will make their announcements about section 106 and circular 6/98, combined with PPG3 obligations on social housing, is one of the biggest factors preventing developers from bringing on stream a large number of new houses?

Photo of Mr Andrew Bennett Mr Andrew Bennett Labour, Denton and Reddish

Again, I am sure the Minister has been listening. Of course, he has been in his post for only a week; perhaps we should give him a fortnight to get things sorted out. However, I agree that we need to get on with things, and I hope that he can give us at least some indication of the progress that has been made.

My final point is that as a nation we must consider the stupidity of having an acute housing shortage in the south of England and in some other regions while many homes elsewhere in the country are empty. We must do much more to match up the two. If you look around your constituency of Bootle, Mr. Benton, you will see houses that are almost impossible to sell, yet if they were in the south-east or in parts of London, they would sell for £250,000 or more.

Photo of Andrew Love Andrew Love Labour/Co-operative, Edmonton

With great respect, I have nothing in principle against a firmer regional policy—indeed, I support some of the comments in the report—but if one looks at the figures for the housing that is available in the north and the south, one cannot escape the conclusion that there must be a major housebuilding programme in the south of England.

Photo of Mr Andrew Bennett Mr Andrew Bennett Labour, Denton and Reddish

I am not disputing that, but persuading people to move into some of those empty houses would contribute to solving the problem. It is not just that houses are empty but that they are matched by school places, by facilities at the local hospital and health centre, and by many other facilities. If houses are empty and underused, all those other facilities are underused, too, whereas if we build extra houses in the south-east to meet demand there, we also have to build all the extra facilities to make those communities sustainable. I therefore press the Minister to ensure that part of the Government's strategy is to find ways of making moving attractive.

Part of that effort must be an attempt to persuade central Government, local authorities, schools, hospitals and others to move some of the jobs that are not dependent on being based in the south-east. We must also examine ways of persuading pensioners to move from the south-east to the regions. Some pensioners would have the opportunity to sell their house in the south-east and buy a house for a quarter or less of that price in the regions, and thus to provide themselves them with a very considerable capital asset. It must also be possible to persuade many people whose children are not dependent on one particular community to move. All the evidence shows that people over the age of 40 rarely move house, so we might need to create conditions in which they can feel that they can move. Perhaps they could sample a move to some of the northern cities, which they might find far more attractive than the overcrowded south-east, and they might be happy to stay with an insurance policy that they would be able to go back.

I ask the Government and the Minister how we are going achieve a step change in the number of affordable houses being built across the country. How are we going to get the sites that have been identified in the sustainable communities plan up and running? That has to happen rapidly so that we do not end up like the 1950 Labour Government who got everything in place, only for the following Conservative Government to get the credit for building the houses even though the previous Administration had done all the work.

Let us get houses built quickly. Let us examine the right to buy. Let us make sure that people who cannot afford to buy a house outright can get access to simple schemes for part ownership of a property. Finally, let us think how we can persuade more people to move away from the overcrowded south-east to some of the other very attractive parts of the country.

Photo of Mr Paul Tyler Mr Paul Tyler Liberal Democrat, North Cornwall 2:51 pm, 19th June 2003

I am delighted to follow Andrew Bennett. I will comment on several of the points that he made, but first I thank the Minister for his presence this afternoon. I hope that after seven days in the job, he is fully aware of all the issues that will be brought before him. We recognise that in his previous main roles, he has taken great interest in these matters, albeit with a particular focus on London. Now, I ask him to take a less metropolitan and more nationwide approach.

I declare a past interest in that I have at various points in my non-political career advised the Royal Institute of British Architects, Shelter, the House Builders Federation and the Campaign to Protect Rural England on housing policy. I have something of a track record on this matter.

There are many issues on which I agree with the hon. Member for Denton and Reddish. However, I wish to address a particular constituency-based interest of mine, namely, affordable housing in rural areas of Britain, particularly the south-west. I agree with the hon. Gentleman about the shortfall in delivery—that phrase sums up this Parliament. Delivery of affordable housing is woefully short of expectations: 13,000 units a year built when 80,000 units are needed each year is certainly unsatisfactory.

I entirely agree with my hon. Friend Mr. Davey about the need, at least in the immediate future, to delay the abolition of the local authority social housing grant. I hope that everybody taking part in the debate will, on an all-party basis, endorse the request by the Local Government Association that that should not happen.

The biggest mistake in right to buy was that it was a central Government decision-making process. It should always have been left to local representatives, whatever their political perspective, to decide where it was appropriate.

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

Does the hon. Gentleman appreciate that in the London borough of Westminster, an aggressive version of the right-to-buy policy was the bedrock of Dame Shirley Porter's policy? If local autonomy were allowed to prevail, we could end up with that sort of abuse, which ended up with £30 million being owed to the people of Westminster.

Photo of Mr Paul Tyler Mr Paul Tyler Liberal Democrat, North Cornwall

I must declare an interest. Although I entirely agree with the hon. Lady that distortions can occur, my daughter lives in a flat that was once a Westminster city council flat—and a very nice flat it is. I therefore benefit indirectly.

The hon. Lady is right—we must have a national scheme; but such a scheme should contain an element of local determination, not least because councillors can be held to account for the way in which it is implemented. We all know that the local electorate wanted Lady Porter and her evil works gone. She was eventually removed, but unfortunately some issues are still outstanding.

The Chairman of the Select Committee raised the important subject of shared ownership. Housing associations tell me that they get twice as many homes for their money if they produce good quality, sustainable shared-ownership schemes. The hon. Gentleman is right: it is absurd that we should continue to reinvent the wheel, area by area and housing association by housing association.

With your remarks about brevity in mind, Mr. Benton, I shall concentrate on the south-west. I refer to the extremely important work done in parallel with the Committee and the Government's response by the Joseph Rowntree Foundation in its excellent recent report, "Can work. Can't buy". If that describes any part of the country, it certainly applies to Cornwall.

Younger earners in their 20s and 30s find it harder to set foot on the home ownership ladder in the south-west than in any other English region outside London. Indeed, in some areas in the south-west the affordability gap is worse than in many parts of London. The study done by the foundation found that the asking price of modest houses in Purbeck, east Dorset and north Cornwall—my area—demands almost as big a share of the typical pay packet for local workers under the age of 40 as the highest priced homes in fashionable London boroughs such as Westminster, Camden and Islington. Affordability is not just a metropolitan problem. I hope that the Minister will visit us in Cornwall during the summer recess to see for himself not only what a glorious place it is, but how serious the housing problems are.

A total of 15 districts in the south-west figure feature in the league tables as being among the 40 least affordable areas in England. Districts as varied as Salisbury, Gloucester, Penwith in Cornwall and Torridge in Devon are included in the list. The report was prepared by the university of York and it presented three affordability indices comparing younger workers' earnings with house prices in every borough and district for four or five-bedroom houses. [Interruption.] I should have said four or five-room houses—I thank my hon. Friend the Member for Kingston and Surbiton for correcting me. The first index compared local house prices to income ratio. The second was an access-to-ownership index that calculated the percentage of working households under the age of 40 in each district whose pay was too low to purchase even the least expensive starter homes. The third was a key worker index that identified local authority areas where qualified nurses, teachers, social workers and police constables could not find affordable accommodation. I would add to that list people such as coastguards and Royal National Lifeboat Institution crews who, for obvious reason, have to be on emergency call in many of the smaller communities in the south-west. They do not have a hope of being able to afford homes of their own.

An analysis of the indices showed that across the south-west small starter homes cost more than four times the average annual income for local working households with earners in their 20s and 30s. The national average is less three and a half times the average annual income. That is a major discrepancy. In 16 south-west districts, the house price to income ratio for younger workers exceeds the average for London—I have already mentioned some of them. The only south-west district with a house price to income ratio below the average is north Somerset. Average prices for four and five-room houses are lower in the south-west than in the south-east, but the differential between average incomes of households with younger workers is even wider, ranging from £29,626 in the south-west to £38,478 in the south-east. I could continue, but others want to contribute to the debate.

Professor Wilcox of York university said:

"This analysis challenges any assumption that the housing affordability crisis is confined to London and the South East. When local incomes are part of the calculation, and we look at the price of starter homes, it is clear that young working people in many south-western districts, from Cornwall to Dorset, Gloucestershire and Wiltshire, face severe difficulties finding even a small home they can afford to buy."

He continues:

"Policy makers would be foolish to focus their attention solely on the higher house prices in the South East and ignore the way that affordability problems are spread across the South West as well."

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

I totally concur with the hon. Gentleman, but there are two key points to make. First, one cannot isolate housing from other rural issues such as employment, transport and access to services. Secondly, a problem unique to rural areas is that they have relied a great deal on things like the exceptions policy in planning, which has broken down. No more land is becoming available, which means that we cannot build in villages until we adopt a radically new approach and make it worth villages' while to take on new housing.

Photo of Mr Paul Tyler Mr Paul Tyler Liberal Democrat, North Cornwall

I agree. The hon. Gentleman's Gloucestershire constituency strongly reflects the situation in the further south-west, which some call the wild west.

Several calamitous policies under successive Governments have allowed parts of the south-west to become a graveyard for local people's hopes of affordable housing. Not least among those calamities is the policy on second homes. We have a desperate problem with second homes, but despite their promise the Government have so far failed to do anything serious about second homes. I hope that they will fulfil their promise, and not only in relation to council tax. The sort of person who buys a second home in Gloucestershire or Cornwall will always have the resources to pay a 200, 300, 400 or even 500 per cent. rate of council tax. Some sort of responsibility should be placed on the local planning authority to decide when enough is enough and to make the transition of any property that has been in full use into the second home market a matter for planning consent. That is the only way in which the local community can take back control of the local situation.

I entirely agree with what the hon. Member for Denton and Reddish said about encouraging people from the south-east to spend the profits from their housing in the north, but to be frank, an awful lot of them have already spent in Cornwall the profits from the sale of their property in the south-east, and they have distorted the housing market disastrously. That has added to the calamity of second homes, because even houses that were bought under the right to buy have ended up in the market for second homes or retirement homes—in other words, as properties for people other than those for whom they were originally intended.

It is nonsense that the council tax advantage introduced by the Conservative Government continues, but what is worse is the ridiculous Conservative proposal that that the right to buy should be extended to housing association properties. That is absolutely crazy. The Conservatives must be out of their minds and totally out of touch with rural areas if they believe that that will be of any assistance to the people who are most in need of affordable housing. Throughout the south-west, such an extension of right to buy would be an unmitigated disaster.

For many years, through the work that I described and through the work with Shelter, I have been trying to help those who have no access to affordable housing in their own community. However, our local efforts to do something about the problem have been stymied by successive Governments who have failed to see that the south-west has a particular and sizeable problem. I welcome the work that the Select Committee has done. I hope that the Minister's response will be positive, and that the Committee and the Minister will seriously consider the work that has been done by the Joseph Rowntree Foundation. 3.3 pm

Photo of Christine Russell Christine Russell Labour, City of Chester

I, too, welcome the Minister to his new post. Without sounding too cheeky, I must say that I hope that he is more accessible than his predecessor to Members of this House. In other words, I hope that we can get him up against the wall in the Lobby and lobby him.

I welcome the opportunity to participate in the debate. My constituency probably has more in common with that of the previous speaker, Mr. Tyler, than with that of the Chairman of the Committee, my hon. Friend Andrew Bennett. Chester is a high-demand housing hotspot, but it is located in the north-west, which is a low-demand region.

The No. 1 concern of constituents who come to my surgeries is the lack of affordable housing in Chester—I suspect that I share such problems in common with many other hon. Members here. There is plenty of evidence that increasing numbers of people are being priced out of the housing market. For instance, the statistics show that a typical two-up, two-down Victorian terrace now sells for more than £100,000, which is far beyond the reach of first-time buyers. When we conducted an inquiry into empty homes, we visited your constituency, Mr. Benton, and a number of other constituencies in the north-west. We discovered there that £100,000 would buy a whole street of Victorian terraced houses—indeed, one could pop along to the local and pick up a house like that for perhaps a few hundred pounds, never mind a few thousand.

It is always useful to give our local statistics. The statistics from my constituency show that 3,327 applicants are on the waiting list. I do not wish to disagree with my Committee Chairman, because he is an excellent Chairman, but I would not want to encourage too many pensioners in need of social housing to move up north to my constituency because there are already nearly 1,000 pensioners on the housing waiting list.

Last year, 320 homeless families presented themselves at the housing trust. The right to buy has meant that housing stock in Chester is being lost faster than it is being replenished—other hon. Members have talked about similar problems. I certainly support the calls from my hon. Friend Mr. Pollard and I hope that the Minister will consider extending the discount reduction scheme to other housing hotspots.

We all welcome the Government's sustainable communities plan, which will, I think, put £5 billion into housing over the next few years. The main thrust of the sustainable communities plan for the north-west is rightly to address depopulation in big cities such as Liverpool and the problems of abandonment and lower demand in places such as east Manchester and Burnley. The Government's announced commitment is now to market renewal, which is welcome. However, I am concerned and should like assurances from the Minister that the Government recognise that the need for affordable housing does not follow the traditional north-south divide and that many parts of the north-west, such as Chester and South Lakeland, face problems similar to those that the south-east faces. The housing associations in my constituency are concerned that the creation of the single regional pot for housing could result in local housing needs in places such as Chester being overlooked.

The increasing disparity between income and house prices in Chester, as in Cornwall, means that the public and private sectors are now starting to experience recruitment problems. In the case of Chester, key workers such as nurses have been forced to move over the border to north Wales, where property prices are so much lower. It is not much fun to come off a 12-hour shift and then have to face a long commute involving two or three buses to get home. I therefore call on the Government to consider extending the key worker initiative to parts of the country that face an acute shortage of affordable housing.

I support the outcry against the abolition of the local authority social housing grant. The loss of that grant will at best cause delay; at worst, it will result in the loss of hundreds of desperately needed affordable housing units—260 in my constituency. Will the Minister consider instructing the Housing Corporation to use some of its extra allocation from the sustainable communities plan on supporting the schemes that were in line for social housing grants, or to allow a 12-month extension for schemes where the local authority has already made the commitment and raised the expectations of local people? That view is shared by the LGA.

During its inquiry, the Committee heard a great deal of evidence to support the view that the contributions towards affordable housing secured through the planning system have so far been modest and that their potential is fairly limited. I checked with my local authority, which reckons that so far 111 affordable units have been provided. That is roughly 13 per cent. of new housing development in Chester.

Most hon. Members will know that the Government issued a circular in 1998, in which they said that 25 per cent. of all units in developments of more than 25 properties should be affordable housing. In historic cities such as Chester, many of the potential development sites are small and fall below that 25-unit threshold. That does not apply in rural areas, so in some ways those areas are better off, although I accept what my hon. Friend Mr. Drew said about the lack of development sites.

In many cases, developers skew their applications deliberately to avoid the need to provide any affordable housing. Although the Government state that circular 6/98

"does not preclude developers from providing affordable housing on sites which are below the threshold" and that the Government encourage them to do so, most developers have a very negative attitude towards that circular. I understand from discussions with the Minister's predecessor that the Department intends to update the circular. I would be interested to know when that will happen. Could the Minister give us some idea of the content of the new guidance to local authorities?

The current system of negotiation allows too many developers to provide affordable housing that meets their own requirements, but does not meet the needs of the community. There should be more scope for local authorities to be prescriptive in their requirements for the type, cost and tenure of the new units. At present, the developer usually concludes his land deal before he enters into discussions with, or seeks advice from, the local authority. Frequently, that results in adversarial confrontation rather than good partnership working between the public and private sectors.

Finally, if we are serious about providing more affordable housing, we need to be far more co-ordinated across government. In my constituency there are vast tracts of land in public ownership and I am sure that that is also the case in the constituencies of many other hon. Members here today. In Chester, there are acres and acres of land that is surplus to the requirements of the Ministry of Defence, British Waterways and housing trusts. Network Rail also owns many acres of land suitable for housing. However, the biggest hurdle in the provision of affordable housing is astronomic land prices. If the Treasury could be persuaded to change its rules, so that public assets could be sold at less than market price for a proven social need, that could make a huge contribution towards the provision of affordable housing.

Photo of Clive Betts Clive Betts Labour, Sheffield, Attercliffe 3:14 pm, 19th June 2003

When the Committee examined the issue of affordable housing, we found that one major problem was the shortage of houses, particularly in the south-east. We found that despite the Government's excellent progress since 1997 in increasing investment in housing, their commitment to increase expenditure by 4.2 per cent. a year in this year and the next two years meant a shortfall of about £1 billion in the money needed to provide enough socially rented houses—about 20,000 extra houses. That is a major problem. Many of us want housing to be put higher up the political agenda and are pleased that the Government seem to be doing that now, but they will still have to return the question of resources.

As has been mentioned, we produced a further report on sustainable communities and recognised the need for additional homes to be built. However, coming from a northern constituency, one of my concerns, which I raised as part of that inquiry and will repeat today, is about the major investment in infrastructure that will be necessary to develop those four new communities in the south. Will the Minister reassure us that it will not be at the expense of infrastructure investment and regeneration areas in the north?

I can see the pressure on the number of houses, but there can be different housing markets in one city. For example, there is a demand for new houses to be built in the south of Sheffield, where my constituency is, and a problem of low-demand properties in north Sheffield. Therefore, it is important to note that it is not simply a question of numbers, but also of quality. There is no use in telling people that they can move into a £10,000 house down the road or a council property that has not been modernised in the 50 years of its existence. Those houses are affordable, as people can afford to pay the rent or take out a mortgage on it, but they are poor quality. Should people be aspiring only to that standard of housing in the 21st century? Quality, as well as affordability, must be addressed.

We welcome the Government's commitment to the housing market renewal fund. One of the pathfinder projects covers part of my constituency and again we agree with how the Government have gone about their work. They have not been prescriptive and defined a specific funding scheme, telling us to jump through hoops to meet certain criteria before we get any money. They have said that money is available and that people should work out at a local level how to use it to tackle their problems, which is a welcome change in approach from many past initiatives.

I have two concerns, however. First, the £500 million is welcome, but it will only scratch the surface of the problem of sustaining affordable houses of a reasonable quality in the north of the country. The Government will have to commit more funds if we are to save some of the houses and ensure that people have reasonable housing in which to live.

Photo of Andrew Love Andrew Love Labour/Co-operative, Edmonton

My hon. Friend will be aware of the 10-year target for bringing all existing affordable homes up to a decent standard. As yet, there is no target for the production of new affordable homes, so should he not be more worried about them, rather than existing homes, which are the subject of a clear target?

Photo of Clive Betts Clive Betts Labour, Sheffield, Attercliffe

I am worried about numbers and have said already that more resources will be needed to build the 20,000 extra homes that the Committee thought were necessary. My hon. Friend is right that we would like the Government to make that their target, but I shall come to decent homes targets later.

To return to the housing market renewal fund, I have already said that we will need more resources once the pilot projects show how we can spend the money. My second worry is about the fact that those projects look at the worst properties in an area and consider their demolition. My concern is that they will not cover the nearly-the-worst properties, which, if we do not do anything about them now, will be in a similar condition to the current worst housing in 10 years. Communities that might slip into a poor state are being excluded from the pilot projects. I have had discussions with local officials about the Triangle estate in my constituency. I might well visit the Minister to discuss it in due course.

I accept that there is a decent homes target, but there is a problem with it and I asked the Deputy Prime Minister about that yesterday at Question Time. The Government accept that to achieve the target and to ensure that current affordable homes remain habitable they rely on three sources of funding: the traditional funding for local authority houses, the funding through arm's length management organisations and the private sector funding for stock transfers. The problem is that tenants in individual local authorities must decide who they want their landlord to be.

The Government's success in achieving the decent homes target seems at this stage to be reliant on tenants nationally voting in the proper proportions either to have their houses transferred to a housing association, to vote for an ALMO or to stay with a local authority. If tenants nationally do not divide into those various groups in the same ratio as the available funding, what happens to the decent homes target? That is a fundamental problem. We will carry out an inquiry into stock transfer and the target in the autumn. The target is not necessarily achievable unless the tenants vote in the right way—individually and collectively—to access the funding that has been made available in the discrete boxes that the Government are providing.

The Committee identified other issues in the report. We are looking forward with interest to reading the Government's new planning guidance. We are looking forward to seeing how we can disseminate good practice. There is a lot of good practice at local authority level in getting planning gain and using it to provide affordable houses. Some authorities are not successful and they can perhaps learn from the better authorities. We are keen to see whether the Government follow up their expression of interest in the Committee's suggestion that commercial developments could also provide some planning gain for affordable houses. When affordable houses are provided by planning gain, they should not be put up in one corner of the site with a brick wall around them where they are obviously inferior and not part of the wider community. That happens on occasion and we want the Government to issue guidance to ensure that it does not happen in future.

We have to be cautious. Planning gain will not fill the gap that exists between houses that have been built and those that are required. It will perhaps provide a small, marginal increase. At the same time, as more homes are built on brownfield sites, there will be less planning gain around to build the affordable homes that we need. That brings us back to where the Government can provide the extra resources to ensure that any target that they set—we hope that they will—is met.

I agree with my hon. Friend Ms Russell that we should be looking at how public unused or underused land can be released, not necessarily at full market value but perhaps at a lower value recognising the importance of providing affordable homes. We should encourage the regional development agencies to be more proactive in using compulsory purchase orders where land is lying around in the private sector that could be used for that purpose. Indeed, the RDAs in general have a bigger role to play in housing. Yorkshire Forward opted out of housing altogether a couple of years ago, saying that it was not one of its priority areas. It has now changed its mind and has decided to come back into it.

The history of RDAs and English Partnerships getting involved in housing schemes has not always been happy. I have an excellent scheme in my constituency, the Attercliffe village project, which is a mixture of housing association properties and low-cost homes for purchase. It has had some subsidy from the RDA. From the initial idea to the first tenants and residents moving in took 10 years. Three of those years were spent arguing with English Partnerships and the RDA about the level of subsidy that they would give. We were not talking about fortunes, but about £10,000 a unit to get the development up and running. It will now hopefully be added to with some further developments.

If we are putting public money into encouraging such developments, particularly into low-cost homes for sale—there is some public sympathy for that—we must look at what happens down the line. Should the benefit of that subsidy go only to the first purchaser or should there be some conditions so that when they eventually sell on there is a reduction in the price so that others can benefit too? Otherwise, only the first owners or the first people who move into a shared ownership scheme will benefit. We have to sustain that public investment to help people. I welcome the Government's comments about the right to buy and the action that they have taken. Some hon. Members have pointed out that the Minister might look again at how far he can go in designating new areas.

Finally, I must say a few words of caution. The Chairman of the Committee was right to say that if we are to move to higher-density housing, we must make sure that we get the design right. Too often in the past, we have put things together then wondered why, 20 years later, not merely the buildings but the communities have not worked. We must also consider maintenance costs. A few weeks ago, the Committee visited Greenwich. Although the new housing is attractive on first sight, I fear that there will be design and maintenance problems in 10 or 20 years. We have got so many things wrong in the past that I hope that Ministers will realise how important the matter is and will think about the sort of guidance that they can give.

I am still totally unconvinced about system-built housing. It might be a conservative instinct in me—one of the few such instincts I have—but I have too often heard Governments say that they know that there have been problems in the past, but that they think that they have now got it right. System-built housing is unproven in this country, and once it is built—

Photo of Mr Kerry Pollard Mr Kerry Pollard Labour, St Albans

In my constituency, we have 12 prefabs that were built to house people at the end of the second world war. They are still there and still lived in. Some years ago, when I was chair of housing, we decided to knock them down and the residents put a rope across the road to prevent me from gaining access to them, so proud were they of their houses. Purpose-built houses can have a place in our society, and modern methods of construction are excellent.

Photo of Clive Betts Clive Betts Labour, Sheffield, Attercliffe

I do not often disagree with my hon. Friend; perhaps he is right about the prefabs and they are the exception that proves the rule. I would be worried indeed without at least some lengthy trial schemes, and a guarantee that people would be available to maintain such properties. Often, system-built housing goes up, then the firm goes out of business and nobody knows how to maintain it. That can be a problem. Instead of—possibly as well as—considering system-built housing, I would seek a major expansion in the training of craftsmen and women in the traditional skills of the building industry, so that we do not experience the shortages that force us to rely on system building because there is no labour available to build traditional homes.

I stress that the Government have done many things right. In my constituency, housing expenditure has gone up by more than half as much again since the general election and we have extra resources. However, the scale of the problems that we inherited and the disrepair and disinvestment of the previous 18 years mean that the Government have a major task in identifying the resources to deliver the affordable homes that the nation needs.

Photo of Karen Buck Karen Buck Labour, Regent's Park and Kensington North 3:27 pm, 19th June 2003

I refer hon. Members to my entry in the Register of Members' Interests.

I congratulate the Committee on its important contribution to the debate and welcome my hon. Friend the Minister to his new brief. The Government have done some important things in the recent past, not least increasing spending through the comprehensive spending review 2002. The bed and breakfast target constitutes a major recognition of the problem in London, and it was right and brave to begin to grapple with right to buy, which has been a politically taboo subject for a long time and has thrown up a number of problems.

Despite that, we have to recognise that, for our constituents, housing is an issue of public service delivery as important as education, health and crime prevention, yet it has nothing like the degree of political salience. Until it has such clout—it will never enjoy the public or media attention that those other issues attract, not least because most journalists do not live in social or shared-ownership housing—the Government will have to attach more importance to it. We have to do that because, as my hon. Friend Andrew Bennett said, we face a crisis.

It is unfortunate that the word "crisis" is bandied around so much, because it should be used selectively. In London—I am going to be unashamedly, unapologetically and nakedly metropolitan—we have a housing crisis. If we do not tackle it, there will be serious consequences in the coming years. Spending has increased recently, which is welcome. However, house building is at an 80-year low and housing investment is still below the levels of a decade ago. The £1.4 billion spending plans for housing are likely to leave us between 37,000 and 50,000 units a year short. In other words, we are dealing with about 50 per cent. of housing need and making few inroads into the backlog.

I accept that there is both a chronic problem of low demand and pockets of acute housing shortage in rural areas and some high-value towns outside London, but in London we face such manifestations of the crisis as the fact that 60,000 households are in temporary accommodation—the highest number ever. Seventy per cent. of Britain's homelessness backlog is in London. The backlog of unmet housing need in London is estimated to involve 112,000 households. The census shows that London has the worst overcrowding in the country.

Different policies can be put in place to help to tackle those problems. One policy that has been adopted by some local authorities and that the Government are committed to rolling out was in the homelessness legislation: the extension of choice-based lettings. Camden council, a very high-demand central London authority, has adopted choice-based letting and found that that tool has enabled it to reduce its homelessness problem. However, even with choice-based letting, we still need massive additional housing investment to deal with the problem.

It is sometimes said that part of London's housing crisis is due to migration. We have to discuss that important issue and tackle it head on, because competition for the scarce resource of housing is the principal practical driver of racism in the capital. We must deal with that. The number of homelessness acceptances in London is lower than it was 10 years ago; the problem is caused not by increased demand for housing, but by the fact that the supply of new lettings is falling, even with additional investment coming on stream. For every four lettings that were available to homeless families and tenants on the transfer list 10 years ago, we now have only three, and that trend is likely to continue for the foreseeable future.

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

Is it not also a fact that the demand for housing in London is an innate demand from the population, because London has one of the youngest populations in the country? The higher demand is created by young households living in London and having babies, as well as by the lack of supply to which the hon. Lady referred.

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

The hon. Gentleman is right that household formation is one driver of changed housing need, but the figure that I quoted reflects that. The problem is that, even allowing for household formation and migration to London as drivers of increased housing need, our problem is not housing need, but housing supply. We must address that.

We have talked, rightly, about some of the facts, statistics and policies, so I shall do what I often do in such debates and remind hon. Members of what those mean and the type of cases that we are addressing. I am sure that my hon. Friends from high-demand areas will be familiar with them. Mrs. Padbury says:

"I am single parent with 7 children aged between 9 months and 14 years . . . two of my children are disabled. I am living in a 3 bedroom flat. My 14 year old daughter and my 13 year old son share one room. In another room I have . . . two sons aged 9 and 8. In my room is myself and my 9 month old. In the sitting room is my two daughters. My children fight all the time . . . my oldest daughter has her GCSEs coming up", but she is unable to study. The council's response is that only two four-bedroomed properties will be available to let on the transfer list this year. My constituent's position on the list implies that she will have to wait five years before she receives an offer.

Mr. Nutbourne shares a two-bedroomed home with his wife and five children. The council writes:

"Under the city council's bedroom standards, Mr Nutbourne's 2 sons and 2 daughters are expected to share one room".

They would be awarded additional overcrowding points only if one of them was over 17. In a third case, someone says:

"On April 30th, we had our third child . . . we are still in the same tiny 1 bed flat and there appears to be no progress whatsoever regarding a move either with the local council or Kensington Housing Trust. It makes me cry when I see other children living normally while mine are deprived of any proper living or sleeping space."

That is the reality for tens of thousands of households in London and in some other high-demand areas.

Another reality is that many of the families at the most acute end of the overcrowding problem are black and ethnic minority families. The Office of the Deputy Prime Minister's annual report on housing black and minority ethnic communities—my hon. Friend the Minister may be familiar with it—shows that 2 per cent. of white families report overcrowding compared with 23 per cent. of Pakistani and Bangladeshi families and 9 per cent. of black families; and 14 per cent. of white families had poor housing conditions compared with 35 per cent. of Pakistani and Bangladeshi families and 23 per cent. of black families. As many as 35 per cent. of white families want to move, which seems bad enough until you compare it with the 52 per cent. of Bangladeshi families and 52 per cent. of black families who want to move. Although many white families are deeply embittered and feel that immigration is the cause of the housing pressures, the reality is that black and ethnic minority families are suffering the most acute housing problems.

I ask the Minister to reflect on the fact that the housing investment opportunities for social rented housing or for shared ownership housing do not have anything like enough scope to allow larger properties to be built. Four, five and six-bedroom properties are simply unavailable, and the grant process works makes it uneconomic for social landlords to build larger properties. Nothing is being done as a result. It is ironic that it is the most overcrowded and most desperately needy families of all colours who wait longest and for whom the least is being done. It is perhaps no surprise that many of those families have the lowest educational achievements and some of the worst health conditions; those factors are interlinked. I ask the Minister urgently to look into the issue of housing investment for larger properties.

We must build larger properties, to rent and to buy, in high-value areas. The Government are rightly committed to ensuring that we move away from having estates or even towns and cities that are predominantly poor and where people on low incomes predominate. We want to change that and we want to get mixed tenure right. However, the Government are not saying that we need to increase investment in some high-value areas—but if we do not increase investment in such areas in order to help low-income families buy or rent affordable property, where will they go? At the moment we are dealing with only one side of the equation—mixed tenure and mixed communities. We are failing to reflect the fact that those families exist and have to go somewhere. In the meantime, they are having to put up with acute or chronic overcrowding. I pay tribute to my hon. Friend Mr. Love for his work on statutory overcrowding. I welcome the fact that some hon. Members are working on the problem.

My last comments are a variation on the same theme—the necessity of recognising that low-income families have to be enabled to live in high-value areas. The Government are piloting a proposal for standard rent allowance in the private rented sector. That is reasonable, not least because many private tenants face significant shortfalls between what they pay in private rent and what they receive in housing benefit. The intention is to give people a standard allowance based on geographical area. As a result, households will know exactly what they can purchase in the open market; they can then negotiate rents with the private sector landlords. The pilot scheme is relatively new, and I hope that it is successful. However, in his Budget speech, the Chancellor of the Exchequer flagged up the fact that he was interested in rolling out a similar standard housing allowance into the social rented sector. I put it to the Minister that the consequences of such a policy in high-value, high-cost areas are likely to be serious. It will polarise neighbourhoods, so that low-income families who have the least to spend will be driven to the cheapest properties.

Under the Government's policy of rent restructuring, there is a greater divergence of rents between high and low-value areas. New, good-quality properties will have higher rents; older, less modernised and slightly less attractive areas charge lower rents. If there were a standard housing allowance for a geographical area the size of a local authority, lots of people would either be priced out of good-quality accommodation, thereby concentrating low-income families in the poorest accommodation, or face a shortfall between their rent and housing benefit. According to research by the Association of London Government, 11 London boroughs said that the number of rents well above average—in other words, those that housing benefit would not fully fund—will rise as a result of rent restructuring. One borough has nearly one in five rents above average. That means that potentially one in five tenants will face a shortfall between their rent and the maximum amount of housing benefit that they can receive.

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

Do we not already know that the policy would be disastrous from our experience of the experiment that the Government took over from the Conservatives of putting a cap on housing benefit in high-rent areas? I am sure that the hon. Lady has people coming to her constituency advice surgeries who cannot afford to pay private-sector rents. This policy would make that situation even worse.

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

I am against the restriction on council tax benefits. That is a dangerous policy.

I end by saying that both in terms of housing investment and the standard rent allowance, we must be clear that if we want mixed communities, we have to have mixed communities everywhere. That means that we must be willing and able to inject the necessary investment to allow low-income families to live in high-value areas, where they are necessary for society and for the economy.

Photo of Ms Jane Griffiths Ms Jane Griffiths Labour, Reading East 3:41 pm, 19th June 2003

The Select Committee report is an extremely useful document. It is very important in that it pulls together the pressures facing affordable housing and what needs to be done to meet needs and demands. I congratulate the Committee members on their work. In my contribution, I would like to use the situation in my constituency to highlight some of issues discussed in the Committee's report, and the response thereto.

I will address the general situation in Reading, East, and in particular the situation of key workers. I would like to thank Debbie Ward at Reading borough council for her thoughts on the situation in Reading and for the information that she has provided. However, the use of that information and the arguments that I make are my responsibility alone.

At the end of March, Reading had six families in bed and breakfast, all of whom stayed less than six weeks. There were also seven single people in bed and breakfast. As the bed-and-breakfast facilities that Reading uses are in Slough, the consequences are severe, especially for working people in poorly paid employment. They not only lose their home, but quite often cannot afford to stay in employment. Their children have to change schools, and they have to change them again in less than six weeks.

The price of Reading's relatively low use of bed and breakfast is that there are more than 250 people in temporary accommodation. Some 7,500 people are on the housing waiting list. About 1,000 people present as homeless each year and a duty to house them is accepted for 45 to 50 per cent. The council houses around 700 people a year, so it does not take a mathematical genius to work out that about 200 from the waiting list get housed each year.

Of the new development, 90 per cent. is brownfield, which means that it is expensive to develop. However, the council manages to build about 150 new homes a year. That is 1,000 homes short of what the council's housing needs strategy states need to be built each year. Things will be better in the coming 18 months as success with the challenge fund means that around 400 new homes will be built.

About 80 to 100 homes a year are lost through the right to buy, meaning that there is a net gain to the housing stock of 50 to 70 homes. We have yet to see what difference the recent reduction in the discount has had, but if all applications that came in before the change was made are completed, 200 homes would be lost this year. I am sure that that picture is replicated across the south-east. Most of the new units are gained through the planning system. The council has a target of 38 per cent. affordable housing in each development.

Having given that background, I will turn to the issue of key worker housing. I have spoken before of the difficulties that the high cost of housing causes public services in my constituency. Indeed, in 2000, I secured an Adjournment debate to discuss the problem. I was pleased that Reading subsequently received one of the best allocations under the key worker housing initiative, although I do not take personal credit for bringing that about as a result of my Adjournment debate—I am far too modest.

I was pleased that the then Minister visited Reading to talk to people who provided public services and to hear for herself what problems Reading faced. Welcome as the Government's assistance is, most of it is targeted at younger single people in smaller housing units. That is good for attracting people at an early stage of their public service careers, such as teachers or social workers who have just qualified. However, no attention has been paid to older people. People who have completed their training, have some experience and want to settle down to start a family face even greater problems with housing.

Last summer, I spent the recess accompanying people who provide public services in Reading and Woodley. I wanted to hear from them and to experience what their jobs involved. As a result, I have learned that Reading has become a training town. It is good at attracting people and training them but, once they are more mature and want to start a family, they find that they cannot afford to buy the house that they want and they move elsewhere. The problem is experienced across the sector—from the ambulance service and the police to firefighters, bus drivers and others.

The extent of the problem is illustrated by the results of the council's housing survey, which was called "Living in Reading". It showed that three out of 10 households felt that they were likely to move in the next five years, and nearly half of those expected to leave Reading. Migration into and out of the town are roughly on a par, but the out-migrant households tend to be larger than the in-migrant ones.

The difficulties that the lack of experienced staff causes for the provision of public services are obvious. Solving that problem will be the next challenge for the Government as regards key workers—it will be a challenge for their public services agenda.

Let me explain the nature of the problem. A three-bedroom terraced house of the type to which someone with two young children might aspire costs about £160,000 in Reading. A mortgage of three or three and a half times earnings is therefore well out of the reach of a police officer who has finished training and done a couple of years' service. I apologise for neglecting to welcome my hon. Friend the Minister to his post at the start of my speech. I hope that he will tell us what plans there are to widen the starter homes initiative to the groups that I have described.

On page 4 of their response to the Select Committee report, the Government state:

"The Government agrees that numbers of affordable homes (in the sense of social homes or homes for low cost home ownership) have declined over the last two to three decades. A return to the huge social house-building programmes of the past would not be appropriate at a time when owner occupation is the tenure of choice for the majority of people."

They go on to talk about expanding private housebuilding and about reforming the planning system. They then refer to the short to medium-term need for major investment in homes to buy or rent at below market rates

"to address homelessness and to house essential key workers."

The implication is that they believe that homelessness and the need to house essential key workers will disappear in the medium to long term. If I understand it correctly, that shift is meant to result from a massive increase in private housebuilding and from the fact that home ownership is people's tenure of choice. However, there is certainly no evidence that it is happening in Reading.

The demand for affordable housing in Reading is deepening and widening. A report that is soon to be published shows that there is a significant housing shortage in Reading and that more than 50 per cent. of people cannot meet their housing needs. Home ownership is not even an option, which is not surprising given that the average salary is £26,000. A mortgage of two and a half or three and a half times salary makes even a bed-sit difficult to buy. Let us consider a family seeking a mortgage. Even when both partners earn the average wage, a house in Reading will be out of their reach.

That makes it all the more disappointing that the Thames valley was not included as a growth area in the sustainable communities plan. Reading is an affluent town with full employment, and a significant number of people earn very good salaries. When I say that the United Kingdom headquarters of Microsoft and Oracle are in my constituency, and that several other large and prestigious IT firms are based there, people will see why Reading has become a leading-edge business location and why it attracts major businesses that operate in European and global markets. The rising demand for housing and intense competition on salaries among higher-value industries have produced steep house price inflation and high prices in real terms.

House prices have increased by 124 per cent. in the past five years, while earnings have increased by only 35 per cent. in the same period. So although some people are doing very well, a significant number are not. Not being in one of the sustainable communities plan growth areas means that affordable housing expenditure will grow only in line with the retail prices index. At the same time, construction costs have risen by 10 per cent. As I said, most building is on brownfield land, which is generally more expensive to build on. The concern is that fewer affordable homes will be built than the 100 a year that I mentioned. I repeat that that is 1,000 fewer than the council estimates need to be built to meet demand.

The housing situation in Reading is not rosy. Half the residents in my constituency cannot afford to meet their housing needs. It is not possible for a family on an average salary in my constituency to purchase even the smallest family home. There is a significant mismatch between the demand for affordable housing and the supply. Just one knock-on effect is that, increasingly, people with less and less experience provide our public services. For the people of Reading, East, the fear is that our community is becoming less sustainable.

Photo of Ms Oona King Ms Oona King Labour, Bethnal Green and Bow 3:51 pm, 19th June 2003

I congratulate my former colleagues who served on the Select Committee on the Office of the Deputy Prime Minister: Housing, Planning, Local Government on producing such a powerful and well argued report. In particular, I thank the Chairman, my hon. Friend Andrew Bennett, who put up with me pestering him on the subject for many months. I hope that he will not mind me saying that we were fairly obsessed: I was obsessed with the lack of affordable housing in and around my constituency; he was obsessed with the scourge of empty homes that have decimated so many communities around his constituency. During the Committee's consideration of these two issues, we learned that no one in the country has a monopoly on misery when it comes to the housing problems that we face today. Both problems must be urgently addressed.

Some of the report's recommendations are so good that they have already been acted on. Others have elicited a positive response, and there is a fair prospect of action. The rest will obviously take a little more time for Ministers to digest. I welcome the new Minister. I have very high hopes for him, and I thank him for the interest that he has always taken in housing. I hope that the debate will persuade him that action needs to be taken on some of the recommendations that have not yet been addressed. I have eight questions to ask him, and a couple from constituents whom I met this morning who are pleased that Parliament is debating the issue today.

First, I want to talk about the inquiry's key terms of reference, which were: the scale and location of the demand for affordable housing; the adequacy of the existing supply and the available resources; and the cost to individuals, businesses and the economy resulting from any shortfall in the provision of affordable housing.

On the scale of demand, the commonly accepted estimate is that about 70,000 to 75,000 homes are needed each year. The report includes research into the current backlog of housing need—that is, homeless households, temporary accommodation, the hidden homeless, people sleeping in hostels or in the homes of friends, and the overcrowded. That list is estimated to be almost 1 million strong. The needs of about a third of those households could be met from existing stock if properties and households were better matched. That leaves a backlog of about 650,000 households that have been let down by the failure in the past quarter of a century to build the houses that we need and to invest in new affordable housing.

Realistically, we can aim to reduce the backlog only by half in the next 20 years, which means adding the demand of about 16,000 households to the annual estimate of newly arising need. If all the figures that I mentioned are added up, the total number of new affordable houses needed is about 90,000 a year. Although the Committee does not make a recommendation on that point, its analysis and conclusions are clearly based on assumptions of housing need on that scale. Frankly, that is the best estimate that we have, so my first question for the Minister is whether the Government accept that estimate. If they do not, I hope that he can give a commitment to commission research into that crucial topic, so that we can all be better informed.

The next key issue is the adequacy of the existing supply of affordable housing and the money available to increase that supply. Given how big the backlog is, it goes without saying that the existing supply is totally inadequate—the 17,000 families on the housing waiting list in the borough of Tower Hamlets, where my constituency is, certainly show that. Just how inadequate is totally inadequate? The main funding stream, the Housing Corporation's approved development programme, delivers only about 20,000 new affordable homes each year—at least that was the figure last year. The local authority social housing grant, the recycled capital grant, planning gain and direct registered social landlord investment together deliver another 25,000 affordable homes. We are therefore currently building 45,000 homes a year. Hon. Members will recall that the previous estimate of need was 90,000 a year. That means that we must double our total output. My second question for the Minister, therefore, is whether he accepts that we need to double our output of affordable housing and if not, what his assessment of the increased required is.

Tough requirements on planning gain and the use of prefabricated construction methods will help us to get more for our money. However, it is clear that the vast majority of the extra homes that we need will have to be funded by an increase in the budget for building new affordable housing. That requires something in the region of £1.7 billion a year extra throughout the current spending review period. For the avoidance of doubt, that is £5 billion on top of the £5 billion already earmarked in the sustainable communities plan. Although we can dwell on the fact that the Government have vastly increased the money to be spent on affordable housing, the problem is that we need more. When I say that we need £5 billion on top, I want the Minister to know what he is aiming for.

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown Shadow Spokesperson (Communities and Local Government)

I hesitate to interrupt the hon. Lady, but she just said something that is factually incorrect. I have a parliamentary answer to Andrew George that shows clearly that the proposed amount of money that is available to the Housing Corporation, which is a major funding stream, in 2002–03 is exactly the same as it was in 1995–96: £1.7 billion. The simple fact is that the Government have not increased the resources for affordable housing—indeed, they have cut them through the abolition of the local authority social housing grant.

Photo of Ms Oona King Ms Oona King Labour, Bethnal Green and Bow

The hon. Gentleman is aware that the funds are increasing as we speak. I should remind him of the fact that under the Conservative Government my constituency, which has the highest density of poverty in the United Kingdom, received a cut in funding to be spent on affordable housing. The Labour Government, however, have increased the money available for affordable housing in my constituency. We now get 300 per cent. more than we ever got from the Tories. I therefore appreciate the hon. Gentleman's intervention, but not enough to thank him for it.

I should like, perhaps undiplomatically, to ask the Minister my third question, which is whether he agrees that extra funding by the proportion that I mentioned—£5 billion on top—is now necessary, given the problem. Do we need to double our output?

I return to the second term of reference, which is about the cost and consequences of not building affordable homes. The Committee has been quite generous on that point: it has been more diplomatic than me and resisted the conclusion that the decline in the number of affordable homes being built is having an impact on the delivery of key public services. I think that there is evidence for that, but in truth the impact on public services or even the wider economy is not the cost or consequence about which we should be concerned. The cost that we should be concerned about is the cost to the life chances, the health, welfare, educational achievement and employment prospects of those who are directly affected: the children, the young people and the families I represent.

My hon. Friend Ms Buck eloquently outlined many of the problems faced by my constituents. I took a previous Housing Minister to visit a family in my constituency: 16 people were living in a property with two bedrooms. Some families on the waiting list, even if they have only two children, know that they have no chance of being offered new housing in the foreseeable future unless housing output can be doubled.

The Committee rightly highlighted the impact that the crisis has had on the number of homeless families with children in bed-and-breakfast accommodation. I secured an Adjournment debate and campaigned on that issue because it is so important to end the use of bed and breakfast for families with kids. That is why I am so pleased that Ministers made a commitment to achieve that objective by next spring, and to give the families extra money. They have already managed to reduce the numbers in bed-and-breakfast accommodation by 16 per cent.—a reduction of 5,600 families with children—which is an excellent achievement, but those 5,600 families are the tip of the iceberg. For the vast majority of those in housing need—the backlog I mentioned earlier—there is almost no prospect of being adequately housed.

Among those most affected by the lack of housing are families living in overcrowded conditions. The progress made in tackling overcrowding between 1890 and 1990 has largely stalled; the latest survey of English housing estimates that about 500,000 households live in properties with one or more bedrooms below the bedroom standard. More than 175,000 of those families live in London, many of them in the borough of Tower Hamlets. I pay tribute to my hon. Friend Mr. Love for securing a ten-minute Bill on overcrowding which highlighted the plight of living in overcrowded conditions and, more importantly, included provisions to update the statutory definition of overcrowding.

Two years ago in this Chamber, the Minister's predecessor, my hon. Friend Ms Keeble, gave me an undertaking that the overcrowding standards would be reviewed. She deplored the fact that kitchens are still counted as rooms available to sleep in. It is a disgrace that the definition of statutory overcrowding that we use was introduced in 1935. It is 2003, and as Ministers have acknowledged, our understanding of the need for space and privacy has come a long way since then, yet the standard remains unchanged. My fourth question is therefore straightforward: will the Minister include an updated definition of overcrowding in the housing Bill? Will he or his officials please write to me and to my hon. Friend the Member for Regent's Park and Kensington, North to let us know what progress has been made on the subject?

I know that the money needed will not be found immediately but I am angry that constituents who have already waited 20 years for an offer of family-sized accommodation are being told that they have to wait at least another 10 years. How can we increase the number of council and housing association homes? My suggestion, which touches on the comments made by my hon. Friend the Member for Denton and Reddish, relates to the fact that not everyone who lives in London wants to stay here. As a Londoner who loves the place, I think that is a great shame, but many people, especially in inner London, are living in hell because of their housing. We should help them to get out and thereby release homes for those who want to stay.

The seaside and country homes scheme was one of the successes of the Greater London Council. It allowed pensioners to swap their council home in London for somewhere with a bit of peace and quiet on the coast or in the countryside. It usually involved their giving up a large, family-sized property for a smaller flat or bungalow. The scheme is still up and running but, sadly, in September 2002 there were 564 pensioners on the waiting list, and many cannot even get nominated in the first place. Could that scheme be expanded, perhaps using compulsory purchase orders? Therefore, my fifth question is will the Minister consider expanding the seaside and country homes scheme?

Because of the shortage of time, I shall not detail the background to my questions. However, will the Minister consider increasing the money available for the cash incentive scheme, so that it would give people the incentive to relinquish their home? That would have to be extra money, but for the cost of subsidising one newly-built home, we could offer three or four cash incentive scheme grants and free up three or four homes. My sixth question is: will the Minister provide a relatively small amount of money to increase the number of cash incentive scheme grants available. The seventh is: will he increase the amount of money available for shared ownership schemes? Most people in my constituency cannot afford to invest; the average wage in Tower Hamlets is £12,000 a year, which falls below what is necessary for shared ownership.

I shall give up my eighth question and ask some of the questions that constituents put to me this morning and that I promised to raise. Are the Government aware that the rent restructuring policy does not enhance the supply of large, affordable houses and can policy be revised so that housing associations provide the five and six-bedroom houses that are needed? What will the Government do to increase partnerships between mainstream providers and community groups, especially refugee community groups?

My final question is about choice-based letting schemes. One east London resident, Yasin Abdi, says that the policy is difficult for those who cannot read English, do not have internet access or do not know the areas well enough to make a suitable choice. It does not take note, for example, of the needs of the Somali community, especially its oldest members. Could the Government encourage local authorities to consider the issue?

Those questions show that my constituents want to engage with policy makers about affordable housing. They want to engage with the Minister, so I am delighted that he is one of the most engaging MPs in Parliament. I am sure that we shall be able to meet on the issue. What my constituents really want is for Ministers, MPs and policy makers to understand the misery that a lack of social housing inflicts on them, and then they want them to act.

Photo of David Drew David Drew Labour/Co-operative, Stroud 4:07 pm, 19th June 2003

I shall be brief because I know that others want to speak. I welcome the new Minister for Housing and Planning. I am sure that we shall have some interesting discussions, as we did in his previous incarnation. I also welcome the report and in particular the chairman of the Committee, my hon. Friend Andrew Bennett, who, in a former life, came to my constituency to observe the housing problems in Stroud. Although we are talking about affordable housing, it is in the context of the pressures on many of us in rural and semi-rural areas to balance supply and demand. That is never easy to do.

I make no apology for drawing most of my evidence from an inquiry that the Labour group of rural MPs held last November. We considered housing in rural areas and all the main providers gave evidence to us. We came to two conclusions, the first of which was that there was a surprising degree of unanimity in rural areas about what needs to be done in view of the problems that Mr. Tyler mentioned and the Joseph Rowntree Foundation report highlighted. The second was that, although I do not want to emphasise the differences, the difference between rural and urban areas affects housing more than it affects issues such as education and poverty.

I realise that the Minister will not be able to reply to all the points raised by those who have spoken today. I shall go through some of those points quickly. I shall start with the role of the Housing Corporation. We believe that the Housing Corporation has a key role to play in rural areas and that that role is sometimes underestimated. The corporation's role is primarily a funding one, but when I talked to its representatives, I discovered that its budget was underspent in rural areas because it cannot obtain the necessary land. That issue must be addressed.

We were disappointed at the rather precipitate removal of the local authority social housing grant, not just because of the money involved, but because of the symbolic nature of that measure. There was an implied threat to some of the partnerships to promote delivery in rural areas, which had taken a long time to put together. I am glad that the Government have reconsidered the matter in the short run. However, they should be aware that the sustainable communities plan does not take sufficient account of the rural dimension. My only criticism of the Select Committee report is that it could have included more on that problem.

On local authority housing, I will not rehearse the debate on council housing that some of us had a week ago. However, I believe that there is an obsession with the answer being voluntary transfer. The real issue is not being examined: how to provide more housing, whether through local authorities or registered social landlords. The key point is that there is an insufficient supply of the right type of housing. In my intervention on the hon. Member for North Cornwall, I said that we must understand that in rural areas we must take an holistic approach, of which housing is one element. It is no good providing housing if there are no jobs or transport to get people to those jobs. However, without housing, it is pointless to pretend that anyone will be able to afford to live in rural areas.

Photo of Mr Paul Tyler Mr Paul Tyler Liberal Democrat, North Cornwall

When the hon. Gentleman intervened, I should have said that the job situation has improved in his area, as it has in mine. I give credit to the Government for that. That is why it is so tragic to see young people with access to jobs but with no access to affordable housing within reach of those jobs.

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

I agree. The improvement in the job situation is one of the Government's successes, but we must realise that that success breeds other problems. When we are considering key worker housing, we should recognise that in rural areas we must work in a different and more sensitive way, because we cannot pretend that there will be large numbers involved.

The key problem is that of planning. Although I welcome the current legislation and hope that it is brought quickly into law, it will not provide a magic remedy, because the problems are historical and will take a long time to solve. There is still a dislocation between the Minister's Department and the Department for Environment, Food and Rural Affairs inasmuch as their planning arrangements, although not necessarily at odds with each another, do not work in parallel.

We welcome such ideas as rural design statements, but they do not necessarily get taken up in supplementary planning guidance, which is a shame because people put a lot of effort into them. In rural areas, the evidence shows that if people are given the means to deliver, they welcome the prospect of additional housing and there is not the nimbyism that is sometimes portrayed. However, people have to believe that what they are doing will be acted on, and that what they see is what they will get. They must be sure that when they want affordable housing, they will not end up with four-bedroom executive houses, as happened so often in the past. Otherwise, they will never again want to get involved in such time-consuming processes.

I come to my two last points—I am trying to keep to my 10 minutes. First, we must recognise that we are not only discussing building in rural areas, but refurbishment and repair. There is a lot of substandard housing that could be brought back into use. I am not talking about people who come in and knock two cottages into one, but refurbishment of housing with a bit of sensitive thought, so that the property can be used as rented accommodation by agricultural or other local workers. That would require Government intervention. That is particularly relevant to the elderly in rural areas. All the evidence shows that the elderly live in the most substandard housing, but they could stay in rural areas if refurbishment was organised through home improvement agencies such as Care and Repair, with which I am involved. All those agencies do wonderful work, but they are underpowered and underfunded.

My last point is about community land trusts. This is another point that has not been picked up. Community land trusts are an idea worth pursuing in this country, because they can work in both urban and rural areas and can be linked with housing for key workers. We have no tradition of using co-operative housing to the extent that some of us would like, and I hope that the Government will examine that idea and be creative. We must be both creative and sensitive in rural areas, but if the Government are serious about dealing with the problems, that is how they should act. I hope that, under the fresh steer of my hon. Friend the Minister for Housing and Planning, we will begin to see that happening.

Photo of Andrew Love Andrew Love Labour/Co-operative, Edmonton 4:15 pm, 19th June 2003

First, I welcome the Minister to his new role and congratulate the Select Committee on its report, which has pushed the issue of affordable housing up the political agenda.

I start with the well known conundrum of 2001—record house price inflation at the same time as the lowest new housebuilding programme since records began in 1924. Many people will say that it is all the fault of the developers, because they have a land bank that will last five years, do not like brownfield developments, are in opposition to planning gain and will build only executive houses. I have heard all those reasons, but we must accept that there are problems in the system, including issues of remediation and decontamination with site assembly. We have talked endlessly, including in this debate, about the delays in the planning system, but we must recognise the considerable local opposition to many housing developments.

The Government have responded to some of the problems. The Planning and Compulsory Purchase Bill, which is currently going through the House—

Photo of Andrew Love Andrew Love Labour/Co-operative, Edmonton

Well, it has progressed and will no doubt come back to us.

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown Shadow Spokesperson (Communities and Local Government)

Does the hon. Gentleman really think that deferring the Bill to another Session is progress?

Photo of Andrew Love Andrew Love Labour/Co-operative, Edmonton

All I would say is that considerable progress was made on the Bill, and I am sure that when it returns in the next Session, progress will be made not only with the Bill's existing provisions, but with new provisions. I hope that today's debate will influence that because, although significant new funds have been provided to assist planning departments, especially to speed up the formulation of local plans, we all recognise that a great deal more must be done.

I want also to pay tribute to the Government because, in the past couple of years, they have focused on several issues that have made life extremely difficult for housing development. We have spoken about improved design. The floor for density of housing provision has recently been increased, and we have talked about some of the potential problems around that. We know that a new land-use database has come on stream and, through the challenge fund, there is the proposition of off-site construction. Although I accept some of the concerns that have been expressed about that and our previous experience of off-site construction, it can be one of many part-remedies to the problems that we face. We should also welcome the establishment of regional housing boards.

The Government have also instituted the communities plan of £22 billion, which sounds like a lot of money over a significant time. It focuses on four major investment areas, which will contribute more than 50 per cent. of the new housing that is required. We should welcome that, although more needs to be done, and I want to ask the Minister about several related issues.

First, we have talked already about planning obligations. Over a long period, developers have taken planning officers to the cleaners on their planning obligations. That calls not only for better training of planning officers, so that they understand how site assembly and costs work, but for more standardised contracts. As with the private finance initiative, officers who do not normally deal with such issues would be given the assistance required to ensure that the public sector receives proper support on planning obligations.

Secondly—this issue has already been touched on—sites below a certain size do not require an affordable housing element. I shall not go into detail because of time, but I wonder whether, in introducing a revised planning guidance, the Minister will consider the question of the minimum size of site for the development of affordable housing. Similarly, we should consider what ought to be the percentage of affordable housing in particular developments—whether it should be 25 per cent., as it used to be, whether it should be 35 per cent., as it is in most parts of London, or whether it should be 50 per cent. The latter figure is stressed by the Mayor of London and, according to recent studies, it certainly would be possible in certain areas of high demand in inner London. That subject has to be taken on board when the guidance is revised. We need to ensure that the maximum affordable housing contribution is made on all such sites.

Finally, I shall touch on supply constraints in construction. We have not talked a great deal this afternoon about the skill shortages, but they are now acute in London and the south-east. In their programme of public sector investment—not only in housing, but in health and education—the Government should do something to address the problems of supply constraints.

Affordable housing is the main issue dealt with in the report. Some of the difficulties that we face have come about because, over the past six years, we have had good economic growth and a stable economy, and we have 1.5 million more people in work than in 1997. That has led to steep inflation in house prices in London and the south-east. That has dragged the private rented sector with it, creating what we all know to be a major problem, which is that housing is unaffordable for large sectors of the population in London and the south-east. People cannot afford to be owner-occupiers or access the private rented sector.

I now come to a little bit of yah-boo politics, which is something that I have missed. The Conservative Government's housing policy was called "the right to buy". That was it. That policy did not consider the need for additional units of affordable accommodation. Indeed, the number of units of affordable accommodation declined rather than increased. That policy did not include looking at the backlog of repairs.

Photo of Andrew Love Andrew Love Labour/Co-operative, Edmonton

I thought that that would get someone to their feet. I shall give way to the hon. Gentleman.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

As the hon. Gentleman is doing yah-boo politics, can he explain why the construction of affordable housing has fallen since 1997?

Photo of Andrew Love Andrew Love Labour/Co-operative, Edmonton

I shall come back to that as soon as I have done with the yah-boo politics. The Conservative Government's policy did not deal with growing homelessness in London and the south-east—indeed, throughout the country. The Conservatives closed their eyes to all the real housing problems, and parroted the fact that we had the right to buy. I support the right to buy, as do my Government. Changes have been made in certain high-demand areas, and I recognise the need for that. I have no objection to the right to buy, but it should not have become a shibboleth.

I accept that there are a large number of homeless people—with somewhere in the region of 90,000 homeless households and between 10,000 and 12,000 households living in bed-and-breakfast accommodation. I understand the difficulties that we face.

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown Shadow Spokesperson (Communities and Local Government)

I have a high regard for the hon. Gentleman and it is kind of him to give way again but, with his yah-boo politics, he is just plain wrong. Let me just quote one sentence from paragraph 12 on page 10 of the Select Committee report:

"The number of homeless households in temporary accommodation is now the highest ever."

What does the hon. Gentleman think his Government have been doing in the last seven years?

Photo of Andrew Love Andrew Love Labour/Co-operative, Edmonton

The first thing that the Labour Government did was to take the figures for investment in housing that the Conservatives had given them. In the first two years—[Interruption.] The hon. Gentleman says that that was a major mistake. If the Conservatives had continued in power after 1997, we would have been in considerably greater difficulty than we are now, so I will certainly not take lessons from them. They never showed any concern for the homeless and people in housing need when they were in government and they certainly do not deserve any respect for trying to show some concern when they are not in government.

The report shows clearly the increasing demand for housing that there has been and will continue to be. Household growth, depending on the figures, will be anywhere between 3.5 million to 4 million new households over the 20 years to 2016. Hon. Members have commented on the backlog in relation to housing need, overcrowding and homelessness. That means that there is a significant need for new affordable accommodation. That is the first thing that we must get clear. The second point, on which a number of hon. Members have commented, is that we are not projecting to build enough affordable units to meet that need.

I therefore want to ask my hon. Friend the Minister a couple of questions. First, I recognise that there are constraints on housebuilding in terms of skills, land and planning and those constraints should not be minimised. Is the Minister aware of the need for additional investment? We simply will not reduce the levels of housing need without that. Secondly, the report asks us to accept that greater priority should be given to low-cost home ownership apropos affordable accommodation. No one could object to that in principle. However, because we are talking about people in bed-and-breakfast accommodation, sleeping rough and in appalling overcrowded accommodation—most of them need affordable rented accommodation rather than the ability to access low-cost home ownership—we should not change the priorities at present.

The report emphasises the role of regional policy. I have some sympathy with the idea of a more comprehensive regional policy than we have at present, but I reiterate that that does not negate the need for a proper housebuilding programme. Although we may well need to create more jobs in the north and it might be possible for people to move from south to north, that does not get away from the fact that there is an acute shortage of owner-occupied housing and affordable housing in the south-east.

My last point relates to empty properties, which constitute 3.6 per cent. of the housing stock and are largely in the private sector. The majority are in Greater London. Does the Minister propose to do anything about them?

I welcome the report and the debate. I hope that the Conservative Opposition will be able to get their housing policy on the road so that we can have a proper debate. As we do that, we need to address the acute shortage of affordable accommodation that the report highlights.

Photo of David Wright David Wright Labour, Telford 4:29 pm, 19th June 2003

May I begin by welcoming my hon. Friend the Minister to his new portfolio? As other hon. Members have said, we had one or two tussles in his previous life as well. I am sure that he will be an energetic Minister and as robust as his predecessor was in recent debates in Westminster Hall.

I, too, congratulate the Select Committee on the production of a very important report. I spent about 13 years working in housing regeneration before I entered the House. Having read the report, I believe that it is a major contribution to the debate on housing policy. It highlights some of the difficulties and some of the failings in the policies of successive Governments since the second world war.

I recommend that the Minister examines "Planning for Housing", a document produced by the Chartered Institute of Housing and the Royal Town Planning Institute. That is also an excellent contribution to the debate. I declare an interest in that I am a member of the Chartered Institute of Housing. I was not involved in putting together the report and I gain no financial benefit from the institute. Indeed, I spent 13 years working in housing, many years doing exams, and I have ended up paying the institute through my membership subscription. However, it is a worthwhile organisation, and I commend its report to the Minister.

One of the interesting things about the Chancellor's statement on the euro was the high profile that he gave to housing issues. We are starting to see Government policy coming together. The Government are often criticised—sometimes by their own Back Benchers—for not drawing strategies together and for failing to ensure a comprehensive approach. The Chancellor's understanding of the significance and importance of the housing market—certainly in terms of the debate on the euro—is welcome. That ties in with the proposals to re-examine the Planning and Compulsory Purchase Bill. We must also ensure that policy on developing sustainable communities pulls together all of the various strands. If we go into the euro at the wrong exchange rate and with the wrong interest rate calculations, the problems that we foresee at present for the provision of affordable housing would end up being very small scale indeed. A significant part of the housing debate is entry into the euro in the medium to long term.

Photo of David Wright David Wright Labour, Telford

If at all.

I would like to touch on four key areas: first, clarity in the housing and planning system; secondly, understanding housing market dynamics; thirdly, building capacity in the construction sector, which my hon. Friend Mr. Love identified in his contribution; and lastly, a constituency issue that has national implications, namely, accommodation for young people.

There is a problem in this country with the definition of affordable housing. That is highlighted in the Select Committee's report and by a range of other players in the housing sector. We must consider amending circular 6/98, "Planning and Affordable Housing", to specify three areas of affordable housing. The first is social housing—subsidised rented housing—provided by local authorities or other social housing landlords. The second is intermediate-priced housing, including the private rented sector, and the third, the standard market housing available for sale. Until we specify those areas, local planning authorities and housing strategy players in local authorities will not be able clearly to specify what is required from the planning system if we are to deliver affordable housing. We have completely failed to do that in the past 20 years. We have not defined clearly enough what we expect from developers and other agencies in terms of providing affordable housing. We must break down the analysis and make sure that clear targets are set.

Photo of Mr Paul Tyler Mr Paul Tyler Liberal Democrat, North Cornwall

I have been listening with great interest to the hon. Gentleman. Does he accept that the indices that have been developed by the Joseph Rowntree Foundation indicate that affordability is a relative term? It depends on differing circumstances in various parts of the country. That adds to the complexity of the situation that he describes.

Photo of David Wright David Wright Labour, Telford

I certainly accept that. I am advocating that local planning authorities and local planning strategy players should consider those implications by looking at the three categories that I recommend and that have been recommended by other players in the housing sector. We must get local priorities right and fit national policy around local circumstances. The hon. Member for North Cornwall is right and I was interested to hear what he had to say about the south-west and some of the problems that exist there.

The second point that I wish to make, under the broad heading of clarity in the housing and planning system, is about the sheer complexity of developing community ownership models within the housing sector. I was involved in attempts to establish a redevelopment programme in the west midlands to produce new affordable housing after a large-scale clearance scheme. I have since left that job. Four years on, that project has failed to produce a single unit. Some of the innovative ideas that we have established over the years to produce new housing that is run, managed and developed by community organisations, have been far too complex. We must make the system easier to understand.

We should focus on equity release—people discuss it, but few schemes are implemented. Equity release should be much easier. It can be used as a tool to provide new housing or to assist people in moving into appropriate accommodation. We must ensure that local authority housing and planning departments work more closely together and that their targets, which they set in their local plans, are clearer.

We need greater transparency in section 106 agreements. We have already heard this afternoon how complex the section 106 agreement process can be. We probably need a tariff system within that process to secure the amount of affordable housing needed in local communities, regardless of whether sites are large or small.

We must build the skills of staff involved in housing and regeneration. For example, few authorities are expert on compulsory purchase orders. Over the years, there has been a skills drain out of the regeneration and housing sector, largely because the previous Government did not give a fig for the issue. Many people who might otherwise have entered the sector have not done so and we must rebuild the skills base.

Photo of Chris Grayling Chris Grayling Shadow Minister (Education)

Surely the hon. Gentleman understands that opportunities for regeneration are limited in the parts of the country that are suffering most from the acute shortage of affordable housing and of housing generally. In reality, using the substantial land banks that the Government still hold through, for example, NHS estates to create affordable housing may be a much more effective way to create the housing that we need for the next generation than pursuing the traditional regeneration and urban partnership routes that he is discussing.

Photo of David Wright David Wright Labour, Telford

In a spirit of bipartisanship, I agree with the hon. Gentleman's last point. The Government could do more to release land bank assets, which would be an acceptable way forward and I shall develop that theme by analysing the housing market. Regeneration projects must fit the needs of local communities and I do not fully accept his initial analysis because a wide range of regeneration vehicles can deliver on the ground effectively; the issue is getting the right regeneration vehicle for a particular local area.

The next area that I want to discuss is understanding market dynamics. I acknowledge the issues raised by hon. Members representing constituencies in London and the south-east, where there is a chronic problem that must be confronted. I welcome the Government's proposals on gateway developments around the south-east, which will produce what will in effect be large new towns. I represent a new town and know that they have many positive features, but they must be got right.

We must stimulate demand in the midlands and the north. One way we can do that is by encouraging people to move out of the south-east, perhaps, as the Chancellor has indicated, by relocating Government Departments. We should also consider the overheating economy in the south-east. Major infrastructure projects are continually approved in the London area and that draws the Government's policy into question. Moving major infrastructure projects out of the south-east may make some London Members uncomfortable. [Interruption.] I will name them. The national football stadium springs to mind as one example where we should have examined investing outside the London area. That may make some Members uncomfortable, but we feel strongly about that issue in the west midlands.

Sophisticated market analysis is important to our overall approach. The problem is more complicated than saying that housing in the south-east is overheating and that there is significant abandonment in the north—the structure of the market is much more sophisticated than that. In my constituency in the west midlands, areas of decline and low demand are located next to areas where demand has grown significantly. We must examine the operation of the market in a more sophisticated way. It is no good saying that people are abandoning property in the north and want to move to and live in the south-east.

We must consider a further round of the housing market renewal pathfinder to examine particular communities with a mixed housing market pattern, where there are pockets of decline and abandonment and growth in surrounding estates.

Photo of Mark Francois Mark Francois Opposition Whip (Commons)

I take the point that the problems are sometimes complex. The hon. Gentleman mentioned infrastructure. Does he accept that when one talks about infrastructure for additional housing, it is a question not just of transport, but of health care, access to GPs, school places and so on? We need more housing, but if we are going to build it we have to ensure that the other infrastructure is in place otherwise people will understandably be resistant.

Photo of David Wright David Wright Labour, Telford

I accept that. The Government are doing a significant amount of work in that area. We need to ensure that the infrastructure is provided for new developments. Of course, cutting public expenditure by 20 per cent. would not help to ensure that we get investment in health and education. The Opposition need to look at their overall public expenditure strategy in terms of housing development.

Where we have large developments, particularly on brownfield sites, we must see a comprehensive mixed redevelopment. When we look at estates we should be tenure blind—when one walks down a street one should not be able to identify which housing is for rent and which for sale. We must not stigmatise social housing. We must not tackle it in a walled-off way, where an area of a development site is designated for the social housing element and is not integrated into the rest of the development scheme.

A lot of positive work has been done by English Partnerships in recent months. I perhaps would not have said that two years ago. It has worked to produce strong integrated communities where services and infrastructure are put in place with mixed-tenure redevelopments. I greatly welcome that. I join other hon. Members in welcoming the Government's moves on standardising the right to buy. I should like them to go further to standardise the discount rate to £16,000 for the right to acquire discount for housing association tenants. The right-to-buy structure needs to be standardised throughout the country.

On building capacity and the construction sector, we have to ensure that our education policy, and our 14-to-19 curriculum strategy in particular, link into the construction and development sector far more effectively. The Government have talked about improving and increasing vocational opportunities for young people at 14 and above. The construction sector must be seen as a positive choice. That will be difficult.

While we rightly promote significant improvements in the existing social housing stock, the demand for skilled labour in the construction sector will be high. It is not just new housing that requires significant levels of skilled construction labour, but refurbishment projects. Some of the targets for large-scale voluntary transfers will clearly create increasing pressure across the country for people with construction skills. The Government must understand that.

Finally, I spent a day or so the week before last touring some of the excellent projects run by Telford Christian Council in Telford to support homeless young people. The problem is not as big as it was 10 or 15 years ago when I was a member of the local authority housing committee, but significant numbers of young people still need accommodation. The Government should commit to a significant expansion of the foyer project principle. The Chancellor gave a commitment some time ago that we should have a high quality foyer in every town.

I have not heard much about foyer accommodation in recent years. We must ensure that Housing Corporation approved development programmes shift money through into prioritising that type of project. If one has a foyer that offers accommodation and training linkages, move-on accommodation is also needed. The capacity coming through the system cannot be dealt with unless the people who go into a foyer and receive high-quality training and accommodation can move out into other accommodation. We need growth in general affordable housing, particularly social housing, alongside the development of projects such as foyer initiatives.

Photo of Edward Davey Edward Davey Shadow Spokesperson (Office of the Deputy Prime Minister), Liberal Democrat Spokesperson (Office of the Deputy Prime Minister) 4:44 pm, 19th June 2003

This has been an excellent debate, for two reasons. The first is the excellent report that the Select Committee has produced for the House. Re-reading it before the debate, I was struck by how much of it I completely agree with and how comprehensive an analysis of this country's problem with affordable housing it provides. The second reason is that MPs deal with housing week after week in their surgeries. It is probably the main issue raised—it certainly is in my constituency—and daily we are faced with and have to understand our constituents' housing problems. Everyone who has spoken today has shown their knowledge, which was probably gained from their constituency experience.

We have a problem with the Government. It is not the Minister's fault—he has been in post only a little while—but he is, I think, the fifth, or perhaps the fourth, Housing Minister since Labour came to power in 1997. That does not suggest a long-term political approach in the Department with responsibility for housing. That must change. When I welcomed the Minister's predecessor, Mr. McNulty, I said that he was to charm what the Deputy Prime Minister is to sophistication. I am not quite sure how to welcome the new Minister: perhaps, following the point made by Ms King, I can say that he is more engaging than Ratner's.

To be serious, although I agreed with much of the report, I disagreed with one or two points, which I shall highlight. The report might have been better if the hon. Lady for Bethnal Green and Bow had not left the Select Committee, because it is noticeable that the Committee did not have a London Member. I found one or two aspects of the report surprising, such as paragraph 18, where the Committee reported that it had not received conclusive evidence that the shortage of affordable housing was the major reason for the recruitment problems in public services. Certainly in my constituency, the shortage of affordable housing is the major reason for recruitment problems in the health service, the police force and schools. That conclusion was therefore particularly surprising to me.

Photo of Mr Andrew Bennett Mr Andrew Bennett Labour, Denton and Reddish

One of the problems of Select Committees is that we are very dependent on the quality of the evidence that we receive. Had lots of people in London said that, we could have taken it into account. Sadly, the people in the hon. Gentleman's constituency clearly did not feel that it was worth while writing to us.

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

The Chairman of the Select Committee may have a valid point, but my experience and perhaps that of Labour London Members—I am getting affirmative nods from them—is that the shortage of affordable housing is a major problem.

I was also surprised that the Select Committee said that there is no evidence of a severe effect on the quality of services in London and the south-east compared with the rest of the country. Perhaps, the evidence was not produced, but I am sure that if the hon. Gentleman came to my constituency to talk to head teachers and GPs, he would see that there is a problem with the effect on the quality of public services.

I shall not be churlish, however; overall, the report is excellent because it faces up to the extent of the problem. Ms Buck said that there is a crisis. She was careful in her use of that word, but was determined that we should use it in respect of affordable housing. I am sure that she is right. I see the problem every week in my advice surgeries: I see couples who are both on low incomes and who have no chance of purchasing or even renting a house. In my intervention on the hon. Lady, I touched on the problem of housing benefit. The cap on housing benefit means that some rents in the private sector are simply beyond the reach of people on low incomes, even when they are two-earner couples both in full-time employment.

The problem extends to the owner-occupied sector. The report by the Joseph Rowntree Foundation, "Can Work. Can't Buy", to which my hon. Friend Mr. Tyler referred extensively, gives a stark analysis. I have looked at the incomes of key workers in my constituency and at their pay as a percentage of the income that they would need to buy a very modest house in the borough of Kingston. I discovered that social workers receive an income that is only 36.9 per cent. of the income needed to buy a house, and a nurse receives an income that is only 38.6 per cent. of the income needed to buy a modest house. That is a huge difference. Those people have no chance or expectation of being able to purchase a house—we are excluding them from achieving what should be a reasonable aspiration. Some attention from Government is needed.

The problem is complex, and I think that the debate has shown that. There are differences between different parts of the country and within small areas of the housing market. That is why Liberal Democrats believe that the solution should come from the local housing authority, with enabling support from central Government. Local solutions are needed because of the complex nature of the problem.

Having said that the problem is complex and that there is a crisis, what are the Government doing about it? My main criticism of the Government, who have been in power for six years, is that they have been incredibly slow to tackle the problem. In debate after debate during this and the last Parliament, I and other Liberal Democrat London MPs have focused on the problems of affordable housing for key public sector workers and many others. We have been bringing the issue to the Government's attention since 1997. In many respects—I am not making a party political point—we were the only voice apart from honourable exceptions on the Government Back Benches. The Government refused to listen. I am not surprised that we have this problem: the Government were not paying attention to it in their early years.

There is some evidence, particularly in the Deputy Prime Minister's sustainable communities plan, that the Government are waking up to the problem. However, even if one looks at the details of the plan, one finds that it is not ambitious enough to deal with the scale of the problem that we are facing. One can look at a number of Government failures in that respect. The guidance on affordable housing has yet to be updated. We have been waiting for that for a year or two, if not longer. Why has it not been updated? People need it, developers certainly need it, and local authorities need it.

We had the disaster of the Planning and Compulsory Purchase Bill. That is a sorry tale. The Bill emerged from Standing Committee in January in a pretty dreadful state because the Government had not accepted any amendments. It is now being sent back to Committee but will not be considered until next autumn. If there is a crisis and the planning system is part of the solution, as the report suggests, why are the Government not taking more action? I hope that when the Bill returns to Committee, the Government will take out much of what was in the Bill, because some of it was frankly dreadful and would make the problems even worse. I hope that the Government will read the report that we are debating and take some lessons from the Select Committee on reforms to the planning system.

There is also the matter of the local authority social housing grant, which the Government are abolishing. At a time when there are many schemes in the pipeline to build affordable housing throughout the country, particularly in rural areas, the Government are pulling the plug. Not only will that prevent early solutions to the problem, but money will have been wasted. In producing those plans and schemes for affordable housing, public sector money has already been spent. Councils, housing associations and private developers have put up money and the Government are therefore wasting money by abolishing the grant scheme. I hope that the Government will listen to the Local Government Association's strong and detailed representations and delay abolition of the grant so that the schemes that are in the pipeline can be built.

When one examines the overall housing budget, it is interesting to note how it is used. Various hon. Members have spoken about the need for more resources and they are probably right, but the taxpayer's money that is being spent is not being used very well. We have done some calculations that suggest that more than a third of the housing budget has been spent on policies that produce no new houses, including right to buy and the subsidies relating to stock transfer. If one adds up all the money spent on those policies, it accounts for a third of the housing budget since Labour came to power. That money has not produced a single new home. We need a value-for-money test on the way the Government are spending housing money.

There are many other problems with the way in which the Government have tried to attack the problem. Let us consider the starter homes initiative, which is supposed to help in London. I notice a grimace from the hon. Member for Bethnal Green and Bow; no doubt she has experienced the same problems as I have with that £250 million scheme. It was supposed to target key workers, and when it was launched in December 2000, it was said that it would help 10,000 workers. However, the figures that I have from March 2003 show that it has helped slightly fewer than 3,000, and of the money that has been spent on helping about a quarter of the people that the scheme was meant to help, £12.3 million has been spent on administering the initiative. Surely we can use the available money far more effectively. Why was that money not channelled to housing associations and local housing authorities, so that more could have been built and more people housed?

There are other issues. To touch on a human issue, people have talked about a shortage of skills in the construction industry, which is big problem if we are to get the major boost to new homes, repair and renovation that we need. Some 76 per cent. of employers in the construction industry say that a shortage of skilled workers is a major problem. I went round Feltham young offenders institution recently. The Government are doing some good work to ensure that more money goes into education and training in places such as Feltham to ensure that the young men in there get the skills they need to do good work after coming out. Some of the schemes that I saw, such as bricklaying, feed directly into the skills shortage problem in the construction industry.

However, the governor of Feltham told me that he could not pay the rates needed to attract an instructor for plumbing, because plumbers out in the private sector can earn vastly more than he can offer. Therefore, he cannot equip the young men in Feltham with all the skills they need to be able to get a home, get a job and start contributing when they come out, which is what those young people want to do. We must consider how to deal with the problems holistically, and the Government must do more.

One can speak for hours about housing—I know that some hon. Members feel so passionately that they could probably speak for days about it. I have not covered half of the things that I wanted to say, but I want to give a chance to both the Conservative spokesman—that is always fun—and to the Minister, so we can find out how much he has been reading in the past few days.

Let me end with a comment and a question for the Minister. One policy that could be developed to provide more affordable homes in high-demand areas quickly is a much more concerted attack on empty homes. I am not talking about the problems of empty homes in low-demand areas, but empty homes in high-demand areas. The Government are aware of the problem and recently produced guidance for local authorities on empty homes strategies. That is all well and good, but we were promised consultation on compulsory leasing powers. I will not go into that full debate, but it was mentioned in a previous Select Committee report.

Those compulsory leasing powers would give local housing authorities the teeth to get going and to ensure that where the scandal of empty homes in high-demand areas arises, those homes can be brought on tap quickly. I know that the Conservatives are not very happy about that, but Government need not worry about what they say. The powers are needed, and I do not know why the Government have not issued a consultation paper—if they have already done so, I apologise for missing it. Why are such powers not in the draft housing Bill? If they were, we could be consulting on them already and getting the provisions in, because they are much needed. What has happened to that consultation? Will the Government hold a fast-track consultation? At the moment, it is the one thing that could make a big difference quickly.

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown Shadow Spokesperson (Communities and Local Government) 4:59 pm, 19th June 2003

I am grateful to catch your eye in this debate, Mr. Benton. I start by declaring my interest as a member of the Royal Institution of Chartered Surveyors. May I also warmly welcome the Minister to his new post? He and I have had dealings on many occasions and I have always found him an honourable man. Indeed, Ms King described him as one of the most engaging MPs in the Palace. Without wishing to start any scandals, I would say that she is one of the most engaging MPs in the Palace.

This has been an interesting debate, and I congratulate the Chairman of the Select Committee and the Committee itself on an excellent and timely report. It contains a lot of useful information, and the Minister and the Government will need more than a magic wand to start putting right what is undoubtedly a serious problem.

In 1996, the Prime Minister promised to

"do everything in our power to end the scandal of homelessness, to tackle the spectacle of people sleeping rough on the streets and to end the waste of families sleeping in bed and breakfast accommodation."

Sadly, seven years after that promise, today's reality is different. As the report comments on page 1,

"more and more people cannot afford to buy or rent a home".

A Labour Government are presiding over a record number of homeless people. According to the Government's official figures, the number of families assessed as being in priority need has surged from 102,410 in 1997 to a staggering figure of 125,750 in 2002, an increase of 18 per cent.

I have quoted already perhaps one of the report's most damning sentences. It says on page 10:

"The number of homeless households in temporary accommodation is now the highest ever. Between the first quarter of 1997 and the third quarter of 2002, the figure has risen by 100 per cent. from 41,260 to 84,800."

The most staggering fact is that, as a result of that homelessness, the number of families in bed-and-breakfast accommodation has more than trebled from 4,100 in 1997 to 12,670 in 2002. That is a scandalous waste of human resources, and I hope that the Government's pledge of ending it by the end of next year will become a reality. Sadly, I very much doubt that it will.

As Shelter says in a briefing for this debate:

"Government programmes to end child poverty, tackle social exclusion and promote opportunity will not deliver until this need is met."

On the health, education and well-being of people living in temporary accommodation, Shelter continues:

"There is a high prevalence of infectious respiratory and gastrointestinal diseases . . . Homelessness and overcrowding can seriously undermine a child's educational and life prospects . . . Homeless families are often placed in accommodation far away from the area where they lost their home".

Shelter says that it

"strongly supports the commitment to end the use of bed and breakfast accommodation for homeless families by March 2004."

Will the Minister tell us exactly what he will do about that commitment? I hope that it will be to ensure an end to people living in bed and breakfast rather than to massage the figures.

Shelter continues to make the point, which I have made in interventions, that we cannot produce affordable housing without the resources. It says:

"Spending plans allow for around £1.4 billion"—

I think that that is an underestimate—

"to be spent on providing new affordable housing in 2003/04. This includes resources provided through the Housing Corporation's Approved Development Programme, the Challenge Fund, the Starter Homes Initiative and the Safer Communities Supported Housing Fund. It is estimated that these resources will provide a total output of 25,300 units."

I have to tell Mr. Love that, when we left office, we were building 35,000 affordable units, so his comment that the Conservative Government were building fewer affordable units than the Labour Government is simply untrue.

I want the problem to be sorted, but I regret to say that most of the Government's actions to date—I hope that this new Minister will shine a light on the problem and secure some positive action—have contributed to the problem getting worse. A parliamentary answer to Andrew George shows that in nominal terms, let alone real terms, the Government grant to the Housing Corporation is only about the same today as it was in 1995, decreasing slightly from £1.722 billion to £1.712 billion. When we add that to the lash-up of abolishing the local authority social housing grant, it begins to make nonsense of the funding of social authority housing. It was a lash-up because, although local authorities were consulted in August 2002, they were not finally told about the abolition until 6 March this year, as they prepared their budgets for 1 April.

The Conservative group on the Local Government Association has produced a briefing on the subject for today's debate. It states:

"LASHG has produced over 53,000 homes since 1996, and last year produced nearly a quarter of all social housing units. It has played a central role in developing affordable homes in the South East, the East and London, both for low-paid workers and for homeless households."

It concludes:

"The combination of LASHG abolition, the cut in Supporting People grant and allocations being made by Regional Housing Boards with no more than 70 per cent. of current HIP levels guaranteed from 2004 has created a climate of uncertainty."

Not only has it created uncertainty, but a number of local authority schemes and housing association schemes simply will not come forward.

I turn to the shortage of key worker housing. A briefing has been produced by the Local Government Association, which reports real problems with that initiative. For example, the London borough of Bromley has a shortage of social workers; Hampshire has a shortage of firefighters; and East Hampshire has a shortage of constabulary, with 119 vacancies. A recent study of housing needs indicates that 50 per cent. of local businesses in Crawley borough think that the problem impacts on their recruitment of staff; and 32 per cent. think that housing problems have an impact on staff retention. The south of England has real problems, but particularly in relation to housing for key workers.

I have been asked to draw a particular problem to the Minister's attention, and I shall be grateful if he would write to me about it. It is to do with the starter home initiative. Further education lecturers are not included in the definition of key workers. The briefing from the Association of Colleges tells us that the Department for Education and Skills said that FE teachers are not identified as "a priority". Yet that briefing states also that college lecturers teach the majority of 16 to 18-year-olds. They teach 600,000 children, compared to the 400,000 taught in schools.

I met the principal of Cirencester college the other day, and he said that the problem is making it difficult to recruit further education teachers in areas such as the Cotswolds. I urge the Minister earnestly to consider the problem, and to see whether further education teachers could not be included in the definitions in the starter homes initiative.

Photo of Mr Andrew Bennett Mr Andrew Bennett Labour, Denton and Reddish

Is that a shopping list? Does the hon. Gentleman want to expand the definition of key workers even further? Does he not accept that, although a case can be made for many more people being treated as key workers, it would undermine the concept?

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown Shadow Spokesperson (Communities and Local Government)

Of course, if the number of homeless is at a record level, and if the problems are as I described, particularly in the south of England, there will be a huge unmet need. We shall have to look at the problem, and try to find a way to produce more affordable houses.

Photo of David Wright David Wright Labour, Telford

Is the hon. Gentleman going to touch upon the Conservative party's policy document "A home of our own", which talks about the extension of right to buy to housing association tenants? It states:

"On reasonable assumptions a new home could be provided for every two homes sold to their tenants".

I am not sure whether those figures stack up, but the policy will reduce the amount of available rented housing in the social housing sector. Indeed—

Photo of Joe Benton Joe Benton Labour, Bootle

Order. The intervention is becoming lengthy.

Photo of Geoffrey Clifton-Brown Geoffrey Clifton-Brown Shadow Spokesperson (Communities and Local Government)

I am grateful, Mr. Benton, but I shall have to take a minute out of the Minister's time, because I want to deal with that intervention.

So much rubbish is talked about this subject; it is unbelievable. For those who want to buy their homes, it is only fair that, if there is a right-to-buy policy in the council house sector, there should be one in the registered social landlord sector. There is no reason why that should not produce at least another 15,000 affordable homes in this country at no cost to the taxpayer. We could build another 25,000 homes at no cost to the taxpayer if we used all the proceeds from the current 55,000 homes sold under the right-to-buy initiative. That would mean 40,000 new homes at no cost to the taxpayer. [Interruption.] Yes, the ratio is two to one, but the houses do not disappear. People live in them and enjoy doing so. We are talking about availability. David Wright knows full well that people live in their houses for at least 10 years. In many cases in London, houses become vacant every 20 years. The important thing is therefore availability, not numbers.

The hon. Gentleman is seeking to foment trouble for me, but I commend him on his comments about the use of compulsory purchase powers. The Planning and Compulsory Purchase Bill has been a lamentable story, but a benefit of the delays is that we will be able to sort out the compulsory purchase system. One of the things that the Conservative Government did very well under my right hon. Friend the former Member for Henley was to regenerate some of the worst areas in the country, such as the Hulme estate in Manchester, the docklands area of Liverpool, the centre of Leeds, the centre of Glasgow, and London docklands—an excellent piece of regeneration. The message was to put people with skills in compulsory purchase into those areas so that large enough blocks could be accumulated for redevelopment.

I could make several more comments before the Minister makes his winding-up speech, but I will make only two. I hope that we can give greater credence to the private sector, which, with encouragement, could contribute considerably to the real and dreadful problem of homelessness. There are 750,000 empty houses in this country, and I am sure that, with encouragement and the right incentives, including tax incentives, many of those houses could be brought into the private rented system. Shelter reckons that at least 10,000 houses a year could be made available. However, they will be returned to the private sector only if the Government pay attention to this aspect of the problem. They will need to reconsider their rents policy. With the uncertainty that surrounds rents, the policy will make it very difficult to make that number of homes available.

Finally, we should consider the amount of brownfield land available and the amount of communications infrastructure that we will need to provide before we build these big gateway projects in the south and south-east. Otherwise we will end up concreting over a lot of green fields. We need to ensure that the communications infrastructure and other infrastructure, to which hon. Members referred, are in place before the houses are built. Otherwise, we will have a situation similar to that in the docklands, where houses were built but no one lived in them until the docklands light railway was put in, when, of course, they became popular.

There is, of course, huge demand in the south-east, and the planning system needs to be revised sensibly, as circular 6/98 suggests. All those things need to be done, but we must bear in mind that we are on a tiny island. Let us not concrete it over more than we need to.

Photo of Keith Hill Keith Hill Minister of State (Housing and Planning), Office of the Deputy Prime Minister 5:12 pm, 19th June 2003

First, I congratulate my hon. Friend Andrew Bennett on securing the debate on the report on affordable housing produced by the Select Committee on the Office of the Deputy Prime Minister: Housing, Planning and Local Government.

I am grateful for the kind words of welcome from my hon. Friend and from many other hon. Members on both sides. Colleagues may recall my hon. Friend pondering that I might be better employed digging foundations. I am, however, glad that I stayed for the debate, which has been a most educational experience for a Minister on a learning curve.

I listened carefully to all the speeches and will reflect carefully on the points that hon. Members have made. Clearly, I am not in a position to deal with all of them, not least with what ultimately became the 11 questions that my hon. Friend Ms King asked me, but I will write to her and to my hon. Friend Ms Buck on overcrowding and the housing Bill, and to other hon. Members on the issues that they raised, as appropriate. There are clearly many hon. Members in the Chamber with a great deal of expertise on housing matters, and I suspect that our dialogue will not end at 5.30 pm today.

We have had a very wide-ranging debate today on one of the most important issues facing this country: how to ensure that everyone has the opportunity to be decently housed in a prosperous community and with a good quality of life. The need for more and better homes to meet the variety of housing needs is one of the key challenges that the debate and the Committee's report have addressed. We know that we cannot deal with housing in isolation. It must be considered squarely and in the context of sustainable communities, so that jobs, homes, transport and public and private services are all provided in a coherent and balanced way. The debate has demonstrated that we face different challenges in different places: in parts of the north and the midlands suffering low demand the issue is not so much the supply of housing as giving people hope that their local communities have a future.

It has been said that homes are where jobs spend the night. Across much of the south-east and London, years of economic prosperity and lack of housing supply have meant that homes and jobs are out of kilter. The step change that the Deputy Prime Minister announced in February in his sustainable communities plan provides a convincing and co-ordinated set of policies and initiatives. If there is to be a step change in the supply of housing, we need to do things radically differently—all those involved in the social and private housing sector have to raise their game.

The first thing to recognise is that we need more homes and we need them quickly. The Government share the concerns of the Committee about the effects of rising house prices and acknowledge that numbers of affordable homes—social homes or homes for low-cost home ownership—have declined in the last two to three decades. Year after year, this country built fewer and fewer homes and wondered why there was more and more demand. The strain has been felt particularly by those working in key public services, such as the teachers, nurses and police who care for, educate and protect us.

When the Government came to power in 1997, we faced falling budgets for new housing projects and a massive £19 billion backlog of housing repairs. Even where money was spent on housing, communities were often forgotten about. There was a huge legacy of neglect and under-investment in housing infrastructure. We all know that communities cannot be transformed overnight, but there is a great deal that we can do in the short, medium and long term if we target our resources and efforts on where we can make most difference, and targeting is vital.

I hear what has been said about the abolition of the social housing grant. In the past 10 years, that grant has been consistently under-spent. Of the £500 million available each year, it was unusual for more than £400 million to be spent. Broadly, the system advantaged debt-free authorities and did not allocate funds to areas of greatest need. We are, therefore, seeking a more strategic approach. Meanwhile, we are making £550 million available this year through transitional arrangements.

Photo of Keith Hill Keith Hill Minister of State (Housing and Planning), Office of the Deputy Prime Minister

I am sorry, I have a lot to say and little time in which to say it. The policy statement, "Sustainable Communities: Building for the Future" sets out our proposals to spend £22 billion to strengthen and rebuild our communities over three years and to focus that money on real need. After the years of go hang laissez faire, we recognise the need for targeted, focused financial and regulatory support where it can do most good.

The new regional arrangements announced in the sustainable communities plan will allow a regional view to be taken on such questions, with allocations being made on the advice of new regional housing boards, based on their regional housing strategies. That approach will promote effective targeting of resources and will allow schemes to be selected on the basis of local needs and priorities. Across the board, our action needs to be focused and proportionate.

For example, the Government are concerned about the impact of right-to-buy sales in areas under the greatest housing pressure, so we recently lowered the maximum right-to-buy discount available to tenants in 41 such areas, where there are high levels of homelessness and prices are high. I have this week circulated a note on the criteria used to identify those authorities. The maximum discount available in those areas is now £16,000, the amount suggested by the Committee. I also want to reassure the House that the Government share the Committee's concern about exploitation and we shall tackle it by measures in the housing Bill.

We have focused our response on where the situation needs to be addressed. A one-size-fits-all approach does not allow for the complexity and diversity of the housing issues facing the country. We can create tailored solutions only if we have a clear understanding of the nature and operation of all sectors of the housing market in different local authority areas. Research is, therefore, under way to provide a tool to aid the analysis of housing markets in low, high and balanced-demand areas. This so-called housing market assessment tool is for use by local authorities and groups of authorities. It will allow them to make informed decisions across all tenures to reflect current and future housing demand. I say to my hon. Friend the Member for Regent's Park and Kensington, North that it will help them to produce sound planning policies that address communities' needs—whether for smaller homes for singles or larger homes for families.

In the short to medium term, there is a manifest need for major investment in homes to buy or rent at below market rates. They are needed to tackle homelessness and to house key workers. The communities plan provides £5 billion over the next three years for those purposes, and at least £1 billion of that is expected to be used for key worker housing.

Some 3,000 key workers have so far purchased homes that they would have been unable to afford without assistance from the starter home initiative. We expect several thousand more key workers and their families to benefit from the scheme. I am sure that those thousands of nurses, teachers and police officers, not to mention their families, will be shocked to learn of the scorn that the Liberal Democrat party has expressed for a scheme that has given them the chance of a home.

The Housing Corporation's £300m challenge fund for the current year will provide 8,000 homes for rent and low-cost home ownership in London, the south-east and the east of England. About half of those will be for key workers, providing low-cost home ownership and housing at intermediate rents below market level. We are focusing large amounts of resources on the immediate challenge posed by the need for homes for key workers. In the medium to longer term, however, we must increase private housebuilding in high-demand areas in recognition of people's aspiration to own a home of their own. That is why we have given priority to reforming the planning system to promote a simplified, more predictable and less adversarial process; to promoting the more effective integration of housing and planning; to ensuring that the homes planned in existing regional planning guidance for London and the wider south-east are actually built; and to concentrating homes in sustainable growth areas.

We recognise that even that volume of extra housing may not have a significant effect on house prices. Nevertheless, much can be achieved through a better mix of housing. Too many upper-end-of-market homes are being built at a time when there is considerable growth in one-person households. When we plan the growth areas, we must ensure that they provide a good supply of affordable housing.

My hon. Friend the Member for Denton and Reddish suggested that I say a world about Ashford, and I am happy to do so. The Ashford growth area seeks to deliver 13,100 dwellings in 2001–16, and 30 per cent. of them should be affordable. That compares with an average of 25 per cent. in the rest of Kent. This new development will be delivered through higher-density building and natural extensions of the present urban area, supported by new and improved bus networks.

Last year, my Department approved a private finance initiative package of £25 million to regenerate Ashford's largest social housing estate, the Stanhope estate. The work will involve some demolition, rebuilding and refurbishment, as well as environmental improvements. Measures to be taken by Ashford to mix tenures will include providing affordable housing for sale and promoting social inclusion. Progress in Ashford is well under way. Indeed, I am pleased to report that the new Under-Secretary of State, Office of the Deputy Prime Minister, my hon. Friend Phil Hope, attended the first meeting of the Ashford delivery board yesterday afternoon.

I remind hon. Members that affordable housing does not have to be subsidised, and the market can provide much affordable housing for renting and owner occupation.

The Government agree that the provision of affordable housing negotiated through the planning system makes an important contribution but is not by itself the answer to meeting affordable housing needs. We therefore intend to update the guidance on planning obligations and planning for affordable housing, and to support that with practical advice about what works well and where. We will seek to reduce the time taken for negotiations over planning obligations and to encourage the best results for local authorities and developers. We will consult on allowing local authorities to seek affordable housing on smaller sites where that is justified. In updating planning guidance, we intend to address the concerns raised by the Committee. The draft guidance will be subject to consultation in the normal way.

I say to my hon. Friend Mr. Love that we have introduced a £350 million planning delivery grant to incentivise performance on planning matters and, not least, improvements in the handling of planning applications.

Photo of Mr Andrew Bennett Mr Andrew Bennett Labour, Denton and Reddish

Can my hon. Friend the Minister just tell us when we will have the extra news about section 106?

Photo of Keith Hill Keith Hill Minister of State (Housing and Planning), Office of the Deputy Prime Minister

My aspiration is that the extra news will be delivered very shortly.

Our emphasis on more homes, more quickly, must not be at the expense of quality. My hon. Friend Mr. Betts was right about that. We are not in the business of repeating the mistakes of the past—the soulless estates and identikit homes. Design will be at the heart of our housebuilding strategy.

We need to intensify efforts to identify and use brownfield land. The Government agree with the Committee that local authorities need to take a more proactive approach to facilitating site assembly if our objectives of the more efficient use of urban land and the reuse of previously developed sites are to be achieved.

English Partnerships is developing a comprehensive national strategy for brownfield land. That will start from a detailed understanding of what brownfield land is available, making full use of the national land use database, which identifies 66,000 hectares of previously used land that are capable of redevelopment. That is an area slightly bigger than the Isle of Man. The strategy will cover how best to bring sites back into use, especially in growth areas.

All our work must be informed by a willingness to embrace innovation and get out of old mindsets. Reflecting local circumstances is a key point. Like the Committee, the Government are concerned that the houses being built do not always adequately reflect a community's needs. It is Government policy to encourage mixed-use development, because that can be more sustainable than single-use development. We want to work with local authorities, house builders and other housing providers to ensure that the size and type of housing better matches need, especially by providing more homes for the increasing number of smaller households.

I emphasise that our proposals are geared towards helping rural areas as well as urban ones. This is not a competition between urban and rural areas; it is about sustainable communities for people wherever they live. I say to my hon. Friend Mr. Drew and the hon. Members for North Cornwall (Mr. Tyler) and for Cotswold (Mr. Clifton-Brown) that it is essential that the affordable housing needs of the countryside are taken fully into account, so that we pass on a thriving rural England to future generations.

Sustainable communities do not depend solely on quality housing at a price that people can afford. They need jobs, services, an accessible and enjoyable environment and active engagement by the people living in them. The problems that we face in our communities are deep rooted and vary hugely across the country. No hon. Member could reasonably claim that the solutions were easy or immediate. After all, we are turning round years of under-investment, not only in housing but in the fabric of our public realm. We are investing £22 billion in sustainable communities, but money on its own, though handy, is not enough, so we are reforming as well as spending, because we recognise the importance of cultural—

Photo of Mr Paul Tyler Mr Paul Tyler Liberal Democrat, North Cornwall

On a point of order, Mr. Benton. Is it not evident that the speech that the Minister is reading is largely typed and does not refer to the contributions of hon. Members? We all understand that he is out of practice, but is it not an insult to hon. Members who have taken part that so little of his speech refers to the debate?

Photo of Joe Benton Joe Benton Labour, Bootle

I regret to tell the hon. Gentleman that that is not a point of order. The manner in which the speech is delivered is purely a matter for the Minister.

Photo of Keith Hill Keith Hill Minister of State (Housing and Planning), Office of the Deputy Prime Minister

May I point out to the hon. Member for North Cornwall that the speech is in response to the report on affordable homes? I am dealing with the key issues raised in that, but of course I have sought to deal with the issues raised by colleagues. I have also given a clear undertaking to write to them on particular issues that they raised. I am responding to the broad issues raised during the debate.

It being half-past Five o'clock, the motion for the Adjournment of the sitting lapsed, without Question put.