[Mr. Mike Weir in the Chair] — Social Housing (Central London)

– in Westminster Hall at 12:00 am on 14th January 2009.

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Motion made, and Question proposed, That the sitting be now adjourned.—(Mr. Ian Austin.)

Photo of Mark Field Mark Field Conservative, Cities of London and Westminster 9:30 am, 14th January 2009

Talk of the economic downturn has gone hand in hand with some very gloomy predictions about the health of the housing market. Each week seems to bring forth ever more catastrophic forecasts about the likely fall in house prices, leaving the spectre of negative equity to torment an increasing number of home owners. However, in the midst of the panic about private housing, a less reported story has also emerged: social housing projects have stalled dramatically. It is quite conceivable that, this year, there will be a collapse in the completion of affordable housing developments and no programme in the 2010-11 tax year, unless credit begins to flow once more.

Grant rates for new development have decreased to about 40 per cent., leaving housing associations, which are the main providers of affordable housing in the capital, with a choice either to build social housing at a financial loss or to cross-subsidise through sales of shared ownership and private borrowing. In these tumultuous economic times, associations' ability to take the latter option has, as for many other private businesses, been brought to a standstill. The Government's target to build 3 million new homes by 2020 looks like it will never be fulfilled.

Notwithstanding the difficult economic climate, the housing associations to which I have spoken believe that there is a path forward. I want to address that in my comments today. I appreciate that these are very difficult problems, and I hope that in the Front-Bench contributions from Sarah Teather, my hon. Friend Grant Shapps and the Minister will be a sense of trying to work together on this matter. It is not, and should not be, an issue for an over-partisan approach. Inevitably, there will be differences in the approaches that each political party takes, but I think that we all appreciate that some major problems are affecting all our constituents, especially given the reliance on social housing, and that there are particular pinch points—dare I say it?—within London and its outskirts. I consider the number of central London MPs; I am well aware, having contested a seat in Enfield, North well over a decade ago, that the same issues apply to constituencies such as my hon. Friend's, which lies just the other side of the M25. I recall that such problems were at the forefront.

Planned Government investment could be brought forward in a new national housing programme, and a fresh financial model could encourage genuinely mixed communities in our cities, thus opening a flexible social housing option to a far greater number of people on a wider range of incomes. However, if the Government fail to take steps quickly enough, associations believe that the ambitious social housing targets will remain woefully unachievable.

Of the many misconceptions about my constituencyCities of London and Westminster—the most common must surely be that I represent only a lucky club of people rich enough to live in central London: the mansion dwellers of Belgravia and Mayfair, the City's movers and shakers and wealthy international folk who snap up river and park-side penthouses at ease. In reality, constituency-wide, there are significant pockets of social housing, and the area has important historical connections to some of this nation's oldest housing associations. Some estates in my patch have even attracted plaudits for their design, such as the Pimlico's post-war Churchill Gardens, which has been praised as an imaginative example of high-density, inner-city housing—at least it was high-density when it was built in the 1950s, although it does not seem so now. It now seems to be a very well-planned estate. Other estates provide wonderful examples of Victorian philanthropic architecture, such as the Peabody estate in Brown Hart Gardens in Mayfair and the Abbey Orchard estate off Victoria street, which is almost a stone's throw from this debating chamber. Such developments have helped to transform one of Westminster's and inner London's worst 19th century slums and stand as a testament to the generosity of renowned philanthropist George Peabody and the eye of the English architect, Henry Darbishire. Sadly, such well-built, attractive estates have been eclipsed in the nation's perception of social housing by so much undistinguished post-war development.

Along with other London Members' constituencies, Cities of London and Westminster has witnessed a colossal boom in the housing market in the past decade. Property prices in my constituency rose by some 220 per cent. in the decade to 2007, while the average wage rose by only 44 per cent. In the meantime, the number of people on social housing waiting lists continues to increase. Last year, 333,857 households were on social housing waiting lists in the capital—a 47 per cent. increase over the past five years alone.

With the neediest households receiving priority for housing, my constituency is now exclusively home to the super-rich and the very poor. That is not a healthy state of affairs, although it has probably applied in places such as central London since time immemorial—it has always been home to the very wealthiest, as well as to much poverty. One can read books going back many centuries to see that. However, that phenomenon increasingly applies almost throughout the capital. People face great disadvantages. I am sure that all Members have constituents earning multiples of the average national wage who cannot get on to the property ladder and who find themselves lost, because they are regarded as being far too wealthy to qualify for social housing. That probably applies to suburban areas such as Eltham as well—I see Clive Efford in his place, although silently so, I expect. We need to draw back from such polarisation. In the immediate term, one can see that an economic downturn might help at the margins of that polarisation, but we need a much more systematic and fundamental approach.

With the enormous pressure on stock, housing problems, along with immigration difficulties, continue to account for the largest element of casework that I receive in my daily postbag. I expect that the same could be said of all other inner-London Members. Those two issues are likely to go hand in hand, as many people migrating to Britain arrive in, or make their way to, the centre of London, which can place enormous pressure on emergency and temporary housing. Given the disparity between stock and demand, I am frequently sent letters from residents who find it difficult to secure a permanent council or housing association property or to get awarded a transfer to a more suitable home. In the meantime, those constituents often find themselves waiting in desperately overcrowded conditions or in properties quite ill-suited to their basic needs.

Last November, I met representatives of the G15, which is the group representing London's 15 largest housing associations. They wished to express their deep concern about the impact of the current economic crisis on London's social housing stock. The G15 associations house about one in 10 Londoners—approximately 700,000 people—and manage some 410,000 homes. Crucially, they are also relied upon to develop most of London's new affordable housing each year, in view of the targets for the next decade or so. However, they told me that it is becoming increasingly harder to continue with affordable housing projects.

As I mentioned earlier, grant rates for new developments have decreased to about 40 per cent., making it impossible to build social housing at anything but a financial loss, unless an association can cross-subsidise. However, cross-subsidy is no longer an option, because it can be generated only through sales of shared-ownership properties and private borrowing—routes that have been cut off owing to the collapse of the property and credit markets.

Furthermore, a significant proportion of new social housing in London is produced by private developers through planning gain agreements. Again, however, as private development dries up, commensurately less planning gain for the social sector will follow. As I am sure that the Minister is aware, the result is likely to be longer delays for the thousands lingering on social housing waiting lists and an increase in the 750,000 Londoners living in overcrowded conditions.

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

I have disagreed with nearly none of what the hon. Gentleman has said. However, does he accept that, even before the impact of the credit crunch was felt, in some local authorities, including his and my borough of Westminster, the proportion of affordable homes from planning gain was only 11 per cent, over the past two years? Only one in 10 of all homes built in the borough before the economic crunch was affordable, and that cannot be blamed on the economic situation.

Photo of Mark Field Mark Field Conservative, Cities of London and Westminster

The hon. Lady makes a fair point. In the eight years that I have been in the House, we have had a number of battles—friendly, I hope—on issues related to housing. As she is aware, one of my concerns is that the targets that were set by the erstwhile Mayor of London were so unrealistic that too many developers in places such as Westminster were happy to sit on their hands and watch the value of their stock of land going up and up, rather than going down the path of taking on social housing.

I accept the point that the hon. Lady makes. I am not suggesting that the short-term credit crunch is the only issue, but given that it will impact on the housing market—particularly the social housing market—for some years to come, it gives us an opportunity to take stock and collectively to work out the best pathway forward.

Faced with the situation in which lenders will not lend, buyers will not buy and builders cannot build, the G15 contend that we need to rethink our national housing policy. The previous housing crisis was dealt with by encouraging the emergence of a third sector of independent housing associations and a third way that combined the best of public and private to get the market moving. Similarly, the G15 now want to see—as I do—a fourth way in which planned Government investment is brought forward to allow for a new national housing programme led by the third sector, to which I have referred. Such ideas could turn the financial crisis into something of an opportunity.

I should like the sales-based cross-subsidy to be replaced with a new type of subsidy that will fill the gap that is left. That will require support from the Government through increased grant funding and through equity investment given by the Homes and Communities Agency. In addition, more accessible and less expensive land will have to be made available.

I should also like a re-examination of the nature of Government investment that separates future investment into two elements: grant subsidy, which is used to develop and deliver affordable rents, and equity, which is needed to fund the product. Although equity cannot be returned, it can be reviewed and adapted to suit changing individual circumstances.

In addition, I support the introduction of a new housing model that discourages home ownership for those who cannot afford it, but leaves open an option—not an obligation—to buy in the future. By that I mean getting on a stepladder to buy a bit of shared equity. Currently, too many models regard home ownership as the be-all and end-all. In many cases, people do not have suitable lifestyles for home ownership. For example, they may not have a particularly firm employment record. Getting on to the housing ladder may seem an attractive proposition, but it is an unrealistic one for many people. The new model would help to generate very mixed communities, which is a positive way forward in social housing development. It would offer a wide range of rents and refocus on providing homes that are in short supply, such as family accommodation.

As for supply, I should like new partnerships to be established between housing associations, local authorities, house builders and the Homes and Communities Agency. By working together, the inherent economic risk can be reduced, investment increased and a firmer eye kept on long-term sustainability by ensuring that the quality of housing is high. Calls for housing associations to buy unsold private stock should be resisted as far as possible. The majority of such properties are not suitable for social housing. Only 2 per cent. of new private development homes have been awarded the status of "very good", or level 3, of the sustainable homes code. Level 3 is the minimum standard that housing associations require to use a property for social rent purposes.

With regard to the sale of shared-ownership stock and the financial health of individual housing associations, a number of housing association chief executives have identified banks' lending behaviour as a major risk to their business and a significant stumbling block in the completion of property sales.

Although low-cost home-ownership sales have decreased substantially in recent months, demand has risen. Housing associations are receiving more and more inquiries about different kinds of home ownership, but the rate of completion remains minute. Admittedly, in some circumstances, that is because potential buyers are waiting for the market to bottom out. They are making their inquiries and then sitting on their hands for a few months, perhaps for a year, assuming that the asset value will get lower, which is probably a fair assumption to make.

In most cases, housing associations report that transactions fail because of a lack of mortgage finance. Lenders are looking for opportunities to reprice their loan book, which has had a detrimental effect on housing associations as well as on local small businesses, many of which have been in touch with me in recent weeks. Let me provide an example. A housing association that had a group structure with three different organisations decided that it wanted to collapse that governance structure to become a single organisation with residents' panels. That is perfectly desirable. The association consulted its residents, who mightily approved of the scheme, and such a change would save the association around £300,000 a year. However, its core lender said that if it went ahead with that restructuring, it would regard it as a significant event and be compelled to reprice the entire loan book at a cost of £1.9 million to the housing association. Naturally, in the current climate, the move did not go ahead, and efficiency savings along those lines were not made.

We must encourage Government to put further pressure on lenders, especially those in which they hold a significant stake, to provide affordable finance in this field. I appreciate that this is fast-moving situation, and I do not expect the Minister, even in conversations with his friend the erstwhile Member for Hartlepool, to give us commitments at this juncture. None the less, I hope that he will make the case for social housing, given the amount of money that is going into various loans for small businesses.

Problems with social housing policy extend well beyond supply difficulties. The cost of renting in London remains a significant issue, due to the gap between social and market rents and the inflexibility of the social rent structure. That is a problem about which I am particularly passionate, given the impact of economic polarisation in my own constituency. As I have said, wealth disparity has been a London issue since time immemorial. In the eight years in which I have been in the House, I have watched the extent of demographic change and seen that those on middle-to-low incomes in London—by that, I mean at least double the average national wage—are increasingly being pushed out of the area. All too often, families who have been here for generations and who want to contribute to the local community are in that category and are forced to move away.

As for the limits of the current structure, I shall use the example of the housing arrangements of one of my constituents who passed away last year. She had lived as a secure tenant in her home on the Peabody Wild Street estate since 1986 for a rate of £75.50 a week, which included services. The estate is moments away from Covent Garden piazza, and the market rent for the flat would be around £320 a week. The flat is now being re-let at £116 per week, including services to a tenant with support needs. The difference between the social and market rent is £200 a week, or £10,000 a year. What happens to those who fall between the two extremes—those who do not qualify for social housing, but who cannot realistically afford the cost of market rents in central London? That is the sort of gap that we are looking at—effectively two thirds of the cost. One third applies to someone who qualifies for social housing, and the full rate to individuals who would love to live close to their place of work but who simply cannot get on to the housing ladder.

The current economic climate provides us with a once-in-a-lifetime opportunity to create a much more flexible rental market. I support the provision of a wider range of housing options for people who are too rich to qualify to rent social housing but too poor to buy in the market. Housing associations are often frustrated that the income they receive from renting a property barely covers maintenance costs and that the rental income from a four-bedroom house is only slightly more than that from a two-bedroom flat. The same applies when we look at the differences in rent for a zero-carbon home and for an old, inefficient property. None of this makes sense. I appreciate that it is easy for me to make proposals. We are on the verge of unravelling almost a century of rental arrangements going back to the first world war. There are many inconsistencies in place, and it is difficult to establish a definitive template, but I am trying to put a few things on the record that will form part and parcel of the thinking of this Government and of all parties going forward.

Much better use could be made of rental portfolios, to the immense benefit of people on low and middle incomes, who would like a wider range of renting options, and would view intermediate rent of 80 per cent. or less than the market rent as an important new mechanism to bridge the gap between the social and market rent. Importantly, it could also ensure that we a greater mix in communities. A relaxation in rent policy will increase incentives to build to higher standards and reflect the relative value of a social tenancy. Rent differentiation would also provide an incentive for a couple to downsize when they no longer need to stay in a large property when their children are grown up. That would free up valuable family-sized accommodation to address the acute problems of overcrowding.

I frequently receive letters from constituents telling me of the desperate pressure imposed on family life by overcrowding. I received a letter this week from the City of London citizens advice bureau that brought to my attention the plight of a family of eight who live in the square mile in a three-bedroom flat with one small bathroom. They have been trying to get a transfer either to a larger property or to one with better bathroom facilities, but the lack of social housing in London has resulted in their having to remain in that flat. That is one example, but London Members will receive letters like that day in, day out, all year round.

I appreciate that this is an unintended consequence, but I fear that the Government's target of reducing temporary accommodation by 50 per cent. is hampering efforts to reduce overcrowding, because local authorities are forced to transfer households who live in suitable private-sector accommodation to any new flat that they gain. That means that when councils ask developers to build new accommodation under a section 106 agreement, they build for single occupancy to reflect the type of households in temporary accommodation, and ignore the need for family accommodation, which is in many ways the more pressing need. As I said, that has an important impact on the social glue of a community, because we want to ensure that people can live in central London for the long term, and we do not want them to think that living here is something they do when they are single, before moving away.

One of my local authorities, the much-loved Westminster city council, fears that overcrowding will increase as the economic downturn deepens. The council has long recognised that overcrowding is one of the biggest housing challenges it faces and is launching a campaign to tackle the issue. It intends to say which of the Government's targets are particularly contradictory and unhelpful in preventing local authorities from dealing with overcrowding, and it will highlight the need for reform on three key issues: more efficient use of supply, managing demand, and tenure reform.

Westminster council would like the Government to allow local authorities greater flexibility, to give them the power to transfer a household to a more suitable home when housing needs change, and to allow them to discharge the homelessness duty when a client has been assisted into suitable private accommodation, which would quickly help to reduce the overbearing waiting lists. The council contends that Government targets to reduce the use of bed and breakfast and temporary accommodation have resulted in fewer transfer opportunities for existing tenants, because new people on the register are given preference for available properties. It also intends to recommend that an applicant's connection to the local area and community is given greater weight when deciding a person's priority for housing—as the Minister will be aware, I feel particularly strongly about that.

Photo of Jeremy Corbyn Jeremy Corbyn Labour, Islington North

How does the hon. Gentleman define local connections when it comes to the allocation of properties? I ask that with some feeling, because the proposal could end up being discriminatory against people who are in a poor housing situation. They could be in a worse position because they could be blocked out of the transfer system.

Photo of Mark Field Mark Field Conservative, Cities of London and Westminster

Clearly, I am not going to define that off the top of my head. As the hon. Gentleman knows, we have waves of migration, and some people have families who have lived here for several generations. Let us be honest: if we were talking about local connections in the context of housing in London 30 or 40 years ago, the unspoken issue would have been race. To my mind—this is the reality—local connection now means every bit as much to the large numbers of Bangladeshi or Chinese communities as to anyone else, and I would assume that the same applies to a place such as Islington, North. Promoting local connections means as much to people whose families have lived here for a couple of generations and who want to stay, who have work and social networks, including friends, nearby.

Arriving at a firm definition is quite difficult—it is an inherent difficulty. By the same token, too much discretion in the hands of local authorities would present difficulties. We all know that there is a sensible medium ground but, unfortunately, the strict and mandatory rules of central Government pre-1997—this is not a narrow party-political point—make things more difficult, as it is frustrating for councils, whether a Labour or Liberal-run Islington council, or Conservative-run Westminster council, to try to build a stable population in which people are willing to play an ongoing part in the community.

I appreciate that other hon. Members wish to speak, so I shall conclude. I recognise that the Government alone do not hold sway over the provision of social housing in Westminster or other local authority areas. With a budget of more than £5 billion, the Homes and Communities Agency, which is chaired by the Mayor of London, has an important role to play in addressing the capital's housing needs. However, in his recently announced housing strategy, the Mayor has already shown a commitment to many of the aims that I have addressed in this speech, such as encouraging mixed communities, promoting a range of tenures, expanding the intermediate rental sector, boosting the number of family-sized homes, and nurturing partnerships between local authorities, housing associations and developers. It is now crucial that the Government show their true commitment—I am sure that they have one—to the provision of social housing in our capital, not simply by restating targets, but by giving serious and immediate thought to the proposals that I have set out.

Unless a fresh housing model is introduced swiftly to recognise the need for a new subsidy, the Government's stated aims on social housing will, sadly, remain unachievable. Although the crisis facing the social housing sector is daunting, it should be seen as an opportunity to address some of the long-term problems that have plagued housing provision in the capital, such as the polarisation of communities, overcrowding, and the unaffordability of property. By working with housing associations rather than putting a break on their aspirations, the Government can use social housing to steer London's home owners and tenants out of the darkness.

Several hon. Members:

rose—

Photo of Michael Weir Michael Weir Shadow Spokesperson (Trade and Industry), Shadow Spokesperson (Environment, Food and Rural Affairs)

Order. A number of hon. Members are seeking to catch my eye. I ask hon. Members to bear in mind the fact that I want the winding-up speeches to begin at about 10.30 am.

Photo of Jeremy Corbyn Jeremy Corbyn Labour, Islington North 9:57 am, 14th January 2009

I shall be brief because we want everybody who wishes to contribute to have time to do so. I congratulate Mr. Field on his contribution and appreciate his obvious concern for his constituents' needs.

Social housing is obviously important, but I wish we could find some other term, because "social housing" has connotations of unmunificent charity, not of people's right to decent housing. I do not know what that alternative term is, but I wish we could find one. I am sure that the Department for Communities and Local Government will find one in time—it always does.

I represent Islington, North, and the hon. Gentleman talked about the issues that affect his constituency, which are similar throughout central London. The growing gap between the wealthy and the poor in central London is quite appalling and, actually, economically damaging to London in the longer term. In Islington, North, even now, if a council house or housing association property becomes vacant through either death or somebody moving away from the area, it is nearly always let to a larger, poorer family, but if a private property becomes available for sale—a street property—it is nearly always sold to somebody much wealthier than the previous owners. That pattern is repeated across London, so the gap between the richest and the poorest in our capital city is increasing quickly. That is very much my experience.

There is enormous pressure on allocation and resources in my borough, just like all the others in London, and I find it sad that we end up having an endless debate about the science of allocation policy for housing for people in desperate housing need. We all have advice surgeries, so we probably all have far too much knowledge of the workings of the points allocation system. We all spend a great deal of time writing letters to local authorities to try to get somebody more points or greater allocation because of medical needs, or to deal with problems such as overcrowding, children of different sexes sharing bedrooms and so on. Those problems are important and it is part of our job to deal with them, but the issue, fundamentally, is the lack of supply of housing for people in desperate housing need. That must be addressed.

I was looking yesterday at the statistics for housing developments in my borough over the past 15 years. The number of units built each year for rent by housing associations varied between very few and a few hundred. The number built by the local authority for most years was zero, but happily it is now building a small number of homes.

The vast majority of development has been small infill development by private sector developers, typically creating between half a dozen and a dozen private flats, some of which are sold on the buy-to-rent market. My local authority chose to set the threshold for what it terms social housing too high, so most of those developments contained no social rented element whatever and were nearly all for sale. That threshold has been reduced a little, so the number of places available for rent by people on the housing list has gone up a little. However, we have to be tough about this: there are developments across London that will probably soon by mothballed or stopped, so this is a golden opportunity for local authorities to take them over and use them to house people in desperate need.

I take the hon. Gentleman's point about the purchasing of private properties by housing associations, but sadly many of them are simply inadequate and built to too low a standard. That alone is a condemnation of our system: the private sector building is of such low quality that local authorities and housing associations could not buy them even if they wanted to. I look to the Minister for much tougher building regulations on the private sector in addition to the welcome improvements in the public sector.

I also want briefly to mention the private rented sector. My constituency has an owner occupation rate of only about 30 per cent., which is well below the national average, and indeed well below the London average. That level is declining fast, in part because people have difficulty selling in the current climate and prefer to rent and hang on to the capital value of the property. The local authority stock was declining fast due to right to buy, although that has now declined a great deal, so the stock is more or less static.

The only stock that is fundamentally increasing is that of housing associations, but it is in the private rented sector that the biggest problems emerge in that the local authority has limited resources and huge demands are placed upon it: there are roughly 13,000 families on either the waiting list or the transfer list in my borough council area, and I suspect that there are similar figures across central London.

Therefore, the local authority can allocate housing only by guiding people into the private sector to rent a property, and because most of those who apply for housing are on benefits, housing benefit pays the rent. That costs the public sector a great deal of money, but it comes not from the local authority, but from central Government, who are paying astronomical rents of £200 or £300 a week for wholly inadequate properties.

That issue has been raised many times by successive Ministers and with the Department for Work and Pensions, and I was pleased that the Secretary of State agreed to meet a delegation of London MPs to discuss housing benefit costs in the private sector, because it is an enormous waste of money. We are paying a great deal of public money to keep people living in misery.

Photo of Simon Hughes Simon Hughes Shadow Secretary of State for Energy and Climate Change

In boroughs such as the hon. Gentleman's, as is probably the case for us all, that is also unfair because rich parts of the borough with high prices can contribute to the average taken across the borough. The housing benefit that someone can get might not reach anywhere near the cost of the place available because it is based on the average for an area with low-cost and high-cost housing, so it is even worse for many people.

Photo of Jeremy Corbyn Jeremy Corbyn Labour, Islington North

That is a fair point, and a real issue. Due to how the housing benefit system operates, we can end up with a kind of social cleansing of certain areas because housing benefit costs often do not meet the rent costs. We all have cases of someone coming to see us because their housing benefit covers perhaps 80 per cent. of their private sector rent and they have to pay the rest out of income support, so they end up on an incredibly low take-home income. That has to be looked at.

Clearly, the housing crisis in London can and must be resolved by rapid investment in new build and much tougher planning regulations on the level of building within private sector developments. The hon. Member for Cities of London and Westminster pointed out that the number of rented units available through housing associations is declining because most of their developments are predicated by sales policy, or indeed by commercial lets policy.

We must ask ourselves what housing associations are for. They were established to provide housing for people in housing need, roughly equivalent to the local authority. Indeed, the allocations for affordable rented property come entirely from the local housing authority anyway, but since they now have much less than half their capital costs provided by central Government through the homes agency, or indeed any other source, they have to borrow the rest, so they are encouraged to build for sale and to go to some extent into commercial renting. We must then ask ourselves why on earth we have housing associations if they are not providing the kind of social rented housing that we need.

We must look carefully at what some housing associations are doing and whether they are behaving more like property companies than agencies for renting to people in desperate housing need. I hope that the Minister can give us some comfort in that regard.

I also want to mention local authority building. For a long time, local authorities were the main source of provision of new housing for people in housing need. Between the 1950s and 1980s, the level of council house building was enormous, and I think that 100,000 houses were completed in 1979. The number declined rapidly after that to almost zero, although it has now increased a little.

Local authority housing has provided good-quality homes for a large number of people, and surely that ought to be the solution to the current crisis. Investment in council housing is a means of regeneration, conquering unemployment and keeping the building industry going. Above all, it is a way to provide for people living in appalling overcrowded conditions and to help to prevent underachievement in school, high levels of crime and all the other problems that result from bad housing and overcrowding. Those can be improved by this strategy.

I hope that the Minister can give us some comfort that it will be possible for the money allocated for housing development during the current crisis and the money given to the homes agency to be used for that purpose.

My final remark returns to the point I started with, which was about allocations policy. There is obviously a huge science around all that, but frankly, I just wish that we could provide housing as of right so that we would not have to have these arcane debates.

I am concerned that the number of households in London that are populated by single people is increasing. Indeed, that is predicted to be the fastest-growing area of social living in London over the next 20 years. In most housing association and local authority allocations, it is hard to get housing for single people. They have to be either vulnerable or elderly or suffering from some serious medical condition.

Increasingly in London, many single people—quite often people in work—must sofa-hop from one friend's home to another, sometimes ending up sleeping in cars and all the rest of it, because they cannot afford private rent at the rate of £200 or £300 a week and cannot be allocated a council or housing association property because they do not figure as a priority. I hope that we can become slightly more balanced and ensure that their needs are met as well as others'.

We have it in our hands to do something about this crisis. If we do not, the result will be sheer misery for those living in grossly overcrowded accommodation, and a more divided social structure in central London, which is in nobody's interests.

Photo of Tom Brake Tom Brake Shadow Minister (Olympics and London), Shadow Minister (Home Affairs), Liberal Democrat Spokesperson (Home Affairs), Liberal Democrat Spokesperson (Olympics and London) 10:10 am, 14th January 2009

It is a pleasure to follow the hon. Members for Cities of London and Westminster (Mr. Field) and for Islington, North (Jeremy Corbyn), who speak frequently and knowledgeably on London issues. The hon. Member for Cities of London and Westminster was right to point out that housing is one of the most intractable problems that we face as Members of Parliament, whether we represent central or outer London.

The hon. Member for Islington, North asked what the purpose of housing associations was. At the point when a lot of responsibility was shifted from local authorities to housing associations, one of their purposes was to be more representative, accountable and accessible than councils. However, in my experience—it may be his as well—local authorities nowadays are all too often more responsive, in many ways, than housing associations. In terms of democratic accountability, from the housing perspective, it is much easier to put pressure on someone in the local authority than in a housing association. I am afraid that the original intention has been lost in recent years.

I had expected to make only an intervention in this debate. Indeed, before the hon. Member for Cities of London and Westminster turned up a minute or two before the debate, I thought that I would end up making the only Back-Bench contribution, so my remarks this morning are perhaps an extended intervention, containing a couple of key questions for the Minister.

Clearly, this is a critical time for the economy. It is already having a significant knock-on effect on home owners, and it will have a significant effect on people in social housing as well. Job losses will undoubtedly lead to home repossessions and people falling behind with their rent. How many homes does the Minister expect to be repossessed in London this year, and what impact does he expect that to have on the demand for social housing?

The hon. Member for Cities of London and Westminster rightly highlighted the impact of the situation on funding, particularly for projects where the local authority or a housing association is working in partnership to provide a mixture of affordable housing and housing for sale. Is it still the Government's preference to have mixed-tenure development? In the current economic circumstances, that will be more and more challenging.

From a London perspective, the Mayor has a significant responsibility for housing. It is regrettable that the 50 per cent. target for affordable housing to which he signed up during the mayoral campaign has been jettisoned. I welcome his target of building 50,000 new homes, as well as the fact that he places great emphasis on the need for boroughs to be at the centre of what is happening in housing. They have the tough job of balancing strong demand all over London for affordable housing with equally strong demand in many parts of London, particularly outer London, for the preservation of back gardens. Back gardens preserve a green lung and are in many cases the only habitat for wildlife in suburbia. They are often the reason why people choose to live in suburban London; people feel that gardens are an important part of the character of those areas.

I hope that the Minister, as well as the Mayor, will adopt the proposal advocated by Mike Tuffrey, a member of the London assembly, to provide real-time information about the number of homes being built. The Minister might want to put a diode display outside the front of his Ministry to show how many completions there have been each week. We could then see whether the Mayor's targets and the Government's were being met, and if they clearly were not, suitable action could be taken to address the situation.

In a London and national context, in relation to empty homes, it would be remiss of me not to mention something that the Liberal Democrats have banged on about endlessly: equalisation. VAT on new build should be the same as on renovations, to bring back into use the empty homes scattered across London, typically above shops on our high streets.

My local authority is still en route to becoming a two-star arm's length management organisation. Will the Minister reassure us that, notwithstanding the current economic circumstances, the money will be available for authorities that achieve two-star status? My authority has significant housing issues. The housing stock is not of a standard that I feel is appropriate. One of the explanations for that involves my final point.

We have been running a local campaign called "A Fair Deal for Sutton's Tenants", which brought a couple of busloads of tenants up to London to deliver a petition to No. 10 last year. Sutton's tenants, who suffer from housing that is not of an appropriate standard in some cases, make an average contribution of £1,473 each from their rent to the central pot. In effect, £10 million is being taken out of Sutton to subsidise and improve social housing in other parts of the country that we, not having two-star status in our borough, need to invest in improving our own property.

The Government have the issue under review, but I hope that the review will be tough. Local authorities of all political parties will be winners or losers if the Government address the situation. However, this is a fundamental issue of fairness. When tenants in a borough pay their rent, they expect that rent to be spent locally on doing up their own properties. They do not expect £10 million a year to be exported to do up council properties in other parts of the country.

I hope that the Minister will respond to those two or three critical questions, and I hope that the Government, working with the Mayor, will address the provision of social housing in central and outer London. It remains the single biggest intractable issue that we, as Members of Parliament representing London constituencies, must address daily.

Photo of Andrew Slaughter Andrew Slaughter PPS (Rt Hon Lord Malloch-Brown KCMG, Minister of State), Foreign & Commonwealth Office 10:17 am, 14th January 2009

I congratulate Mr. Field on securing this debate. I enjoyed his contribution and agreed with almost all his analysis and some of his recommendations. I was a bit worried that I would agree with everything; he started to say some nice things about Westminster city council and its long-term concerns about people in overcrowded housing, and I just managed to get to the point of disagreement in the end.

The hon. Gentleman was absolutely right in much of what he said and in some of his recommendations. It is refreshing to hear a Conservative Member talk about the positive side of rented accommodation and the need for it, as one rarely hears that from that party. However, I was left with the impression that what he had really done was to give a justification of the previous Mayor's housing policies, rather than the current Mayor's. I cannot understand from what he said what could possibly have been wrong with a target of 35 per cent. social rented housing, 15 per cent. intermediate housing and 50 per cent. market housing. That seems exactly the right discipline for London at the moment.

The emphasis on social rented housing is based on the fact that, notwithstanding what is said about intermediate housing, it is clearly the area of most pressing need. We know that the past Mayor hopes to come back. If he is looking for a housing adviser, perhaps that job will be available, but the reality on the ground is very different. Housing policy in London is different, because it is now largely in the hands of mainly Conservative boroughs and a Conservative Mayor. I do not want to be a party pooper, but I want to reflect that reality for a moment.

The first point is that the abolition of targets is a very cynical move to ensure that less social rented housing is built in the capital. That process operates to the extent that one of my local authorities—Hammersmith and Fulham—judicially reviewed the Government to reduce the target that was set. Then, having won that judicial review as recently as last week, the authority was crowing over the fact that it now has much lower targets on social housing. It says, as the Conservative mantra has it, that that is because these targets create artificial boundaries. As I often remind colleagues on these occasions, under a previous Labour administration, it was possible to build 80 per cent. affordable housing, split almost 50:50 between intermediate and social rented housing. I would have thought that that was the paradigm for what the Conservatives say they wish to achieve, so I do not know why they should engage in the business of spending public money to go to court to reduce those levels, because not only are targets for affordable housing going but the definition of affordable housing is substantially changing.

The target for what is called "affordable housing", as far as my local Conservative council is concerned, is for people with a per annum income between £50,000 and £72,000. Previously the range was £50,000 to £60,000, but under the Mayor's housing strategy, the range is for people with a per annum income between £50,000 and £72,000. I do not know whether that is what the hon. Member for Cities of London and Westminster had in mind when he was talking about intermediate housing, but that is not what I call intermediate housing. When I talk about intermediate housing, I am talking about people on perhaps £20,000 to £40,000, who are the majority of people in housing need and looking for housing, but who may be able to access a level above social rented housing.

Those people are entirely excluded from my local authority's plans, but it goes much further than that. There are three pillars of housing policy in Hammersmith, the first of which relates to disposal. The reason why the council is unlikely to reach its targets on temporary accommodation is that, for example, it has just sold off by public auction large, good-quality properties for £1 million to £2 million each that provided more than 60 flats for homeless families in the centre of the borough, with family networks, schools and everything that goes with good-quality temporary accommodation when it is necessary. That sale happened so that those families can be moved, probably out of the borough and certainly into private sector leased accommodation, at a cost to the taxpayer that is three or four times greater than the cost was previously.

As I have already alluded to, the second plank or pillar of policy in Hammersmith is to build no new social rented housing at all in the borough. Again, that is a question of going back, renegotiating with and putting pressure on housing associations not to include any social rented housing at all in new developments.

Most provocatively, the third pillar of policy is to look at the demolition of existing social housing. If all the council's plans came to fruition, up to a third of all social housing in the borough—up to 5,000 units—would be demolished for redevelopment, either as commercial units or as private housing units. I do not have to explain any further; clearly, far from improving things, that policy will make the housing situation locally far, far worse.

Perhaps Grant Shapps, the Opposition spokesman, may wish to allude to this matter, but what must underlie a policy that is stated as reducing the percentage of social housing in Hammersmith and Fulham is a Conservative policy that was mooted last year; I do not believe that it is yet formally official policy. That policy is to relegate the status of social housing effectively to temporary accommodation, to remove security of tenure. I say that because that can be the only conclusion. It is certainly the stated policy of the Conservative administration of Hammersmith and Fulham council that it believes that social rented housing should be available only for emergency housing or for temporary provision. That idea was something that fed into the Conservative party's policy review. As I say, that can be the only conclusion of a policy that says that they wish to see a substantial percentage reduction in the availability of social housing over the next few years, when waiting lists and overcrowding are the highest for a generation.

I finish, as I always do on these occasions, with a plea to the Minister: in relation to London housing, only the Government can wave the stick to ensure that, far from being reduced, the amount of affordable social housing is increased, which I believe is Government policy. That applies not only to local authorities, but to housing associations, and on that point I agree with my hon. Friend Jeremy Corbyn.

Again, it is partly the fault of the Conservatives that public land sites that previously would have been transferred to housing associations at nil value are now being auctioned to the highest bidder. Of course, once the housing association is saddled with more debt and more expense, it can build only a lower percentage of affordable housing. However, many of the culprits in this situation are precisely the chief executives of the G15 group of major housing associations, who, almost as a matter of pride and policy now, see the future in housing for sale, rather than in housing for rent. That is a complete subversion not just of the function for which they were established, but of what, frankly, they are paid and instructed to do. The Government must come to terms with that, because those people are unaccountable, either to their paymasters in Whitehall or to their tenants, who are primarily the people whom they deal with. That is a matter that we must address.

Photo of Grant Shapps Grant Shapps Shadow Minister (Communities and Local Government) (Housing and Planning), Co-Chair, Conservative Party

Does the hon. Gentleman share my concern that the Housing and Regeneration Act 2008 specifies that public land cannot easily be sold for anything other than its market value, which sometimes leads to the wrong type of development?

Photo of Andrew Slaughter Andrew Slaughter PPS (Rt Hon Lord Malloch-Brown KCMG, Minister of State), Foreign & Commonwealth Office

I will let the Minister respond in detail to that point, but it is something of a canard. There is a problem at root there, although the hon. Gentleman always finds a lateral way of avoiding his responsibilities as a housing spokesman to make what I often think are rather petty points. As I say, there is a problem with disposal for best value with all public assets, but there are also ways round that problem. However, I agree with him that we often hear from the Government about plans to dispose of unwanted public assets for the benefit of social housing in particular, yet I do not see much of that happening. That is perhaps another area where the Government can pay more attention.

Photo of Simon Hughes Simon Hughes Shadow Secretary of State for Energy and Climate Change 10:27 am, 14th January 2009

I am very grateful to Mr. Field for securing this debate. I will be very brief, because I am sure that Ms Buck, who is very knowledgeable and helpful in these debates, would like to say a word. I will therefore be really quick, taking two minutes to outline the state of play in Southwark and another two minutes to put questions to the Minister.

Southwark has the largest local authority housing stock in London and probably the largest leasehold stock, given the number of people who have bought property. In my constituency, we have the smallest owner-occupation rate in London, so we depend on local authority housing and housing associations—both the traditional housing associations, such as the Peabody and Guinness associations, and the newer ones. I want to reinforce the last point but one that was made by Mr. Slaughter about housing associations. The intention was that they should build property for rent. They should do so, and I hope that Ministers will tell them that that is what their purpose is, not suddenly to do other things.

I also want to reinforce the point made by my hon. Friend Tom Brake and other Members that housing associations are far less accountable than they should be. As an MP, four out of 10 constituency issues that I deal with are related to housing, and I generally find it far more difficult to obtain good responses from housing associations than I do from the local authorities—Southwark and the City of London—that own the housing stock. That issue needs to be addressed.

I want to put on record the latest official figures, which the Minister will know. The average local authority rent is £76 a week; the average housing association rent is £81; and the average private sector rent is £193. Obviously, things are moving a bit at the moment. Equally, the average house price in London is £315,000; average earnings in London are £25,000; and the income needed for a mortgage is nearly £100,000. Furthermore, there has been a much greater increase in house prices than in earnings. Therefore, most people cannot afford to buy and are dependent on local authority and social housing stock. The most recent figures that I have seen show that in London, private sector completions were 12,800; housing association completions were 9,100; and local authority completions just two—I repeat, two. That is complete nonsense if we wish to respond to need.

I therefore have a number of questions for the Minister. First, what is the policy on empty homes? Should registered social landlords be able to buy or lease them? I am aware of the controversy, but there are a lot of empty homes around and they should be used. What is Government policy and what should housing associations be doing? Secondly, will Ministers consider suspending the right to buy from today, or as soon as possible, for anyone who moves into social housing, to stop the drain that has, sadly, taken too much away? Thirdly, will Ministers consider lowering the starting rate, with shared ownership, for the percentage that one needs to buy? There could be a 5 per cent. purchase with 95 per cent. rent rather than a 10, 15 or 20 per cent. purchase. Fourthly, can we have a response to the question that Jeremy Corbyn and others made about single people and couples, key workers and people returning from the services? Such people need to be provided for in all our communities. It is not sufficient to provide only for those who are elderly, vulnerable or have children, because that does not allow us to service the economy, get jobs done and keep communities together.

Fifthly, what is the deal between big and small housing associations? Are the big ones in a position to finance the smaller ones that are in difficulty? I have read in the housing press that some of them are coming to the rescue. Is that satisfactory, or will the Government need to come in and give support? Sixthly, does the new Homes and Communities Agency have the money that I am told it has to release now? Is it waiting to give that money out? If so, can the money be released so that schemes on the drawing board can be delivered? Lastly, there are big developments in my constituency that the Government support, such as the Heygate and Aylesbury redevelopment. I understand that the deals have been agreed but are not being signed up to because the housing associations are nervous that they cannot deliver. Will the Government take an active interest so that the plans that everyone has agreed should happen—this is not a party political matter—can happen? Then people will not be so nervous that new housing is not being built.

Photo of Karen Buck Karen Buck Labour, Regent's Park and Kensington North 10:31 am, 14th January 2009

I have just one or two points to make. First, let me congratulate Mr. Field on securing the debate. I agreed with almost all of his analysis of the current crisis, including the cash-flow problems facing registered social landlords and the G15 group talking about having more than £1 billion-worth of unsold shared ownership on its books. The underlying problem of the grant regime must also be addressed.

We all need a little more honesty if we are to find a way forward. On the Conservative side, there is the fundamental problem of resolving the issue without resources or due attention to social housing. That was entirely absent from the Mayor of London's strategy. There are also all the reasons that my hon. Friend Mr. Slaughter gave, which I shall not repeat. We need a little more honesty from the Government, too, about the way out of the immediate crisis. One issue that I want to pick up is the desperate importance of taking a more relaxed attitude to the target to reduce the use of temporary accommodation by 50 per cent., because the transfer and movement of people who are in chronic housing need and suffer from overcrowding is being backed up to an alarming degree. The target was based on projections of new housing supply that have since been rendered totally invalid. The London councils inform me that the projection on which it was based was for 7,263 social homes to be constructed this year, whereas there will be about 5,000, and we all agree that the numbers will almost certainly fall off a cliff in 2009.

Even on the basis of previous projections, almost two thirds of all housing nominations are going to homeless households, although I understand why. Everyone in the Chamber, including me, deals with huge numbers of homeless households who are in a desperate situation. No one is suggesting that their needs should be abandoned, but all other housing needs are being squeezed to a catastrophic degree. That squeeze is having an impact on community cohesion in all parts of London, in addition to the problem with housing need. It is time to be flexible about the target and to use the HCA's £17 billion budget to ensure that we provide settled, long-term accommodation for homeless households in the thousands of privately rented accommodation properties that are mainly ex-right-to-buy. Otherwise, £400 a week a more is paid in rent for such households.

My final point is about an issue that the Minister has addressed and has heard me raise before, but which still goes on: the exporting of homeless households from areas where they have strong local needs. I promised to raise a case about which I have written to him concerning a Bangladeshi family with 27 years of local connection to the Church Street ward. They were born and bred there, they work locally and their children are in Gateway school in that ward, but they have been sent to Barking and Dagenham where there is a problem with community cohesion. As my hon. Friend the Member for Ealing, Acton and Shepherd's Bush has said, we look only to the Government to enforce the rules and to help us to deal with this crisis, which has been so well described this morning.

Photo of Sarah Teather Sarah Teather Shadow Minister (Communities and Local Government) (Housing and Planning) 10:34 am, 14th January 2009

Let me begin by congratulating Mr. Field on securing the debate, which has been useful. It has covered much ground that has been covered in previous housing debates, usually with the same speakers. The focus on the economic crisis is useful to the overall debate on housing need.

Like most hon. Members who have spoken today, I have acute problems with housing in my constituency, in which about 20,000 families are on the housing waiting list. One in 10 children in Brent live in temporary accommodation. Nationally, 1.7 million are on council waiting lists. As Jeremy Corbyn has said, the issue is fundamentally one of supply, which is why it is important to tackle the problems that prevent housing associations and councils from meeting targets on affordable housing for rent.

The issue is partly about lending, as the hon. Member for Cities of London and Westminster said. Many of the housing associations that managed to secure private finance before the credit crunch hit have found that banks are trying to renegotiate the terms of their loans. They say that will happen at the end of this financial year, when land that they purchased previously will be downgraded in value, appearing as a large loss in accounts and audits. The banks will use that as an excuse to renegotiate loans. That is affecting the larger housing associations; it is not just about smaller housing associations having difficulties with liquidity. As it is predominantly the larger housing associations that are building and developing properties, they are having the greatest difficulties.

There is also a problem with cross-subsidy, as many hon. Members have said. It is essential that the Government consider creating more flexibility in the subsidy per unit. This is not necessarily a long-term issue—it is a short-tem one—and it is crucial that the Treasury relax the rules. We have to accept that, for the moment, it is going to cost more to build affordable housing for rent. If we do not relax the subsidy, no housing will be built.

Photo of Jeremy Corbyn Jeremy Corbyn Labour, Islington North

Does the hon. Lady agree that it is important to have more fairness for housing co-operatives? By their nature, they cannot, and do not, become involved in the sale of property, as that is against their ethos, so they need more support with new building.

Photo of Sarah Teather Sarah Teather Shadow Minister (Communities and Local Government) (Housing and Planning)

The hon. Gentleman makes a valid point.

Another relevant issue is flexibility for councils, which would probably find it easier to borrow on the financial markets at the moment as public sector bodies, but the Treasury rules on council borrowing make that difficult. In addition, they cannot keep the capital receipts for properties that have been sold under the right to buy. As my hon. Friend Tom Brake said, there is uncertainty about the amount of housing rent money they can keep. They are not in a position to borrow, but they could make a greater contribution to meeting the need for affordable housing to rent if they had that flexibility.

Many hon. Members have mentioned the social housing model. The whole point of having cross-subsidy and a mixed economic model is to ensure that we do not have ghettoised communities, but there is another option. We could have affordable housing for rent, intermediate rent and private rent in the same developments. What consideration are the Government giving to intermediate rents? Such rents would make a substantial difference to the ability of housing associations to meet the sustainable communities requirements that the Government place on them and on councils when they are able to build developments. They would also ensure that those involved were not stuck with a model where they could finance the development only through private sale, which is, of course, what is causing difficulty. Is it really a sensible policy priority for the Government to push people into home ownership at the moment? As property prices are still going down, is it not more sensible to use the subsidy to try to make sure that we build more affordable housing for rent? There is no reason why those properties cannot be sold later, either through shared ownership or on the open market, if that is appropriate and if lending comes back on stream. However, banks are not offering mortgages for shared ownership properties anyway, so it does not seem to be a particularly sensible priority for the Government to continue to put money into that when so many families are absolutely desperate for affordable housing to rent.

Photo of Grant Shapps Grant Shapps Shadow Minister (Communities and Local Government) (Housing and Planning), Co-Chair, Conservative Party 10:40 am, 14th January 2009

I congratulate my hon. Friend Mr. Field on securing the debate—it is a pleasure to have a debate secured by a Conservative colleague. In relation to affordable housing, he has demonstrated that even Conservatives who represent London boroughs that might to the casual observer seem to be well off share exactly the same problems as hon. Members who represent other parts of London and, indeed, areas just outside London—as is my constituency.

The areas of deprivation that my hon. Friend highlighted are of considerable concern and historical in his part of London. Things are moving in the wrong direction, rather than the right, and I have been struck by the degree of consensus across the Chamber this morning. I think that everybody agrees that the fundamental problems derive from not having built enough housing of all types in recent times, notably social housing. That has led to a crisis—the shortage of available homes—that is perhaps unparalleled since the war. Again, that applies to all categories of housing, but notably social and rented housing.

Time is short, so straight away I will talk about what should be done about the problem and ask the Minister for his thoughts. First, there are too many small, minutiae-type projects going on to try to tackle the problem. What is required is big thinking, not a lot of press release-type thinking. Too many small, sometimes complex and contradictory programmes are out there. We know that Social HomeBuy has been a spectacular failure. It was designed to help 10,000 people over two years, but is has helped 235 people over that period. What is the Minister going to do about that? Just the other month, a new scheme called HomeBuy Direct was announced to help people to obtain shared equity and get a foot on the housing ladder. Having spoken to social providers, affordable housing providers and developers, it seems that HomeBuy Direct and New HomeBuy can end up in direct conflict with each other in some developments.

We hear that a new announcement will be made by the Minister for Housing this Friday, which will involve £200 million and is designed to help people to get on to the housing ladder. Again, I fear that that will involve small, meddling schemes that no doubt have good intentions, but which will not solve a crisis of the kind that we have got ourselves into.

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

On supporting people into home ownership, does the hon. Gentleman believe that priority should be given to households that earn more than a Member of Parliament earns?

Photo of Grant Shapps Grant Shapps Shadow Minister (Communities and Local Government) (Housing and Planning), Co-Chair, Conservative Party

We could get into a debate about exactly where the threshold should be, but as my hon. Friend the Member for Cities of London and Westminster pointed out, the average salary in one part of the country—and therefore the average availability of housing, as we know through the local housing allowance—can be very different from that in other parts of the country.

Levels of affordability mean that people can be in deprivation when they have relatively high earnings. It is nonsense to suggest that the situation is the same across the country. For example, this week, I visited social housing in the west midlands, where housing is significantly cheaper than in Cities of London and Westminster. We must have some flexibility, and therefore the numbers will be different.

Let us get back to the big picture. As I have said, we are suffering the consequences of nearly 12 years of less housing being built. On average, some 30,000 fewer units are completed each year under this Government. Things such as the density targets, which have been referred to this morning, have had a significantly damaging effect on the range of property available and, in many cases, have meant that the wrong types of property are available and are in surplus. Families in many hon. Members' constituencies will therefore struggle to get into decent housing. Does the Minister think that it is time to end density targets, which have done so much damage?

Surely, a proper scheme to kick-start the housing market is required. Back in the early 1990s during the last recession, 60,000 affordable homes were built in 1992. Why is it that next year we will be lucky to scrape 10,000 or 15,000 affordable homes? That is a great shame and does not reflect well on current housing policy. I will end my contribution there to allow the Minister to answer some of those points.

Photo of Iain Wright Iain Wright Parliamentary Under-Secretary (Department for Communities and Local Government) 10:46 am, 14th January 2009

I join other hon. Members in congratulating Mr. Field on securing the debate. I have said before in this Chamber that for an hon. Member who represents what is seen as an affluent area—arguably the most affluent in the country—the manner in which he represents all his constituents in this place is testimony to his character. That has been shown today.

This has been an excellent debate and the hon. Gentleman set the scene extraordinarily well. His analysis was extremely strong, particularly when he pointed out that we have had many housing debates in the House, but the manner in which the current economic crisis is having an impact on housing markets makes such debates particularly important. The recent economic crisis is bringing such problems into even sharper relief, with consequences for home owners, house builders and prospective buyers. The full effects of the crisis are yet to unfold, but it is clear that the social housing sector and affordable housing in general are being affected.

There is more pressure on the stock of such housing because of increasing unemployment and the possibility of rising repossessions. There have also been strains on the business model, which was another strong element of the hon. Gentleman's contribution. Other hon. Members also mentioned the business model and I would like to talk about it at length if I have time.

The Government want to address two challenges. First, we wish to ensure that much-needed social housing gets built. Increasing the supply of housing is vital, and despite the current pressures and the financial difficulties that the world is experiencing, we need to build more homes. Secondly, as has been mentioned in this excellent debate, we need not only to build homes and concentrate on numbers, but to drive up quality throughout the sector, offering a better quality of life and a fairer deal for tenants.

I do not have much time in which to speak, but I would like to paint a picture and set out some important scenarios regarding central London boroughs and the need for housing that illustrate the scale of the problem we have been talking about. More than 2,700 households are in temporary accommodation in Westminster, and in 2007, 1,344 households were on the waiting list for social housing in the City of London. That shocked me, because I was probably guilty of believing the perception and myth that there was no need for social housing in that part of the world. More than 8,000 people are on the waiting list for social housing in Westminster. As in all other regions of the country, waiting lists throughout London—particularly central London—have gone up.

There is also concern in some areas about the options on offer once people are in social housing and need to move home—for example, because their family has grown. My hon. Friend Ms Buck gave me the courtesy of allowing me to go to her constituency in the summer, when I visited five families in Westminster who were living in cramped and overcrowded conditions. The purpose of my visit was to see at first hand the impact of that on their quality of life and their life chances. What I saw shocked me and I want to do something about those problems.

It is clear that we still have some way to go in tackling overcrowding, and in reducing the use of temporary accommodation and—this particularly concerns me, and my hon. Friend mentioned it—out-of-borough placements, so that children do not have to travel a long way to school and the family unit can stay together and remain concentrated as much as possible in one place.

A theme of today's debate has been the cross-party consensus on the analysis of the problems and the willingness and ambition to do something about them. I hope that all hon. Members will work with the Government and local authorities, as well as with the Mayor of London, to try to deal with those problems. Just before Christmas, I had a meeting with Westminster city council's director of housing at which we discussed the related problems of overcrowding, temporary accommodation and out-of-borough placements, and I am keen to impress on the director and the local authority the need to do much more.

There have been serious problems with affordability, and, despite recent house price falls, that remains the case. The ratio of house prices to average earnings throughout the country is high, which is one reason why we need to build more homes. In central London, as hon. Members would expect, the problem is particularly acute. In the City of London, lower quartile house prices are more than 12 times lower quartile earnings; in Westminster, they are more than 13 times. That really is an astonishing statistic. By comparison, the average ratio throughout England is less than seven times. We are painting a picture of real need for more homes and, in particular, more affordable and social homes in the City of London. The National Housing and Planning Advisory Unit states that somewhere between 33,800 and 42,600 homes are needed each year in London to tackle the supply and affordability problem.

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

If I read correctly the body language of Grant Shapps, who spoke for the Opposition, he implied that the statistics that the Minister has just cited rather undermine my argument about the Mayor of London choosing to raise the threshold for assistance to significantly more than a Member of Parliament's salary. I would argue that the Minister's figures confirm my case, because the sheer scale of demand that he outlined for intermediate and sub-market housing and housing for rent confirms that we must prioritise. Does the Minister agree that people earning more than a Member of Parliament are unlikely to be our top priority for affordable housing assistance?

Photo of Iain Wright Iain Wright Parliamentary Under-Secretary (Department for Communities and Local Government)

I agree with the sentiments that my hon. Friend expresses. The Mayor's priorities are somewhat odd and confusing, as is his housing policy. I am keen to work with him, however, and if I have time, I shall articulate the current architecture of London and its housing policy, and how we can do more to work together.

There is an issue about scrapping the 50 per cent. affordable housing target, and about the idea that we can help people who are on more than £70,000 when there are real priorities. My hon. Friend Mr. Slaughter said that there are people on £20,000 a year who are really struggling, distorting the economy and reducing the chances of the London economy achieving its potential. We really need to concentrate on that element. That is an important point.

Photo of Mark Field Mark Field Conservative, Cities of London and Westminster

I do not want to bandy around the remarks involved in the little battle that is taking place between my hon. Friend Grant Shapps and Ms Buck, but surely the Minister acknowledges that one of the biggest concerns in London involves people who are on £72,000.

I would not have set the target quite so high, but, equally, we are talking about not only people who are on £20,000 a year, but about people on £50,000 and £60,000 who desperately want to stay and live in central London. They simply cannot get on to the housing ladder, but there is that sense of needing to try to achieve a mix, because it is in all our interests to have mixed communities. The case is slightly easier to make for someone on £20,000 a year, and I know that it is more difficult to make when one is looking at a multiple of the average national wage, but that is the depth of the problem here in central London.

Photo of Iain Wright Iain Wright Parliamentary Under-Secretary (Department for Communities and Local Government)

I fully understand what the hon. Gentleman says, and I know that in the economy of central London the wages of a certain element of its population are proportionately much higher than those of people in the rest of London and the rest of the country. He made the point, however, that had he been Mayor he would not have set the level at £72,000, which seems to indicate to me, and probably to my hon. Friends, that the level is wrong and that the measure should have been concentrated on people on lower wages. We could have helped an awful lot more.

I want to mention several points, particularly about how we can help to increase supply. Hon. Members will know about the £8 billion investment programme that the Homes and Communities Agency has planned over the next three years. It has been mentioned this morning, and we anticipate that it will provide 70,000 affordable homes, including 45,000 homes for social rent each year from 2010-11.

London is the biggest recipient from that £8 billion pot, receiving about £4 billion over the next three years, £3.2 billion of which will be London's element of the national affordable housing programme. A further £440 million will be allocated for local authorities' decent homes programmes.

Hon. Members will know that the HCA is up and running—it has been since 1 December 2008—and is responsible for housing and regeneration funding. We have talked today about partnership, and the HCA, with Bob Kerslake as its chief executive, wants to bring people together to have with local area representatives a single conversation about their regeneration and housing needs to deliver better focused and more effective outcomes for places and communities. Given the particular challenges in London, a sub-committee chaired by the Mayor has been set up to oversee delivery.

A key theme of this morning's debate has been the fact that pressure will increase on social housing in central London as a result of the economic downturn, and I agree with the analyses that hon. Members from all parts of the Chamber have provided. The strains on the business model in housing association sectors have been acute, and there has been an assumption that housing associations will have to rely on cross-subsidisation to build social housing. One thing that concerns me, however, having spoken with chairs of housing associations, is the fact that, because of the difficulty and the financial concerns, they are more risk averse—in a similar way to the banks. There is no willingness to increase their stock, and they want to manage their existing stock, but that does not help anybody.

The hon. Member for Cities of London and Westminster mentioned lending. He talked about trying to renegotiate the banks' lending covenants and how the banks have introduced difficulties and obstacles—an issue that has been raised with me previously. Before Christmas, I met housing association chief executives and the National Housing Federation, and precisely that point was made about attempts to renegotiate a group structure and the bank involved wanting to renegotiate its entire lending policy. That is not good; it is short-termist and does not help anybody, and this debate has put a rocket up me, frankly. It has ensured that I can go the lending panel, which my right hon. Friend the Chancellor chairs, and say that we need to do something about the issue. It is not in the interests of increased housing supply if banks are not willing to take a sensible approach to lending.

Having said all that, and given the strains on the business model, I must say that the hon. Gentleman and my hon. Friends will be aware that we have acted speedily to bring forward £550 million-worth of spending on social housing from the £8 billion pot. That will not only ensure that homes are built, but keep construction firms open and people in jobs, which is vital at this time.

Another theme of today's debate has been the need to be more flexible about grant rates, and I absolutely agree.

Photo of Iain Wright Iain Wright Parliamentary Under-Secretary (Department for Communities and Local Government)

I shall just mention this point, because it is key. The key word at the moment is "flexibility", whether in grant rates, models of home ownership, different tenures or different ways to bring forward development, which is what we are doing. The HCA is providing a great deal of flexibility in its grant regime to enable those schemes to go forward, so I hope that hon. Members are reassured by that.

Photo of Mark Field Mark Field Conservative, Cities of London and Westminster

I thank the Minister for giving way. Will he briefly address the point that I and the hon. Member for Regent's Park and Kensington, North made about the 50 per cent. target on temporary accommodation and its distorting effect? Will the Government look again at the issue, with some urgency, either to scrap the target in the short term or to place some downward movement on it?

Photo of Iain Wright Iain Wright Parliamentary Under-Secretary (Department for Communities and Local Government)

My hon. Friend the Member for Regent's Park and Kensington, North has brought the issue to my attention on previous occasions, and I am aware of her concerns, as well as those of the hon. Gentleman, about the relationship between temporary accommodation, overcrowding and—an important secondary issue, in my opinion—out-of-borough placements.

I shall look at the issue. The temporary accommodation target is important and has provided discipline to try to reduce the real moral outrage of people in inferior housing, but I know that there are genuine concerns—[Interruption.] And I know that my hon. Friend is shaking her head now. The target has stimulated work and improvements, but I know that there are concerns and I acknowledge them.

I pay tribute to the contributions made by all hon. Members. The debate has been of extremely high quality, and the analysis focused and well made. We can all work together to improve London's housing stock.