Property Market

– in Westminster Hall at 11:00 am on 25th January 2011.

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Photo of Richard Harrington Richard Harrington Conservative, Watford 11:00 am, 25th January 2011

I have an interest to declare, which is in my entry in the Register of Members' Financial Interests, because I have for many years been a director of a company involved in, among other things, the development of housing, although I have no active involvement in the company. I thank Mr Speaker for selecting my debate; it is much appreciated.

Housing is on the mind of most Members of Parliament, as much of our correspondence relates to it. I am pleased to see the Minister for Housing and Local Government here; I am sure that he will, as a Watford grammar school boy and former Watford resident-he has gone on to greater things and places-find some of the points I shall make very relevant to that place.

Housing has the attention of the media, and a recent article in The Guardian, following an interview with the Minister, was headed "Minister pledges an end to the housing price rollercoaster", which I was pleased to read. However, for people who are struggling to get on the first rung of the ladder, things have never been more difficult. In my constituency in 1996, the average price of a house was more than £73,000. By last year, notwithstanding some reductions in prices, it had reached £234,000. It is easy to see how difficult the situation is for first-time buyers whose average age, calculated locally, has risen to 37 years old. I was delighted that it was announced in the comprehensive spending review that the Government will increase housing supply

"by reforming the planning system so it is more efficient, effective and supportive of economic development."

I am delighted that the Government have recognised the problem and are committed to tackling it.

It is fashionable to place the blame for the current situation on the recession and the banks, but I believe that for many years, from before the recession, there has been a consistent structural problem-a fundamental demand for housing which greatly outstrips the supply. Only an increase in supply will meet demand, tackle the problem effectively and create greater opportunities for first-time buyers.

Photo of Lee Scott Lee Scott Conservative, Ilford North

I congratulate my hon. Friend on obtaining the debate. Does he agree that while the blame does not rest totally with banks, they are making things increasingly difficult for first-time buyers and, indeed, for other people who want to move home?

Photo of Richard Harrington Richard Harrington Conservative, Watford

That is correct, and a valid intervention, which I intend to discuss briefly.

The demand side of the equation is clear. Short-term economic factors may have reduced it, but the fundamentals are as bullish as ever. The south-east, according to all the research that I have seen, is expected to continue the population growth trend, and despite all the incentives that the Government may provide for a change in regional preferences I think that the trend is unstoppable. Without going into too much detail, the factors include migration, the social trend towards more households following divorces, the population getting older and the great predilection for living in small households. Above all, I do not think that anyone can say that the demand side will change much.

My hon. Friend Mr Scott mentioned lending. At the moment, one of the biggest obstacles is the decline in lending. The figures show that the contraction in UK mortgage lending since 2007 has been the most severe on record. In 2008 and 2009, about 500,000 loans were granted for house purchase. That is a lower figure than for any year since 1974.

Photo of Stewart Jackson Stewart Jackson Conservative, Peterborough

I congratulate my hon. Friend on securing this debate. Is he as concerned as I am that the review being undertaken by the Financial Services Authority may not only stifle mainstream mortgage products but prevent the development of new products for intermediate housing, such as do-it-yourself, shared ownership and key worker schemes?

Photo of Richard Harrington Richard Harrington Conservative, Watford

My hon. Friend makes a valid point on a subject that I intended to mention later. The Financial Services Authority is reviewing the mortgage market and, from all the indications that we have received, it intends to bring in, with the intention of protecting the consumer, various restrictions, such as appraising customers and reducing the type of mortgage available, that will significantly reduce the supply. I know that Ministers are aware of that, and I hope that they will bring as much pressure to bear on the FSA as they can. It is fair to say that the lending side is definitely a short-term constraint, but for the purpose of this debate, I will put it to one side. However, I am not trying to reduce its validity.

The core of my argument concerns the supply side of housing-the availability of land with planning permission to build social and private houses. Although I fully support the Localism Bill and its core values of local people and their representatives being responsible for their own actions, I believe that in respect of planning, it could significantly adversely affect the supply of land for housing. If the incentives on offer do not outweigh the anti-development sentiments of residents and their elected representatives, we are in real trouble.

Indeed, the Localism Bill will liberate local communities from stifling Labour targets, especially the well-intentioned but misdirected regional spatial strategies, because it is clear that they have not worked. New homes are being built at the slowest rate since the war.

Photo of Alison Seabeck Alison Seabeck Shadow Minister (Communities and Local Government)

Does the hon. Gentleman not acknowledge that since the Secretary of State's letter went out saying that people could ignore the RSS and everything attached to it, planning applications, and therefore the build for housing, has actually gone off a cliff?

Photo of Richard Harrington Richard Harrington Conservative, Watford

I agree to an extent with the hon. Lady, and I hope that my position will become clearer a little later.

Watford, like many constituencies in the south-east, is badly in need of housing supply; there is no dispute over that. Even during this recession, there has not been an overhang of unsold properties. If development does not come to such regions, a whole generation of people may find themselves priced out of the market for years to come.

The Localism Bill fails to address a serious issue with regard to policy and planning. A YouGov survey, commissioned by the New Homes Marketing Board, revealed that more than eight out of 10 people believe that Britain needs more housing for sale and rent, especially for first-time buyers. That is very much like a "hands up all those who are against sin" argument. The survey also showed that far fewer people-just about 50%-welcome the construction of more homes in their immediate neighbourhoods. Such a view is significantly understated, because when I send out surveys to my local residents, stopping nearby developments comes back as an important priority.

Photo of Mel Stride Mel Stride Conservative, Central Devon

I congratulate my hon. Friend on securing this debate. Like him, I believe that this is an extremely important subject, particularly in the south-west where affordable housing is a real issue. As I understand his argument, he is suggesting that incentives may not always work as a driver of development. Equally, however, does he accept that to go back to the regional spatial strategy scenario that we had under the previous Government, in which top-down diktat told local communities the amount of development that they could have and where it would be, would be a severely retrograde step?

Photo of Richard Harrington Richard Harrington Conservative, Watford

I agree totally with the Minister with responsibility for planning that we should not return to Stalinist central diktat. My argument will hopefully show that that there are more tools in the box other than just the financial incentives that the Government have bravely introduced as a core of our policy. I am very much against central targets because they have not worked, not to mention the issue of morality or believing in local government, which I do.

[Mr Lee Scott in the Chair]

I agree that the Localism Bill has great potential to free local communities to decide for themselves the housing that they need. However, we must acknowledge that the other side of that coin: the Bill will empower those people who are opposed to development in all its forms, so there are two sides to the measure.

Photo of Graham Jones Graham Jones Opposition Assistant Whip (Commons)

Will the hon. Gentleman explain to the Chamber the difference between a supplementary planning document and a neighbourhood development order?

Photo of Richard Harrington Richard Harrington Conservative, Watford

Again, if the hon. Gentleman has a little patience that difference will emerge as I make progress.

We have to do as much as we can to ensure that new homes are built, but there will always be people who oppose development. Sometimes, what is needed to meet the needs of the larger community can be stifled by those who, understandably, have their own personal interests at heart. It is not simply a hypothetical question. The issue has arisen in several places around the country, following the letter from the Secretary of State. Although regional spatial strategies were clearly not successful, evidence of nimbyism has also appeared, with the recent departure of those strategies. I will give some examples that right hon. and hon. Members may find of interest. In Bath, for instance, the number of homes to be built around the area has been cut by nearly 50% under the city's draft core strategy. Previous targets proposed by the South West Regional Assembly envisaged more than 21,000 homes being built during the next 20 years, but that figure will now be cut to 11,000. North Somerset is cutting its target for new homes from 26,000 to 13,000.

Photo of Andrew Griffiths Andrew Griffiths Conservative, Burton

My hon. Friend cites a number of targets, saying that one region wanted 21,000 new homes and another region wanted more. However, the reality is that those targets were fantasy targets. Those new homes were not built. We can set targets as high as we like for the building of property, but under the old regime-under the failed Labour policies-houses were not built and, more importantly, the local communities that had those targets forced on them were very upset about it.

Photo of Richard Harrington Richard Harrington Conservative, Watford

I cannot dispute the validity of what my hon. Friend says, as I am very familiar with his constituency and with my own. The demand for housing in Watford is significantly greater than demand in Burton, but both constituencies offer an illustration of how the RSS and those targets do not work. I am giving examples. My hon. Friend may say that the targets were fanciful, but they were aspirations. Now no-one will say that these new targets will be reached, because my hon. Friend's argument is the same as my own-there is always a presumption against development locally. There are councillors who are elected, one after the other, on anti-development platforms. They come from all parties; I am not picking out one particular party in that respect. However, the fact is that targets have been reduced all over the place, in St Albans, in Wiltshire-I could go on, as I have a list of quite a few areas.

Photo of Stephen Lloyd Stephen Lloyd Liberal Democrat, Eastbourne

I thank my hon. Friend for giving way; he has been very patient in allowing us all to intervene, which I appreciate. Does he agree that a measure that will help people to find homes is another change that the coalition Government are introducing, thereby moving to a default situation where it is easier for people in receipt of housing benefit to opt for it to be given directly to the landlord rather than having it go via the tenant?

[Mr Andrew Turner in the Chair]

I know that my hon. Friend is talking about property sales, but does he agree that that change is another example of the coalition Government being practical and pragmatic, making it easier for people to have their own houses, even if in this instance they are rented houses.

Photo of Richard Harrington Richard Harrington Conservative, Watford

I agree with my hon. Friend, except to say that he says that I am talking particularly about private housing. That is true, but in fact it is really the overall supply of housing that I am interested in and for whatever purposes, whether it is housing for private tenants or for social tenants, shared ownership or outright freehold ownership. I think that the principle is the same; we are talking about supply. However, I totally support that measure on rent that the coalition has introduced.

The core of the Government's strategy is the new homes bonus, which was introduced as an incentive for councils to build. It may well succeed-I hope that it does-but I have spoken to a number of people in the industry. My right hon. Friend the Minister might say that they have vested interests as planning officers, house builders and so on, but whatever their other interests, they certainly have an interest in supply. Their concern is that the bonus will not be sufficient in itself to encourage councils to build.

If a development of new houses is opposed by local residents, local councillors elected on a non-development ticket are unlikely to take action on an issue that might work against them at election time. I do not believe that five or six years of council tax will be a convincing enough reward. I say that not to discount the scheme but to raise obvious concerns to Ministers that other weapons, tools and policies might be needed as well.

My right hon. Friend the Minister believes that residents and their representatives will change their views because of the benefits that their communities will receive from the new homes bonus. He regularly cites a large brownfield site in his constituency of Welwyn Hatfield where the new homes bonus-the money that the council will receive for a housing development on that site-will pay for a renewal of the whole town centre. I can see that-after he mentioned it to me at a meeting in Hatfield, I went to visit the site, and I accept that it is a compelling argument-but most developments are much more controversial than that. In Watford and, I suspect, many other constituencies, the available development land comprises many small sites for which the NHB money would not make a sufficient difference to the community coffers to provide any incentive, although I can certainly see how the big flagship schemes would do so.

I am not negative about the new homes bonus, and I hope that what I am saying will not be interpreted as such. I just do not believe that it will necessarily be enough. I have positive suggestions to make. Some simple considerations might do much to ensure what we want and what the Minister has declared many times that he wants: an increased supply of land with planning permission.

It is crucial that PPS 3, which is under consideration, preserves the obligation of local planning authorities to maintain a five-year housing land supply and to take a five-year view. Although the process is made cumbersome by a lack of nationally accepted guidance on how to calculate land supply-it is a matter beyond my intellectual capacity as a Member of Parliament-I am sure that there are many professional people on different sides of the argument who have views. The implementation of such a measure-not a target, but a measure-would at least ensure an impartial intermediary. I suggest that the Government convene an advisory committee drawn from leading planners, housing and economic experts, Government and local government to draw up a suggested standard methodology for calculating land supply figures. I repeat that it would not be a return to the over-centralised approach of the past, but it could be a sensible way to ensure that best practice is captured so that local councils make informed decisions.

Photo of Justin Tomlinson Justin Tomlinson Conservative, North Swindon

I thank my hon. Friend for giving way in this important debate. I understand the thrust of his argument, having represented a new-build area as a councillor for 10 years while the number of houses rose from 1,800 to 8,000. However, does he agree that solutions to housing pressures must not come at the cost of appropriate development? The high-density housing typical under the last Government, lacking open space and parking provision, simply stores up problems for the future.

Photo of Richard Harrington Richard Harrington Conservative, Watford

I agree that a balance is needed. We have all seen such developments in our constituencies -high-density blocks of flats with no greenery, no surrounding area and no provision for infrastructure. Yes, I agree absolutely.

Photo of Richard Harrington Richard Harrington Conservative, Watford

May I make a little bit of progress first? I am not trying to ignore the hon. Gentleman; I am just trying to get my flow going.

I am against the centralised approach of the past. I am asking only for effect to be given to a measure proposed in the open source planning document as well as the Government's Green Paper. We have to carefully monitor the incentives that we are introducing, such as the new homes bonus, to ensure that they in fact do what they are intended to do. If development targets continue to be halved by local authorities, surely we have to consider other ways to encourage the increase of supply that we all believe necessary. It would be much better if the powers were put in place now, rather than when the problem manifests itself, when it might be too late.

It is very clear to me that the Bill must contain a presumption in favour of sustainable development, so that if the local community has not drawn up its own plan for development, businesses can get involved. The economy is a very important reason for increasing the supply and taking the initiative, but obviously it would have to be proved that the proposals were sustainable. I am most impressed by the presumption in favour of sustainable development. It was one of the most far-sighted proposals in last year's "Open Source Planning" Green Paper, and was reaffirmed with even more vigour in the local growth White Paper later in the year. It is really important that it is brought into effect as soon as possible.

Photo of Alison Seabeck Alison Seabeck Shadow Minister (Communities and Local Government)

I thank the hon. Gentleman for giving way during his very thoughtful speech.

The presumption in favour of sustainable development is not in the Bill, and a number of witnesses have raised concerns about that in the Bill's first public evidence session.

Photo of Richard Harrington Richard Harrington Conservative, Watford

I thank the hon. Lady for her intervention, and I hope to sit in on some of the future public sessions of the Bill Committee.

In the Minister's opinion, does the Bill remain in step with the White Paper statement about its three functions? The White Paper states that those functions are to allow people to shape their own communities-which I think it clearly does; to provide sufficient housing to meet demand; and to support economic development. I am not sure whether the new homes bonus is enough in respect of the second and third functions, and I think that the Government should create a back-up plan to ensure that development continues.

I should like to take this opportunity briefly to consider shared ownership schemes, which are a very important way of increasing home ownership, and of helping the demand and supply sides to meet. On 21 October, I submitted a written question to the Minister for Housing and Local Government about the Government's plans to increase shared ownership and low-cost home ownership schemes, which, as I have seen in my constituency, are a very affordable and attractive prospect at the present time. The response was very positive:

"We announced in the spending review almost £4.5 billion investment...a new delivery model is expected to deliver up to 155,000 new affordable homes".-[Hansard, 2 November 2010; Vol. 517, c. 671W.]

To the best of my knowledge, the details that we have been promised have not yet arrived, and I encourage the Minister to give us some information on that. I very much support what the Government are trying to do with shared ownership, and would like to see progress on that as soon as possible.

Photo of Paul Uppal Paul Uppal Conservative, Wolverhampton South West

I thank my hon. Friend for securing this debate. I have been involved in property for about 20 years, and so this is an area that has concerned and perplexed me many times.

I understand the premise of my hon. Friend's argument this morning, and have no issue with that; he is wholly correct. On the supply side, however, and particularly in terms of demand, in the UK we suffer from an exceptionally large number of people who aspire to own their own homes, compared with our continental neighbours in Germany and France, where there are much higher levels of renting. I have found that institutional investors often look for avenues through which they can get into the residential market, particularly from a letting perspective, and they have often approached Governments regarding the best way to do that. One area that is particularly talked about is the shared ownership vehicle. I do not know whether my hon. Friend, or the Minister later, will be able to comment on that, but I echo the sentiment of shared ownership as a way of solving the problem-not wholly, but certainly helping.

Photo of Richard Harrington Richard Harrington Conservative, Watford

My hon. Friend has made an important point about the vehicles that can be used, and I am sure that the Minister will comment on that. I very much supported the introduction of the real estate investment trusts scheme into this field, but my argument today is about the supply of land for housing development, some of which-a greater percentage, I hope-will be for shared ownership; some of it will be for private ownership and private tenants, and the different forms of social housing. I do not think that my hon. Friend's point, valid though it is, is relevant to that argument.

I remind hon. Members that the lack of accessible housing for first-time buyers is not just a housing issue, or something to do with the idea that an Englishman's home is his castle, and people's desire for their own home. It has serious ramifications for the future of Watford, as for many other places. To use Watford as my example, as I should and must, it has for a long time been a popular place for young professionals, people working in and opening new businesses, and families seeking a first step on the property ladder. It is quite near London, and a lot cheaper, and it is a nice place to live. I say that in my capacity as honorary president of the Watford tourist board-but it is a nice place, and people enjoy going there. It is close to London without London prices. However, I have a significant fear that without housing supply at reasonable prices, which is a function of supply-we know that the demand will always be there, or I at least believe it will-the area will have difficulty in attracting young professionals, and attracting people to open or engage in businesses. That is the most significant aspect of what is a serious matter, with huge implications.

I support localism and I applaud the Government's efforts to introduce it throughout the country, but my central argument, which I hope the Minister will accept, is that it must be part of a balanced package. We must avoid any trap; for the last Government it was their obsession with centralism-the Stalinism that I mentioned before-but that must not be replaced by a similar obsession with localism as the only way to obtain housing supply.

Photo of Graham Jones Graham Jones Opposition Assistant Whip (Commons)

I thank the hon. Gentleman for obtaining the debate; it is a great debate, which is primarily about the south, and under-supply of housing, and I am happy to engage in it. To return to the point about the Labour Government being a centralising Government, could the hon. Gentleman tell me the difference between a supplementary planning document and the new neighbourhood development orders? If Labour were centralising, what was an SPD?

Photo of Richard Harrington Richard Harrington Conservative, Watford

I do not think that it makes much difference to the argument. In practice there is not much of a difference; I understand there is one, realistically. I look forward to the Minister's comments and the contributions of colleagues. I feel I have made my point.

Photo of John Stevenson John Stevenson Conservative, Carlisle

I am grateful to my hon. Friend for securing this debate, which is very useful. I agree with the general thrust of his argument that we need more supply, but he has not touched on the matter of empty properties, how we could bring them back on to the market, and whether there should be incentives to do that, which would increase supply.

Photo of Richard Harrington Richard Harrington Conservative, Watford

That is a valuable point. In Watford there are several hundred empty properties. I keep an eye on that. To give credit to the local council, it is also trying. However, there is more to the question of empty properties than meets the eye. Some of them are transiently empty, not empty over the long term. Some are not in the condition that they should be, and some are in areas of town where people do not want to live. I had this very discussion outside the Chamber with my hon. Friend Andrew Griffiths, who mentioned that it was a particular problem in his constituency. I do not make it out as of no consequence-it is important-but it is peripheral to the main argument. We shall not merely need 100 or 200 extra homes in our constituencies-which might or might not be obtained by making progress with empty properties. The question is the fundamental supply of new housing land.

Photo of Stewart Jackson Stewart Jackson Conservative, Peterborough 11:29 am, 25th January 2011

It is a pleasure to serve under your chairmanship for the first time, Mr Turner. I congratulate my hon. Friend Richard Harrington on an excellent, well informed and intelligent contribution to an important debate. However, I fear I may unfortunately disagree with him on a practical and philosophical level.

Under the Labour Government the fewest houses since 1923 were built. Indeed, that Government tested to destruction the idea that centralised, top-down targets could be the way to engender growth in the provision of private sector, intermediate and social rented housing. Another issue, which has been disastrous in relation to social cohesion, is that, even the social housing that they did produce served, in a period of benign economic growth, to embed welfare dependency, to the extent that the number of people in social housing who are in paid work has shrunk every single year over the past 40 years or so. A mono-tenure culture in social housing cannot be right for the community, the economy or for our nation in general.

Photo of Stewart Jackson Stewart Jackson Conservative, Peterborough

I will not at the present time, but I might give way to the hon. Gentleman later. I fear that the problem for my hon. Friend the Member for Watford is that he is looking through the wrong end of the telescope. The integral issue is mortgage availability and the fact that mortgage providers have failed to adapt and make progress in the market in terms of providing funding and mortgages to people.

Photo of Richard Harrington Richard Harrington Conservative, Watford

I thank my hon. Friend for giving way, particularly after I have spoken for 20 minutes. If the banks decided suddenly to lend twice as much money to people who want to purchase houses-we hope that it will happen, so let us pretend for a moment that it will-what effect does he think that would have on the supply of housing?

Photo of Stewart Jackson Stewart Jackson Conservative, Peterborough

As a Christian, I hope that sinners will repent and that the retail banking sector will lend. I think, however, that the issues are much more integral and institutionalised, as my argument will make clear. I welcome the new homes bonus, although I am slightly concerned about its top-slicing element from year three, which could have an impact on the propensity of local authorities to develop its potential-remember that the scheme is about developing housing appropriate for a particular area.

The situation reminds me of the emperor's new clothes-no one quite knows on what evidential basis we are to decide how many houses are needed. Is it the 2004 Barker report? Is it the misguided views of the then Office of the Deputy Prime Minister and the Prescott sustainable communities plan of 2003? We need to step back and carry out a full analysis of the demographic and social change. Graham Jones has made the point-quite astutely, though in a roundabout way-that this should not just be about the south-east and the east of England and London, but that we should spread our country's wealth through the housing market throughout the UK. In fairness, we are looking at mechanisms such as the regional growth fund, sustainable transport funding and, of course, high-speed rail, which seeks to bridge the gap between the overheating of the south-east and other parts of the country-the north-east, the north-west and Yorkshire and Humberside. We need to have a much more existential approach to why we think we need more houses.

It is also important to think in terms of the operational capacity of planning departments. One would struggle to find many people who would admit that their local authority's planning department is completely fit for purpose. The huge bureaucracy and time lags drive local and bigger businesses and developers mad, because there is not a high degree of accountability in this often technical area for local councillors and residents and, in particular, for business. That causes an enormous and inordinate delay to the development of projects.

Photo of Graham Jones Graham Jones Opposition Assistant Whip (Commons)

Will the hon. Gentleman accept that it is the responsibility of local authorities to fund planning departments and that local councillors have decided that they are a low priority-ditto building control? Will he also accept that the previous Government introduced planning legislation that allowed local authorities to determine what they did and how they did it in their area, but that, because local authorities chose not to resource planning departments, it was left to top-down Government guidance and advice?

Photo of Stewart Jackson Stewart Jackson Conservative, Peterborough

I do not agree with that comment at all. What happened under the previous Labour Government was that central Government decided that councillors were not qualified to decide how much residential development should take place in their area or to co-operate on infrastructure projects. That is something we have made changes to through the Localism Bill, which received its Second Reading last week. In many respects, the previous Government undermined the autonomy and authority of local councillors and planning departments, specifically by adopting a completely crazy top-down and, as my hon. Friend the Member for Watford said earlier, Stalinist approach to the regional spatial strategy. Of course, that did not work. It would have been great if it had actually worked, but-

Photo of Stewart Jackson Stewart Jackson Conservative, Peterborough

I will not at the present time, but he is always my hon. Friend, especially if he wishes to cross the Floor.

Other operational issues stray into the area of regeneration. It is very difficult to put together a residential and commercial package for brownfield sites because of some of the institutional issues at which the Government need to look. One issue is that of European Commission procurement laws. If there is one thing guaranteed to scare planners off, it is the idea that it will take months and months to put together a package and that they must put the work involved-consultancy and other issues-out to European Commission procurement rules. As I said, that can cause massive delay in bringing forward good projects-for example, shopping centres with associated housing.

The other issue, which was touched on by my hon. Friend John Stevenson, is that of empty properties. I remain to be convinced that empty dwelling management orders were the right way to go about dealing with the matter. We really need to tackle the issue of empty properties. If we are going to develop on marginal sites-green belt sites and others-we should be able to satisfy ourselves that we have exhausted every other possibility of developing on brownfield sites. We also need to consider the whole area of brownfield remediation. That is an issue for the Department for Environment, Food and Rural Affairs, the Treasury and the Department for Communities and Local Government.

My hon. Friend Paul Uppal made a very astute point about real estate investment trusts. That is a matter the Leader of the House was very keen to take forward when he was Housing Minister in 1996. Some pretty arcane legal and financial rules in the Treasury mean that it has not been possible to develop such a consumer friendly way of accessing private sector capital in the private rented sector. At the moment, such an approach is confined to the student market in university towns. However, we need to have a bigger philosophical debate on whether-I know it is heresy for any Conservative to say this-we have perhaps reached the limit of owner-occupation. If we consider comparative studies in Canada, Germany, Italy and France, people are happy to live in and pay rent for high-quality residential accommodation. We have not exhausted the possibilities of that here.

Photo of Richard Harrington Richard Harrington Conservative, Watford

It is important that my hon. Friend accepts that although he might be right about housing penetration and such things, those matters are irrelevant to the core argument of the debate, which is that the supply of land is needed-whether it is for rental housing or any other form of housing.

Photo of Stewart Jackson Stewart Jackson Conservative, Peterborough

My hon. Friend has a point. I should not mix my metaphors too much, but if the Government were taking the one-club golfer approach of only putting eggs in the basket of the new homes bonus-we will see from the regulations and secondary legislation how the details of that work out-I would accept the premise of his argument. However, the Government are also looking at community right to build and urban extensions to rural and semi-rural areas because people are very keen to save their post office, their bus service and their local shop. If we can envisage building 10, 15 or 20 houses, housing some key workers and some high-income people, which concurs with, for example, the Sustainable Communities Act 2007-that legislation was passed with cross-party support a few years ago-my right hon. Friend the Minister for Housing and Local Government is absolutely right: people will want to do that. If we do that cumulatively across boroughs and districts, we will drive up housing numbers.

I am mindful of the time, so I will move to a conclusion. We desperately need Treasury buy-in in the housing market to support the new homes bonus and other initiatives such as asset-backed vehicles, in which private sector capital can be accessed for regeneration schemes, including housing; tax increment financing-not just in town centres for retail but for housing-related issues as well-and the important accelerated development zones.

I recognise my hon. Friend's very sincere concern for those young people who want to get on the housing ladder in Watford, and I see the same in my own constituency. We must not ignore the disparity between the joint income of young couples and the amount that mortgages are proffered at by lenders. That gap is huge, and we need to work with the Treasury and the FSA on the matter. I know that our right hon. Friend the Minister for Housing and Local Government is battling hard to make the FSA understand the practical ramifications of restricting the mortgage market, which will be disastrous for the housing market.

Although I support the views of my hon. Friend the Member for Watford, the picture is technical and very complicated. What we do not want to see is the son of regional spatial strategy. Compulsion has failed, and there is no evidence to suggest that it will work in the future. We all hope that we can build more homes for constituents of all incomes. We all support do-it-yourself shared ownership and intermediate housing to get people on the housing ladder so that we can become a property-owning democracy again.

Photo of Oliver Colvile Oliver Colvile Conservative, Plymouth, Sutton and Devonport 11:41 am, 25th January 2011

Thank you, Mr Turner, for inviting me to speak in this Westminster Hall debate and for giving me the opportunity to serve under your chairmanship. I congratulate my hon. Friend Richard Harrington on successfully securing this very important debate. I need to declare an interest. Before I was elected to this House, I ran and was a director of a communications company, which specifically dealt with issues of public consultation. I no longer have an executive role in that company. I hope that over the course of the past 20 years, I have gained some understanding of the market.

The ability to deliver development hinges on the cost of land-how much it costs a developer to buy so that they can develop it. Last week, we debated the Localism Bill. I was delighted to be able to support it because it is exactly the right road for us to go down. I tried, unsuccessfully, to speak in that debate. Had I done so, I would have reminded the House that when it comes to reforming planning legislation, every Government have always thought that they could speed up the process. Unfortunately, that never seems to have happened, and the process has got progressively slower. If we monitor the whole process now and find that it is slower, will the Minister ensure that we can revisit it and try to reform it?

The key issue for developers is the land and the ability to put together land sites and attract political commitment for development so that regeneration and investment can come forward. The previous Labour Government started off on the right foot. They talked about how important it was to encourage both commercial and housing development. Unfortunately, during the course of their 13 years in power, the process got slower and slower to the point that we were literally looking at only one issue, which was making sure that housing development came forward. In any approach that the Government may take, it is important that they include not only housing but commercial development.

As has been said, we are now building fewer homes than we were in the 1920s and 1930s. The previous Government's top-down approach has not been as successful as we would have liked it to have been. That is why I feel that the coalition Government's proposals to introduce incentives so that local authorities can encourage development are incredibly important. I firmly support a carrot approach rather than the stick. It will encourage local authorities such as mine and that of Alison Seabeck to bring brownfield sites back into use and fulfil their full economic potential.

In Plymouth, 38% of the local employed population works in the public sector. Although they do a good job, we have failed to ensure that we rebalance the economy, and we must try to do so. The largest private-sector employer is Babcock, at the dockyard, but that is of course public-sector employment by proxy. I am therefore keen to encourage more private investment in Plymouth. Just yesterday, the deputy leader of my council reminded me that Plymouth is open for business and can deliver. That is good news, but to achieve it in our part of the south-west, we must not only ensure that we have good transport and infrastructure, as my hon. Friend Mr Jackson mentioned; we must ensure that we have a good skills base. If we are to attract inward investment, we need good infrastructure, a good skills base-people move where the jobs are-and the right general design for the area. Plymouth has a low-skills and low-wage economy. To rebalance it, we must ensure that we have the right conditions to attract inward investment.

Last Friday, Plymouth city council organised an event at which I spoke, as did the hon. Member for Plymouth, Moor View and, I am delighted to say, my hon. Friend Jake Berry. We considered the whole business of how to attract investment and so on, and we discussed affordable housing. My hon. Friend did an excellent job and spoke incredibly well. All the reports that I heard said that he certainly hit the issue. It was an opportunity to consider the regeneration that has taken place in Devonport, which we all found interesting and worthwhile.

Photo of Alison Seabeck Alison Seabeck Shadow Minister (Communities and Local Government)

Will the hon. Gentleman at least acknowledge that the development in Devonport, which has been fantastic in turning that community around, was the result of investment by the last Labour Government?

Photo of Oliver Colvile Oliver Colvile Conservative, Plymouth, Sutton and Devonport

Yes. I thank the hon. Lady for her intervention. That investment has continued, and it is impressive how the scheme is progressing. It is developing mixed communities with not only housing but business and commercial opportunities.

Plymouth has about 12,000 people, mainly single, sitting on the city council's housing waiting list. It has a significant population and a chronic shortage of affordable housing, and we must rebalance our public finances. Registered social landlords and housing associations will not necessarily have as much money available as they do at the moment, so we must consider other ways to develop an affordable housing market.

Many rural communities have decided to go down the route of creating community land trusts, and we should consider that for conurbations. I was elected on a campaign of saying to Ministers that Plymouth is not Portsmouth. We are not 20 minutes away from Bristol, and we should not be ignored. We have a good story to tell. We would welcome a visit by the Minister to Plymouth, which is a happening place, as they say.

Photo of Mel Stride Mel Stride Conservative, Central Devon

Does my hon. Friend agree that in rural settings-particularly villages, where it is important that younger people can afford to stay in their communities in order to keep them vibrant and sustainable-land trusts could perhaps allow covenants to ensure that those who occupy the properties come from the local area and can stay there in perpetuity?

Photo of Oliver Colvile Oliver Colvile Conservative, Plymouth, Sutton and Devonport

I will not pretend that I have a brilliant knowledge of rural development-after all, I represent the largest conurbation west of Bristol-but my hon. Friend is quite right.

We have to look at an imaginative way of doing things, and I have one suggestion, which the Minister might like to take on board. Where we have community land trusts-where the local authority or the local community can own the land, and putting the housing, the bricks and the mortar on it is the least expensive aspect-we might look at returning to an old leasehold arrangement, under which developers could sell the building but hold on to the ownership of the land itself, which would mean that it remained in community use during the course of the leasehold.

I have two final points. If we are to do a significant amount of development and encourage inward investment, can we also make sure that we have good design? One big problem, which we have had in various parts of the country, is that we have not produced the design. Secondly, can we make sure that the local community gets involved? When I did some work in the royal borough of Kensington and Chelsea, I was struck by the fact that the local community was involved in the process of deciding what the master plan would look like. When the planning application was eventually submitted, it went through without touching the sides. My right hon. Friend the Minister has a civil servant in his Department who was very much involved in all that as the borough's director of planning, and that approach worked in a very big way. In this way, we can begin to undertake decent, sustainable development that combines housing and commercial opportunities that deliver employment.

Photo of Peter Aldous Peter Aldous Conservative, Waveney 11:51 am, 25th January 2011

It is a pleasure to speak under your chairmanship, Mr Turner. I am grateful to my hon. Friend Richard Harrington for securing the debate, which gives me the opportunity to raise issues that I did not have the time to raise during the Second Reading of the Localism Bill last week.

I make these comments having worked as a chartered surveyor for 27 years before arriving in the House. I am no longer practising and I have no ongoing consultancies. I have also been a district councillor and a county councillor. I support the Bill, although as my hon. Friend highlighted, some parts require further scrutiny.

A steady supply of sites needs to be made available for development so that we can not only build much-needed homes, but enable the construction industry to play its full role in securing the economic recovery. We need to ensure that the Localism Bill is a catalyst for growth and not an obstacle to it. Change is needed because the current system is not working. We are not building enough houses. Patchy local plan coverage has helped to inflate residential land values, taking what were affordable homes out of the reach of so many. The country's infrastructure is also crumbling.

The Bill is radical and bold, and the Minister and his colleagues are to be congratulated on thinking outside the box, proposing a fundamental change in the way the planning system works and a move from a top-down to a bottom-up approach. There is a need to accept that the man from the Ministry does not know best, and there must be a shift of power and responsibility to individuals and local communities. They are, after all, the people who know their areas best.

I support the move towards local decision making, but decisions need to be made in a broad framework to ensure that sufficient land is available for development and to avoid piecemeal, unco-ordinated planning. I would like this framework to incorporate several features. First, we need to ensure that local decisions and local developments have regard to surrounding areas and fit into a countywide and regional framework. The regional spatial strategy was too rigid a straitjacket, but is local authorities' duty to co-operate, as proposed at present, sufficient to ensure an adequate strategic overview? This aspect of the Bill needs to be scrutinised further.

Secondly, to ensure that sufficient houses are built in a district, I propose that consideration be given to asking local planning authorities regularly to assess local housing need, which should be measured in the same way across the country. That will enable councils to monitor their success in providing for development land on which to build the new houses that are so badly needed. Thirdly, arrangements need to be put in place to speed up the whole planning process, including determining planning applications and preparing local plans. One of my complaints, in the past 10 to 15 years of working as a surveyor, is that the system has been getting slower and slower. I look forward to receiving details of how the Government intend to speed things up.

Finally, an issue that needs to be considered is whether the principle of sustainable development should be embedded in the Localism Bill, with the requirement for sustainable development explicitly stated. At present, it is proposed that the need to follow sustainable development principles will be implicit, because that will be included in the national planning framework. However, that has not yet been published, and for my part I believe that sustainability needs to be at the heart of the planning system.

I welcome the move towards neighbourhood planning, with communities being able to write their own neighbourhood development plans. That will give people a real say in how their neighbourhoods evolve, including what type of homes are built, and where they are built.

Photo of Graham Jones Graham Jones Opposition Assistant Whip (Commons)

For the third time I raise the point that under the previous Government, supplementary planning documents meant that, if local authorities wished, their planning departments could approach local communities to develop neighbourhood plans. That facility exists without neighbourhood development orders. I presume that the hon. Gentleman has served on a planning committee. Most of the powers in question exist and were delegated to local authorities. It is the failure of local authorities to develop supplementary planning documents that is the weakness.

Photo of Peter Aldous Peter Aldous Conservative, Waveney

The hon. Gentleman raises an interesting point, which I shall come on to, as I want to set out the issues that need to be addressed for neighbourhood planning orders to be successful. There is a need for capacity building in neighbourhoods, and for communities to have access to advice, training and funding. With that in mind, the ending of support to Planning Aid from March appears short-sighted and I should be grateful if consideration were given either to reviewing this decision or to putting new arrangements in place. It is also important to ensure that all communities participate, not just a few. I should welcome further information on how it is planned to promote neighbourhood planning in those deprived areas where it is most needed.

There is a concern, too, that that some developers might hijack the system. For example, a house builder might offer an enticing planning gain package in a particular neighbourhood, which might appeal to that particular community, but which could have a negative knock-on effect in surrounding areas. How is it intended to guard against such a scenario? Finally, to pick up the point that Graham Jones made, there is no doubt that local planning authorities will incur additional costs in overseeing and promoting neighbourhood planning, and I hope that their funding settlements will ensure that they are not out of pocket in doing so.

The history of levies such as the proposed community infrastructure levy is not a good one. The betterment levy and development land tax resulted in a significant reduction in the amount of land coming forward for development. That is something that the country cannot afford at the current time. I think, however, that the new levy could be different. First, the money will be spent locally and will not be siphoned off by the Treasury. Secondly, much of it will be spent on infrastructure, which most people recognise is badly in need of improvement. Thirdly, an independent examiner will ensure that levies are not set at too high a level. I should welcome clarification from the Minister of why he and his colleagues did not go a step further and abolish section 106 agreements. They have, after all, often been abused over the years. All infrastructure and affordable housing needs could instead be funded out of one easy-to-administer roof tax, which would provide house builders with much-needed certainty.

I am concerned about funding the provision of infrastructure through such a levy, as the dynamics of the development process are such that there may be plentiful funds available for infrastructure improvements in high-value areas, but not in less affluent places, where projects are less profitable and less money is generated for works that cost approximately the same wherever they are built. I would be grateful for clarification of how the Minister will address that concern. The regional growth fund has a role to play, but it is only part of the solution.

The Localism Bill covers a lot of ground, and its objectives are to be commended. It has the potential to change planning in Britain for ever and to re-engage with many who have come to feel disenfranchised. However, the devil is in the detail, and for the legislation to achieve its objectives there are a number of issues that need to be addressed in Committee.

Photo of Mark Pawsey Mark Pawsey Conservative, Rugby 12:00 pm, 25th January 2011

It is a pleasure to serve under your chairmanship, Mr Turner. I congratulate my hon. Friend Richard Harrington on securing this debate. Although I recognise that the debate so far has been exclusively about housing, its title is "Property Market" and I hope to raise a point about commercial property, when my declaration in the Register of Members' Financial Interests will become relevant.

[Hywel Williams in the Chair]

My hon. Friend and other Members are quite right to draw attention to the failure to build new homes at a time when our country needs additional housing. I want to talk about the factors involved, particularly those that relate to the planning system, and to raise the issue of price. My hon. Friend has rightly drawn attention to the link between the planning system and the supply of land for development. We know from a report that came out earlier this month that less land is being approved for development than before. As elected representatives, we all know about the fundamental contradictions that exist within planning. We know that individuals are generally conservative with a small c. They like the environment they live in and they do not want to see change; indeed, they fear change, so we often find communities that are inherently anti-development and which oppose proposals for development at the first opportunity. At the same time, those very people are often looking for places for their children, so that their children can remain within their community, and they are often looking for smaller residential units, too, where they might retire, and which they know in turn will free up family homes for their children in future. Part of the planning system is about the challenge to reconcile those competing influences.

The abolition of the regional spatial strategy was one of the very first acts of the new Government and it is one of the reasons why my hon. Friend the Member for Watford has concerns about whether enough land will be made available for development. However, I think that local authorities have thrown off those shackles as a completely natural reaction, as they were imposed on them by those at the top. If somebody demands or insists that a local authority do something and the local authority then does it with great reluctance, as soon as that demand ends there is an incentive for the local authority to say, "Well, we're not going to have anything more to do with that, we are going to control our own destiny and take things forward in the way that suits us best".

However, I believe that there are two measures in particular that will allay my hon. Friend's anxieties. The first measure, to which my hon. Friend Mr Jackson has referred, is the new homes bonus, whereby councils will retain the council tax for six years. It is not a simple concept. It has taken local authorities a great deal of time to work out how they will benefit financially from taking that action. I am delighted that my local authority in Rugby has made the calculations and recognised the benefits that will accrue to it from taking a progressive and positive attitude to the new homes bonus. I think that, as people look in detail at the proposals, more and more communities will say that this idea for dealing with development will mean that the community will benefit and the new homes bonus will start to make a great deal of sense.

The second measure is in the Localism Bill. Like many of my hon. Friends who are in Westminster Hall today, I would have loved to have discussed that Bill last week but I did not have the opportunity to do so. I want to discuss the effective consultation proposals in that Bill, which demand that developers undertake consultation with local communities before introducing development proposals. We know that good, sensible developers, who want to achieve what is best for the communities they want to work with, are doing that anyway. It is in their interests to do so; it is in the interests of a good developer to get the community working on the same side as them.

An example of a developer taking a proactive approach before the Localism Bill becomes law is the developer who is introducing proposals for 6,200 new homes in my constituency on the radio mast site in the west of my constituency. Many Members will be familiar with that site, because anybody travelling up and down the M1 will see the radio mast, with lights on it, which tells them that they are about an hour from London if they are driving south. The site is a sustainable urban extension, and the local authority continues to introduce plans that, in general, are supported locally. There is some immediate local opposition to the site, but I think that one reason why the ideas are making progress is the very effective consultation that the developers undertook in 2009. They held a detailed design inquiry lasting five days. Stakeholders were there for two days, but the weekend was allocated exclusively to the general public. People in the town and communities most likely to be affected by the development were able to talk to the developers about their vision for the site-what they wanted to see on the site and how they saw its future development.

A big part of the consultation was about learning lessons from recent developments in the town. One reason why people have a negative attitude towards development is that they can identify poor development that has taken place, which is often development that has been rushed through without effective consultation. Poorly designed road structures and poorly thought-out houses are built, leading to people being negative about development.

Another feature included in the design inquiry was respect for the site's heritage. Signals were sent from the site to the British Navy in times of war, so its heritage is important and links into Rugby's industrial heritage. That will be respected through the retention of existing buildings on the site. A significant issue for local people was the infrastructure and the ability of people in the add-on development, at the extremity of the urban centre, to find their way into the town centre. That was important if the development was to be seen in positive terms as contributing to the development of the town. Businesses will be attracted to our town because of the additional spend from people living in the new homes.

Local people have had their say. I might add that the time taken up in working on the proposals has been beneficial. In fact, the delay in bringing things forward caused partly by the state of the housing market means that we will get better planning. My hon. Friend Oliver Colvile argued for speedier planning decisions. I think that we want better planning decisions, not necessarily faster planning decisions.

The price of land is a key factor in providing housing-in the rate at which housing is made available-because it is a very significant proportion of the eventual selling price of housing. An anxiety that may prevent land from being made available forward and about which my hon. Friend the Member for Watford may be concerned about is that, in many cases, developers have built up land banks at times when prices were rather higher than they are now. That acts as a disincentive to use the land for development now, because if prices are expected to rise in the future, the land value will be a smaller proportion of each house price than if development were undertaken now. It is a perfectly natural reaction for developers to hold on to their land bank in the hope that things will get better.

In respect of demand, reference was made to the uniquely or characteristically British view of home ownership. Homes are seen as an investment, as something to put one's money into to add to one's pension, rather than as somewhere to live. We have seen a massive growth in home ownership, to a peak of 71% of UK homes being privately owned by 2003.

Photo of Stewart Jackson Stewart Jackson Conservative, Peterborough

Does my hon. Friend agree that one problem with registered social landlords not developing more schemes for shared ownership is that the existing business model is one with a constant stream of housing benefit income-and that has been the case for a number of years-while the Government's reform of housing benefit will use the market mechanism to develop more innovative ways of getting people into shared equity?

Photo of Mark Pawsey Mark Pawsey Conservative, Rugby

My hon. Friend makes a very sensible point. Shared equity offers a real opportunity. I like to see variable rates of shared equity, so that people may start with a 25% equity stake and increase that as their circumstances change. That is not happening as often as it should.

Points were made about the availability of finance. People's ability to buy homes is very much driven by their ability to borrow, and there are real uncertainties in the market because of the current FSA proposals, which have been described as draconian. The harder we make it for people to get the level of finance they require, the less demand there will be for housing, and that will provide a disincentive for people to bid at a higher price, which in turn will lead to a further reduction in supply.

I wish to make a quick point on the supply of commercial property, because there is a specific measure that the Government could introduce to provide an additional supply of commercial property which, as we move out of recession, will be increasingly important, at it applies to the non-domestic rates for commercial property that have been in effect since April 2008. For decades before that date, Governments helped struggling businesses through the application of empty property rates relief as an incentive to bring empty commercial property into use; my hon. Friend John Stevenson raised the issue of bringing empty housing into use.

If there is insufficient activity in the economy, it does not matter what the rent is, because very often the commercial property will not have a use. That leads to two things: the demolition of commercial buildings, and the fact that there is no speculative building of new commercial premises, because if someone constructs a building they end up with an immediate liability for non-domestic rates on an empty building; they have an outflow before there is any inflow. As the economy recovers, it will be important to ensure that premises are available for our businesses to use. I again congratulate the hon. Member for Watford on introducing the debate, and I look forward to the Minister's response.

Photo of Alison Seabeck Alison Seabeck Shadow Minister (Communities and Local Government) 12:12 pm, 25th January 2011

I need to draw Members' attention to the entry in the Register of Members' Financial Interests under the name of my right hon. Friend Mr Raynsford, because he is my partner.

This issue is of real importance, and I congratulate Richard Harrington on securing the debate, on developing a strong case for action, and on raising concerns that the Localism Bill will not do what it says on the tin. I look forward to the Minister's response to the hon. Gentleman's well-argued policy points.

House prices are falling and are projected to fall during this year in most regions. The Office for Budget Responsibility has significantly downgraded the prospects for house price growth throughout this Parliament. In December, there was a further fall in mortgage lending of 6% from the previous month, and money market rates are rising, which will have an impact on existing borrowers and create a potential for higher mortgage arrears and repossessions.

Some Government Members spoke with optimism, albeit muted, about the prospects for the housing market. Many raised concerns about the mix of the market, and asked genuine questions about the new homes bonus and the conflict between people not wanting new houses in their neighbourhoods but understanding that their children and grandchildren need housing. The hon. Members for Peterborough (Mr Jackson) and for Rugby (Mark Pawsey) raised those issues. Peter Aldous reinforced, with some expertise, the points that he made in the Second Reading debate on the Localism Bill, and Oliver Colvile spoke with passion about the planning system, land assembly and, interestingly, the importance of design, a sentiment with which I concur. The importance of growth in sustaining the economy and the housing market was obviously mentioned, and Opposition Members will clearly be worried by the comments of the outgoing director general of the CBI, who said that the Government are not doing enough to encourage growth and that decisions are being taken for political reasons.

Politics in the housing market perhaps does not work well, and I suspect that previous Labour Governments learned that lesson too. Stability in house prices depends on a balance between supply and demand, complemented by a financing system that matches the aspirations of people who want to own their own homes and has the capacity to provide finance. We are not building enough homes to meet the demands of the population, and that goes for homes in the private market, homes for shared ownership and subsidised social rents. We are likely to see fewer additional affordable homes built than during the previous Parliament, when the housing industry was hit as hard as any sector of the economy from 2007-08 onwards, first by the credit crunch and then because of the recession. According to the Minister's figures-they were confirmed in a written answer from the Under-Secretary of State for Communities and Local Government, Andrew Stunell who, unusually, is not here as he is in Committee-in the previous Parliament, 199,800 additional affordable homes were built. In this Parliament, the Government are aspiring to build only up to 150,000, which is not particularly ambitious.

The Government tell us that development will be driven at a local level via the new homes bonus. The hon. Member for Watford raised concerns here. However, according to the analysis I have seen, if the new homes bonus will work anywhere, it will work in the south-east-not, as my hon. Friend Graham Jones has on many occasions said, in the north. I share the concerns raised by the hon. Member for Peterborough that perhaps impact assessments should have been done prior to the policy being brought forward, so that we really understood where housing needs existed. That reinforces Labour Members' arguments that the Government are moving too far too fast and that they are not looking at the evidence.

Only last week, the Conservative leaders of 21 councils in the south-east wrote an open letter to the Minister in which they declared their serious concerns. They said that they did not see how the new homes bonus scheme provided enough of an incentive to communities for them to welcome development. Again, those concerns were reinforced by Conservative Members. I am also a little surprised that the right hon. Gentleman the Minister of State, Cabinet Office, is not riding shotgun for the Minister today to ensure that he says all the right things and to protect his back from his own side. Perhaps the Minister will enlighten us on the right hon. Gentleman's contribution to his Government's housing policy-the secret review.

The supply of social homes is also relevant to preventing a build up of pressure on an already squeezed private rented sector, tempering rents and allowing potential first-time buyers in the private sector to build up a deposit. The Minister has overseen a process whereby the budget for building new homes has been more than halved and he has placed his faith in the intermediate rent model, which will see social rents charged at up to 80% of the market rent in a given area. In the rest of the country, there is considerable unease that the 80% model will fail to deliver the necessary homes, because for housing associations to move to that model will require a change in their entire business model and therefore necessitate a restructuring of their borrowing with the banks. That will drive up costs and make that method of financing home building unpalatable at best and unworkable at worst. Housing associations are, of course, important contributors to the low-cost home ownership market and shared-ownership markets.

We have noticed, housing experts have noticed and local government leaders have noticed-we have therefore now been told that Downing street has noticed-that the shine is coming off the Minister's policies. In addition to the developing crisis of supply, we have a similar situation with demand, which will also be affected. I disagree to an extent with the hon. Member for Watford. Unemployment is rising, wages across the public sector have been frozen, mortgage interest rates are already increasing and, with inflation pushing higher because of the hike in VAT, I doubt it will be long before the Bank of England considers that an increase in the base rate is on the cards.

The FSA's review of the mortgage market, which many hon. Members have mentioned, has mortgage providers and house builders on tenterhooks. Although the Minister's press team made sure that we were all aware that he would be meeting the FSA-I have also met the FSA-I have not heard very much from the Minister about the meeting's outcome or what he would like to see out of that review. What did the Minister press Hector Sants to do? Did he ask him to tighten regulation, so that the market stagnates and prices remain low? Or did he argue that regulations should be loosened to encourage more people into the market to stimulate it? Which was it? A stable housing market is a noble aspiration, but it requires concerted action across the sector to deliver the homes we need. I look forward to the Minister's comments.

Photo of Grant Shapps Grant Shapps The Minister for Housing 12:19 pm, 25th January 2011

I start by congratulating my hon. Friend Richard Harrington on securing the debate, to which there has been an absolutely terrific response. There has been a great deal of support, particularly from Conservative Members, for the subjects being discussed. As my hon. Friend mentioned, I did not just go to school in Watford; I was born and brought up there. As I said, it has been a good and intelligent debate. I will try to address as many of the points made as I can, but I put hon. Members on alert that because some of them went into quite a bit of detail, I will study the transcript of the debate and get back to hon. Members on some of the specifics raised if I run out of time. I am particularly thinking of my hon. Friend Peter Aldous, who raised a series of detailed points that I do not think I will have time to cover.

Photo of Alison Seabeck Alison Seabeck Shadow Minister (Communities and Local Government)

Will the Minister provide that correspondence to other hon. Members who are present?

Photo of Grant Shapps Grant Shapps The Minister for Housing

Yes, by all means. I have no objection at all to making this a completely open exercise, and my officials will have noted my comments.

As to what we know about the old system, several Members mentioned that it had completely and utterly failed. We did not get to the lowest house building levels since 1923 under the new system, but under a top-down, almost Stalinist approach, which said that we would be able to build the top number of homes that we had set out in the 10-year plan. The pledge was to build 3 million homes by 2020, but the number built crashed through the floor.

The problem was not just the total number of homes being built, but the number of affordable homes, which was derisory, and I know that the Opposition housing spokesman, Alison Seabeck, agrees. Concern was expressed about the amount of affordable housing that would be built under our plans, but despite the £17 billion pumped into affordable house building over 13 years by the previous Government, the impact was a net loss of 45,000 affordable homes. I can assure the hon. Lady that the coalition Government will do better than that every single year.

Photo of Sheila Gilmore Sheila Gilmore Labour, Edinburgh East

Will the Minister not accept that one reason for the net loss in housing is the right to buy? Is he at all interested in the steps being taken by the Scottish Parliament to restrict the right to buy with a view to increasing supply?

Photo of Grant Shapps Grant Shapps The Minister for Housing

I cannot answer for the 13 years of the Labour Government, but they had adequate time to make whatever changes they wanted on that front. However, the argument about the right to buy is very much yesterday's argument; it is literally about the '80s and '90s. This year, no more than 2,000 people nationwide are likely to exercise their right to buy. The issue is not the right to buy, but the pathfinder schemes-the housing market renewal that destroyed homes and neighbourhoods. It was partly responsible for our ending up with fewer homes than we started with after 17 years.

I want now to make some progress and to answer the substantive points raised in the debate, which were really about whether the new homes bonus will be sufficient to ensure that we get out of the hole we were left in and back to a world where we can build a sufficient number of homes to look after our population. I accept the comment by my hon. Friend the Member for Watford that the new homes bonus will not be enough. Before I address that, however, I want to point out how powerful an incentive it will be.

The new homes bonus represents nearly £1 billion, which is funded through the spending review programme. It will ensure that, wherever a home is built for the next six years, the same amount as is collected on the average council tax band there will be paid to the local authority. Where an affordable home is being built, an additional £350 is proposed in the consultation document, which is currently in front of me and which I am considering. The new homes bonus is therefore potentially an incredibly powerful incentive to get out there and build homes.

For the first time, there is some real benefit for the community of the individual authority. My hon. Friend Mark Pawsey mentioned a potential development that I went to see a few years ago. That development could build homes, bring money and facilities in for local people and be a win-win. My hon. Friend Mr Jackson, who is not called Peterborough's champion for nothing, rightly said that housing can have a dramatic and important influence in terms of improving an area if it is done in the right way and not imposed from the top, but not if it is driven by a regional spatial strategy that takes no account of local needs and requirements.

The new homes bonus will be a powerful incentive. As my hon. Friend said, the billion will run out at some point, so the answer is to go and build homes and use as much of the money as possible now. It will then be top-sliced from the formula grant. That, in itself, will be an important incentive to ensure that areas are not left behind as their neighbours develop.

Photo of Graham Jones Graham Jones Opposition Assistant Whip (Commons)

In my constituency, we have 2,500 empty properties. The new homes bonus will not benefit us when the top-slicing comes in. I did not really want to go down this road, because the debate is about under-supply, rather than over-supply, but the housing market renewal pathfinders, which the Minister has just described as disastrous, removed empty properties where few people were living in areas with an over-supply. Will the Minister briefly comment on that?

Photo of Grant Shapps Grant Shapps The Minister for Housing

The hon. Gentleman and I have regular discussions on this subject in the Lobby. I can assure him that the new homes bonus will in no way disadvantage a community that finds it is having a net loss of population. In other words, it does not penalise it when its council tax base reduces from one year to the next, but it massively aids and helps when the base increases. Let us take, for example, a constituency in which a number of homes have been empty for a period of time. Sefton borough council, which I recently visited, has an area in which there are about 450 empty homes. When those homes are rebuilt and reoccupied, it will be able to claim the money from the new homes bonus. As that will be a guaranteed income stream for six years, it can borrow against that potential income and regenerate an area for which, I am afraid, the housing market renewal money has now dried up. It is possible, therefore, to use the new homes bonus in constituencies in the more heated parts of the country, which are perhaps not the most obvious locations.

In the remaining few minutes, let me return to the central theme of today's debate, which is that the new homes bonus is not intended to be the be-all and end-all. There is a whole variety of other mechanisms by which we intend to ensure that the housing market and the housing supply are increased. Let me take a few moments to list them. First, and most critically-the hon. Member for Plymouth, Moor View raised this herself-mortgage finance has been incredibly restrictive. If we look at the root of the problem of housing undersupply and oversupply, or rather of a heated-up market, we would find that between 1997 and 2007, there was no one calling time on the banks. They continued to lend even after they no longer had the balance sheets to sustain such activity. We can pin the blame on a number of factors. One factor in particular that has to be included is the moment at which the Bank of England was given control over interest rates while nobody was given control of regulating the banks. We need to ensure that the supply of credit from the banks is available. At the moment, it has gone completely the other way. The hon. Lady referred to my conversations with the FSA. I can tell her that I say exactly the same thing to the FSA that I say to this House and to the public, which is that there needs to be an adequate supply of lending, particularly to first-time buyers who are the motor that drives this whole issue and who are particularly relevant to housing supply. House builders are unable to build their product and sell it to anyone if there is no competition in the market place. Mortgage availability, therefore, is a very big issue.

Planning reform is another very large area. My hon. Friend the Member for Waveney mentioned the importance of reforming it. Let me reassure the House that the Localism Bill intends to do precisely that. There will be sweeping reform of planning rules. We will no longer have a system in which we go backwards and forwards and in which local communities are overridden by a planning inspectorate. Instead, plans will be put in place by the local community. Let me give one example. The local development frameworks were only filed by 20% of councils because they were too complicated and they did not have local consent. Once local consent is built in to the heart of the system, there is every opportunity for planning decisions to be made much more quickly.

Let me refer to an intervention made by the hon. Lady with regard to whether this Government will be pro-development. The answer is that we will absolutely be pro sustainable development. We have never said that such an aim would be in the Bill; it would be the wrong place to put it. We have always said that it will be in the planning policy framework and that will make it absolutely clear that this Government are in favour of sustainable development. In fact, that is the default assumption.

The changes will create a new attitude towards planning. It will not be us against them-the developer against the local community. It will be people working together to try to improve their local communities through neighbourhood plans. We barely touched on the issue of community right to build, but local communities will be putting forward plans to develop their local areas. Ideas such as affordable rent and reform of the social housing market will help attract private sector finance for the first time. Ideas such as affordable rent and reform of the social housing market will help attract private sector finance for the first time. There is a whole range of options; I wish that we had more time to investigate them in greater detail. I will certainly write to all Members present with detailed answers to the points raised. I congratulate my hon. Friend once more on raising this important issue.