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The Minister for Social Security and Disability (Sir Stephen Timms)
I am delighted to be serving under your chairmanship, Ms Lewell. I congratulate the hon. Member for St Ives (Andrew George) on securing this timely debate just the week before the Budget.
Stable, affordable, good-quality housing is fundamental to individual wellbeing, economic stability and public health. That is why the Government have set out, as Members know, the ambition to deliver 1.5 million homes. We are supporting that with a record £39 billion investment in social and affordable homes. That is the programme that my hon. Friend the Member for North East Hertfordshire (Chris Hinchliff) referred to. We are also supporting that with our £16 billion national housing bank.
Securing an adequate number of decent affordable homes is our priority. People have wanted to do that for a long time. We are making sure that the investment is going in to deliver those homes. It is true that delivery will not happen overnight, but delivery is going to happen. We inherited a very serious housing crisis, and we acted quickly in response. Policies in place are having an impact already. There are over 400,000 new homes in England since the start of this Parliament, more than a quarter of the target. New build starts in the year to June were up 15% on last year.
We are driving forward big reforms of the planning system. In August, we announced a new planning policy framework with clearer rules-based policies to unlock more homes where they are needed. We are investing in construction skills. My Department spent nearly £38 billion last year supporting renters with housing costs via universal credit and housing benefit. That is an increase of around £3.5 billion over the last decade. No other OECD country spends a greater proportion of its GDP on housing support than we do.
I recognise the picture that hon. Members have set out of the impact of local housing allowance in their local areas. Rental inflation across the country varies according to specific challenges in each area. The local housing allowance determines the maximum financial support for renters in the private rented sector. Households in similar circumstances living in the same area are entitled to the same maximum rent allowance, regardless of the rent that they are required to pay.
Local housing allowance was never intended to cover all rents in all areas. The rates for that are set annually by the Secretary of State for Work and Pensions. Future decisions will be based on the Government’s priorities, and those are the priorities that the Chancellor will have in mind as he makes his announcements in the Budget next week.
The Government provide additional discretionary housing support to local authorities to help tenants to meet shortfalls in their rent costs. In England, that is through the crisis and resilience fund housing payment. I wonder whether, in some of the cases that the hon. Member for St Ives referred to, his constituents would find it worth their while to contact the local council to see whether they could benefit from a discretionary housing payment. The crisis and resilience fund includes support for preventive wraparound help, as well as assistance for people facing a financial crisis. I know that local authorities are increasingly looking at what they can do with those resources to protect people in the kinds of situations that the hon. Member for St Ives describes.
Local housing allowance rates are set within broad rental market areas determined by rent officers in the valuation office across England. There are 192 broad rental market areas across Great Britain. As the hon. Member for St Ives said, Kernow West is the one that includes St Ives. A BRMA is an area within which a person could reasonably be expected to live, having regard to facilities and services for the purposes of health, education, recreation, banking and shopping, taking account of the needs of travel to and from those services by both public and private transport.
Across each BRMA, rent officers gather a representative sample of private rental data of all property types and sizes from a range of sources, including both new and existing tenancies. They survey rents across the full year to capture current market conditions. That includes collecting a representative sample from all the local authority areas within a BRMA, including any larger urban centres and more sparsely populated rural areas in that BRMA.
Perhaps the hon. Member for St Ives might find it useful to have a conversation with the Valuation Office Agency, because he raised perfectly understandable concerns about whether the data it uses is out of date. The process is designed to ensure that that is not the case and that up-to-date data is provided. Of course, it was only just over two years ago that the local housing allowance was uprated to the 30th percentile of the levels of rents in each BRMA.
Andrew George
A moment ago, the Minister said that it is not intended that the LHA should cover all rents in all areas, and he encourages me to talk to the local valuation office about its methodology in setting the LHA for my area of Kernow West. I will happily do that, but looking at the marketplace last night, there was not a single property anywhere close to reaching the LHA level. Is it not the Minister who should be undertaking a review of whether the valuation office is up to the task of understanding how the market is working, rather than leaving it to local Members of Parliament?
Sir Stephen Timms
The hon. Gentleman reproves me in a very appropriate way. My point is that I think the LHA methodology, which he queried, is sound. When local housing allowance rates are increased, they are implemented in April, based on the latest private lettings data for the 12-month period up to the end of September the preceding year. I do not think there is a problem with the way the LHA rates are calculated—in 2024, all the LHAs were uprated to the 30th percentile of rates in each BMRA—but there have been significant rent rises, even in the two and a bit years since the level was last reset. That, I think, is the phenomenon to which the hon. Gentleman is drawing the House’s attention. There has been a rapid rise in rents in that period, and that will need to be taken into account in deciding what should happen to the LHA for next year.
Tackling homelessness is a very high priority for the Government, as the Prime Minister underlined when he took office. The LHA supports those on low incomes with their rents in the private sector, but the causes of homelessness are complex, and the LHA is only one measure to tackle it. We have significant funding targeted more specifically at those who are homeless and those at risk of being homeless, as those in the kind of situation that the hon. Member for St Ives described sometimes are. Sustained cross-Government action to tackle the causes of homelessness is being taken forward through the national plan to end homelessness. We will provide more than £4 billion in funding for homelessness and rough sleeping services from 2026-27 to 2028-29.
Councils have £2.7 billion through the homelessness, rough sleeping and domestic abuse grant, which they can use to support people at risk of and experiencing homelessness and rough sleeping, including funding for delivery of support on domestic abuse safe accommodation. That all means that councils can do more to prevent homelessness, reduce reliance on the expensive temporary accommodation that my hon. Friend the Member for Truro and Falmouth (Jayne Kirkham) drew attention to and target resources where they are needed.
Andrew George
The Minister mentioned earlier that we will await the Chancellor’s announcements in the Budget next week. It sounds as if the Minister himself is awaiting those announcements. I wonder to what extent he is putting pressure on the Chancellor to address these issues and ensure sufficient budget for his Department to address this issue. I am sure the Prime Minister sincerely wants to reduce and entirely remove homelessness from our streets, and I applaud him for that, but I am afraid that the way that the system is working will only add to the problem.
Sir Stephen Timms
I think we are all waiting to hear what the Chancellor says next week. I can certainly assure the hon. Member that my colleagues in MHCLG and the Treasury are continually talking about these issues and the right approach. Last time the uprating to the 30th percentile happened—April 2024—the cost over the full spending review period was, if I remember rightly, some £7 billion. If we are looking at effective measures to tackle homelessness, the approaches and specific funding that I have just described to address the problem and the risk of homelessness are the effective ways to do that. Those are the kind of factors that the Chancellor will certainly be bearing in mind as he reaches his decisions for next week.
To further drive the shift from crisis response to prevention, we are setting a national target to increase the proportion of people supported by council homelessness services to stay in their homes or helped to find alternative accommodation. Our new duty to collaborate will require public services to work together to identify people at risk of homelessness and to consider what action they can take within their existing responsibilities to help prevent that.
The Government’s key priority in all this is to secure an adequate number of decent affordable homes. We have announced the new 10-year, £39 billion social and affordable homes programme—the biggest boost to housing grant funding in recent memory. The aim is to maximise supply, with a target to deliver at least 60% of the homes under the programme as social rent. Initial funding allocations via the programme have been confirmed across England, excluding London; 33 providers will receive £9.5 billion to invest in new social and affordable housing and deliver 73,000 homes. Nearly two thirds of the homes built by strategic partners through the programme will be for social rent, and for the first time ever, three councils—Cambridge city council, Eastleigh borough council and Newcastle city council—have been awarded strategic partnership status with Homes England. Councils are increasingly stepping up to meet our bold ambitions.
More than £16 billion in funding for outside of London is still yet to be allocated. In allocating that, the Government intend to prioritise social rent homes, particularly council homes, to achieve the Prime Minister’s ambition for the biggest council house building programme since the post-war boom ended in the early 1980s. Directing funding into that programme and others along those lines is the way to deal properly and permanently with the severe housing crisis that we face right across the country, which the hon. Member for St Ives and others have spoken very powerfully about in this debate.
The new national housing bank was launched on 1 April, backed by up to £16 billion in financial capacity. We envisage that bank leveraging in billions of pounds of private investment to accelerate house building across the country. It is taking quite a pioneering approach to its role, and its status as a publicly owned subsidiary of Homes England, designated as a public financial institution, gives it a lot of autonomy in working out how to do this job most effectively. My colleagues in MHCLG have launched the national housing delivery fund, which includes £5 billion of grant funding to support housing delivery and address viability challenges, including through the remediation of brownfield sites and provision of unlocking infrastructure.
Let me say in the final seconds that my colleagues in MHCLG have taken the view that rent controls would do more harm than good.
Motion lapsed (Standing Order No. 10(6)).