Heidi Alexander
Main Page: Heidi Alexander (Labour - Lewisham East)New Housing Supply
Heidi Alexander Excerpts
Mr Betts
On the second point, I can see the problems. I do not think that we went into that issue in detail. I have been involved in such bodies in the past, and the important thing is to recognise that, yes, there can be issues and to try to resolve them right at the beginning. I will say a little more about housing associations in a second if the hon. Gentleman will allow me.
We looked at real estate investment trusts, which are close to the Minister’s heart—or perhaps not quite so close. We wondered why, after years of having them, no one seemed to be using them, certainly not for housing purposes. We had some challenges about how the Treasury treats investment and trading profits for tax purposes and whether that could be changed. It appears that the Government have gone a bit cold on REITs and do not see them as a solution, but I am sure that we will hear more from the Minister.
On social housing, there was a recognition—we might have different views about its appropriateness—that the Government had cut social housing funding over the comprehensive spending review period by 60%. Effectively, the Government are relying on housing associations in particular to increase rents towards 80% of market values on new properties and perhaps on existing properties to help to fund their balance sheets. Rents are rising to take up the slack from the reduced social housing grant that is available.
The National Housing Federation and housing associations told us clearly that they were concerned that this model would not last much beyond 2015. They did not think that was workable in the long term. They asked for some certainty about what would happen, so that they could enter into borrowing arrangements. The Minister for Housing told us in his response that he accepted that point and that the Government would look at it closely. It would be helpful to know what the Government’s response is now, because it is clearly an issue.
Moody’s has downgraded the credit ratings of 26 housing associations, and we are getting to the tricky issue of direct payments, which the Select Committee considered. The National Housing Federation certainly told us that it thought that a number of associations would end up paying more in borrowing costs because of the associated problem of rising arrears. We welcome the Government’s commitment to the pilots, which are going ahead, and we have had further information during our more recent inquiry into the impact of welfare reform on local authorities. We will reach some further conclusions about the direct payment issue. Clearly, the Government must be aware of the impact on housing associations.
Returning to the point the hon. Member for Meon Valley (George Hollingbery) raised a few moments ago, the Committee recognised that there are a number of ways to get more leverage from housing association assets, and people gave evidence on what they were doing in that regard. It is interesting that only yesterday the G15, the 15 big housing associations in London, made an announcement about a common investment vehicle to raise money to enter the private sector housing market. That is one way in which the solidity of their balance sheets is helping them to raise money for a purpose that should, in the longer term, be self-funding. These are interesting ideas.
The Committee also looked at the housing grant. The so-called grant is sat on the books of housing associations and is counted as a debt. Changing that to a genuine grant or equity could release a lot of funds for investment, and is clearly supported by the housing association movement. We suggested that the Government look at that, because we recognised that there could be problems with overloading some associations in some circumstances with too much debt. Nevertheless, we thought that in principle it was an idea worth considering. We hope Ministers will look at it, because some of the stronger, more robust housing associations might want to pursue it. We have to be cautious, however. What might be right for associations such as the G15 in London, where the private market is buoyant and rents are appropriately high, will not be right in other parts of the country where there is not the same ability to leverage funds. We have to be careful and recognise that a one-size-fits-all solution is not necessarily available.
The Committee looked at the role of local authorities. They have not been great contributors to new house building in recent years, and we ought to change that. We welcome the housing revenue account reforms, because they give local authorities the opportunity to take investment decisions, but why, of all the investments made by local authorities, is housing the only form of investment that is controlled beyond prudential rules? Why is it different? It is a ring-fenced account. It should be in the other direction: it is a safer form of borrowing for authorities. It is not only the Local Government Association, but councils such as Westminster, Kensington and Chelsea and Hammersmith and Fulham that are saying, “Get rid of the artificial cap that has been put on housing revenue account borrowing. Why is it there? Why can we not rely on the prudential rules that are in place for all other forms of local authority borrowing?” Ministers always have fall-back powers under the Local Government Act 2003 if they need them. Why can that not be relaxed to allow more borrowing and building?
Heidi Alexander (Lewisham East) (Lab)
Is my hon. Friend aware that in lifting a cap, local authorities could deliver 600,000 new homes over a five-year period if additional borrowing was available to them? Sorry, that should be 60,000.
Mr Betts
I would be more supportive of the 600,000 figure, but we probably cannot deliver that with the money available. My hon. Friend is absolutely right. She anticipates the “Let’s Get Building” report produced by the National Federation of ALMOs, the LGA and the Chartered Institute of Housing, among others. It makes the point that if the cap was lifted the amount of borrowing local authorities could enter into would rise from £2.8 billion to £7 billion. That would allow the building of 60,000 homes and put a lot of people into work. It just seems to be a simple solution. It does not require the Treasury to go out and find any money to subsidise that borrowing, because it is a ring-fenced account, a trading account, and Ministers need to accept that.
The Committee’s report suggests that some authorities may not want to go ahead, because they do not have a housing need. Why can there not be a swapping or trading of borrowing amounts between local authorities? The Government allow and encourage sharing between local authorities on a whole range of areas, so why not on this too? We raised with them the possibility—we did not say they should definitely do it—of changing Government borrowing rules in respect of the general Government financial deficit. To return to our visit to the Netherlands, the Dutch Government guarantee housing borrowing for housing associations, yet it does not count as Government borrowing. It is a problem in this country that Treasury restrictions weigh heavily on local authority borrowing, particularly in this area.
We welcomed the proposed new models of governance for arm’s length management organisations, which, with more tenant involvement and more co-operative-type structures, could borrow in the private markets, as housing associations do. We also made recommendations concerning the right to buy—about trying to ensure one-for-one replacements and about how the Government could help facilitate that—and giving more freedom to local authorities in terms of discounts in areas of great housing stress and to housing associations that might want to enter the right to buy, where they think it right for their portfolios—that comes back to the point about using portfolios in a way that benefits housing associations. We face the great challenge of moving to a better situation in which we subsidise building, not benefits. That is a long-term problem going back to the 1980s—and even earlier—and the change from subsidising the building of homes to subsidising the high rents of people living in those homes. That is a major challenge for all of us.
Heidi Alexander (Lewisham East) (Lab)
It is a pleasure to follow the hon. Member for Folkestone and Hythe (Damian Collins). I did not agree with everything he said, but I certainly agree with his last point that it is just plain wrong that, in the 21st century, we are paying money through housing benefit to slum landlords. I will probably pick up on that theme later.
I congratulate the Chair of the Select Committee, my hon. Friend the Member for Sheffield South East (Mr Betts), on opening the debate. I was a member of the Committee when we conducted the inquiry and the report was written up, and I think it should provide the Government with a lot of food for thought. I will be interested to hear what the Minister has to say in his updated response.
This Friday, I will do my advice surgery in my constituency, and I can guarantee that I will speak to at least five people who have come to talk to me about problems with housing. There could be up to 10 such people on Friday, but I know that during the course of a year, I speak to hundreds of people about their housing circumstances. More often than not, I speak to mums who come with their children and who are living in desperately overcrowded accommodation. I sometimes see whole families who are living in just one room. These people are often working, sometimes with part-time jobs, but they are living in completely unacceptable housing conditions and I believe that Members of this House, and the Government, have a duty to address the appalling conditions that many of my constituents live in.
In the three years that I have been doing my advice surgeries as a Member of Parliament, not once has anyone come to see me about a housing problem who could afford to buy a house in Lewisham. The average cost of a property there is £260,000, but the average salary is in the region of £29,000. Furthermore, the vast majority of people who come to see me at my advice surgeries cannot afford to buy through the part-buy, part-rent arrangements either. Many of the shared ownership schemes that housing associations run in London are completely out of the reach of many of my constituents, because the salary required in order to access the schemes is many times the amount that many of my constituents earn; and yet we have a situation in which people are paying out huge amounts of money in the private rented sector, often to live in very poor conditions.
I want to focus on the need to build social rented housing in London. The reality of what has happened under this Government is that the number of affordable homes being built has collapsed. Nationally, 34,000 fewer affordable homes were started in 2011-12 than in the previous year. That represents a 68% drop. We should not be surprised about that, because one of this Government’s first actions when they came to power was to cut the national affordable house building programme by 60%. They signalled their intentions for the supply of new affordable housing when they made that decision.
Of course, that money also enables other housing to be built. What I mean by that is that some of the grant that goes into developments to deliver social or affordable housing enables a mixed-use scheme with mixed tenures to be created. Last year, when the Prime Minister and the Secretary of State for Communities and Local Government launched their NewBuy scheme, they chose to come to Lewisham. They stood in a development there that had been constructed only because of a £25 million grant from the Homes and Communities Agency. The scheme, which is providing nearly 800 new homes—about 200 of which are affordable—was coming out of the ground only because of the capital grant from that agency.
I cannot overstate the need to build social rented homes in London, yet in the period between April and September 2011, only 56 new homes for rent were started by councils or housing associations. That was 56 in a six-month period in a city of 7 million people. That is not acceptable.
My own local authority, Labour-run Lewisham council, is due to build 250 new homes, but that is a drop in the ocean compared with the number of families on the housing register there. We have talked about ways of getting more finance into building affordable homes, and I support the comments made on the need to lift the borrowing cap placed on local authorities.
I ask the Minister to consider what more the Government could do about the number of overseas buyers purchasing property in London. Roughly 60% of new-build homes in London are being bought by foreign investors, which is ramping up the London housing market, pushing prices even further away from my constituents. If London is seen to be a safe haven for foreign investors in the London property market, we must surely be able to find a way to capture some of that investment in our great capital city to plough back into the delivery of affordable homes.
Ms Karen Buck (Westminster North) (Lab)
Does my hon. Friend share my concern about the scale of the buy-to-let market in ex-social housing in particular? Does she share my shock that there can be two next-door properties, of which one will be in the social rented sector at a rent of, say, £100 a week, while the other will be in the buy-to-let market in social housing with a rent of £500, £600 or in some cases even £700 a week? In what way does that provide any kind of value for money?
Heidi Alexander
I totally agree with my hon. Friend, and our hon. Friend the Member for Hammersmith (Mr Slaughter) made a similar point. We are lining the pockets of private landlords on an industrial scale. There are no two ways about it.
Another suggestion I would put to the Minister relates to public land. The Government often talk about releasing public land to deliver new homes. There is a lot of rhetoric about this, and we do not see a huge amount of progress. In my constituency, we are experiencing the possibility of Lewisham hospital having two thirds of its land and buildings sold off. There are many hospitals in London for which significant land disposals are going to take place. What discussions has the Minister had with his colleagues in the Department of Health? If these disposals are going to happen—let me be clear that I am very much against it for Lewisham—can we secure requirements for 50% of the land to be used for affordable housing, as these are considerable sites of public land?
I would like feedback from the Minister on what he is doing with other public sector bodies to parcel up land to make it available to small and medium-sized builders. When this country was building the amount of housing it needed to meet the demand many decades ago, we saw small and medium-sized builders providing a far greater proportion of the homes built. At the moment, 75% of new homes come from seven of the largest house builders. If we could find a way of parcelling up the public sector land, enabling small and medium-sized builders to get hold of it for building purposes, that could be a win-win situation.
Mr Richard Bacon (South Norfolk) (Con)
I am listening with interest to what the hon. Lady says about finding new ways to parcel up land. Is she aware that local authorities have an obligation—I add that quite a few of them are not aware of it—to measure demand for self-build in their areas, and then to say what they are going to do about it? If we look at the experience of other countries such as the Netherlands, Germany and France, we find that a much higher proportion of total building is done not by large house builders, but by people for themselves, in some cases with the help of local authorities.
Heidi Alexander
One of the recommendations in the Select Committee’s report is that the opportunities for self-build do exist. I will conclude on that note, grateful for having had the opportunity to contribute to the debate.