Meg Hillier
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Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Sir David. I congratulate my hon. Friend the Member for Brentford and Isleworth (Ruth Cadbury) on highlighting this hugely important issue. As she said, now is really the time. The Government, having passed legislation in this area, have recognised that it does not work for London. We have a huge opportunity now that we have a new London Mayor. Although I railed against the Housing and Planning Bill, we have to work with what we have and come up with a solution for London within the current framework; the Mayor should be given some latitude in how it is interpreted.
I want to talk about issues in my constituency that highlight the crisis, and I will touch on the work of the Public Accounts Committee in this area. I have often talked on the record about this issue, but every time I speak, the price of a house in Hackney has gone up. The average property price in Hackney is now £691,969, which is an 85% increase on 2010 prices, when properties cost only £373,000 and a bit. Average wage growth in London over the same period was 1%, so property prices in my borough are out of kilter with reality for every group. We are living in a real crisis.
Hackney is the 11th most deprived authority in the country. Interestingly, we have gone down from being top or second, where we were for many years, because the house prices mean that only the very richest can move in. That has increased the average salary in the borough to £33,000 a year. The variation is great. People often tell me that my constituency is achingly cool, but I remind them that it is also achingly poor—many people are on very low incomes and are struggling to get regular work. That is reflected in the fact that there are 11,000 people on the council’s housing register, which is frankly a bit of a joke. People think it is a waiting list, but given that 1,338 homes were allocated in 2014-15, the demand is certainly not being met through the available supply. In addition, Hackney Council could lose 700 homes through the forced sale of council homes to fund right to buy for housing association tenants. I really worry about where people on low incomes will be able to live in the future. In the private sector—I will speak more about this in a moment—the rent for a typical two-bedroom property is about £400 a week, which equates to just over £20,000 a year. To afford that, someone would need an annual gross household salary of approximately £59,000.
The stark reality for my constituents is that home ownership, renting and social housing are but dreams. Many of them are stuck living with their parents at home as adults. In my surgeries, I increasingly meet families that have people living in the living room, or parents and children living on the sofa—not even a sofa bed, because very often there is not space even for that. I say seriously to the Minister that I fear we are creating modern slums. I acknowledge that Governments over many years have not built enough homes, but now we have this wretched housing Act.
This is not new. Back in 2001, when I was a member of the London Assembly working with the then Mayor, Ken Livingstone—perhaps not so much working with him, as he was not in my party at the time—I produced a report and chaired a group on housing for key workers. We looked at nurses, bus drivers, teachers and police officers as a sub-section of that group, and concluded that there was a real crisis looming for middle management. As my hon. Friend the Member for Brentford and Isleworth highlighted clearly, that is sadly coming home to roost. I do not like to say that we were right then, but we were, and too little has been done since. As my hon. Friend said, that goes to the heart of London’s ability to function. We predicted that problem. We also had the concern that, as she highlighted, people on low incomes in the private sector are key workers, too: we need people to work in banks, to be chefs and to drive taxicabs. They need to be considered, too.
The solutions that the Government have come up with are key worker housing, shared ownership, starter homes, Help to Buy and, of course, the private sector, but they do not work for Hackney and the expensive parts of London and the south-east. Key worker housing is usually defined by profession, and it is typically for the public sector. That is fine if people can access it, but there are issues with it. For a start, there are not many key worker housing schemes around, and there is also an issue about rent levels.
Together with the right hon. Member for Cities of London and Westminster (Mark Field) and other colleagues, I fought hard to preserve some former Crown Estate properties as key worker housing. They are now owned by the Peabody Trust. I met Peabody last week, because many tenants in those properties have raised concerns about the unaffordability of rents, which have been set at 60% of market rent; that is Peabody’s definition of a rent that is achievable by key workers, but given the market rents in Hackney that I have set out, that is beyond the reach of nurses, social workers and teachers.
Even if that model is made to work, there is not enough of it. It is a very ill-defined part of the housing market. Peabody has, to a degree, acknowledged that there is a problem, and it is looking again at what the right rent should be. I am pleased to say that it will meet tenants and residents in July to start the debate about what the best model is for providing sustainable, solid and secure housing for the key people we need to keep London operating. I wish it well in its endeavours, and I hope to be involved. I am also seeking a meeting with the Mayor of London to see whether we can shape this debate at a London level.
Shared ownership is one of the other so-called solutions. In Hackney, we have seen the ludicrous situation of shared-ownership properties on the market for well over £1 million. The defence of the housing association concerned is that four sharers on £70,000 a year could buy a share of the property. That is not what I thought shared ownership was for. The rent levels on the remaining equity can be a real problem—it is sometimes as high as 4%—and there are issues of move-on for families who grow and need a larger property, but cannot afford to staircase up. One of the challenges is the narrow market, and the lack of mortgages available to people who are shared owners. That model is fast heading for bust; we need a rethink, and perhaps to use the money put into shared ownership for more sustainable forms of rented housing, or for better subsidies so that the right people can move into long-term affordable home ownership.
At Prime Minister’s questions, the Prime Minister told me that the solution to the problem in Hackney was starter homes. As my hon. Friends have highlighted, at about £400,000 for a starter home, who in my constituency can afford that? Hackney Council has estimated that a person would need an income of about £71,000 to buy a starter home in the borough, although my hon. Friend the Member for Brentford and Isleworth highlighted a figure of £97,000. There are different figures, so perhaps the Minister will clarify that point. What is the rate for a starter home in London? My constituents want to know that, because anyone who might be interested in a starter home wants to know whether it is possible to get one.
As for Help to Buy, I need say little about it, except that in my borough it has been fuelling house prices. Miraculously, newly built properties coming on to the market hit only a smidgen below the Help to Buy threshold. That initiative is not helping in areas such as mine. The private sector, too, is a real problem. In my constituency, more people now rent privately than own their own home. Private sector tenants who have been suddenly cast out and have nowhere to go are coming to my surgery at an unprecedented level.
Let me give an example. Only this Monday, a 68-year-old woman saw me at my surgery. She has lived at a property for 52 years, first with her grandmother and her uncle, who are now dead. The property, to use an old-fashioned description, was benevolent housing for the working poor when it was built towards the beginning of the previous century. It was, however, sold on, and the rent is now £382 a week. It is a three-bedroom property, so she has been told that her housing benefit entitlement is only £200 a week, because she is under-occupying, but bear in mind that it has been her home for 52 years. The woman’s income—she has a private pension and a bit of state pension—is £800 a month. She is a proud woman who has never claimed a penny until she had to claim housing benefit, and she is embarrassed about doing that. She is in a desperate state and is in rent arrears. I am working with the council to see if we can find a solution for her, but she is only one of many.
Another tenant, a younger woman of 46 years, works in one of our national museums, but she has been ill and unable to work. The rent was affordable, but the landlord decided to up sticks and move abroad; he contacted an agent, who said, “Hey, you’re not charging enough here, put the rent up,” which the landlord did. That put the tenant notionally into rent arrears, although her rent was enough for the landlord previously. Her ill health and her need for housing benefit mean that no agent is interested in looking at her. She managed to find one landlord who was willing to take her on, but that landlord would only accept her with some sort of rent guarantee, which the council, however, cannot offer on housing benefit before someone moves in, so the whole system is bust. She has looked not only in Hackney, but in the neighbouring five or six boroughs, and she can find nowhere affordable to live, even in the constituency of my hon. Friend the Member for Leyton and Wanstead (John Cryer). She is 46 years old, single and not working—temporarily—and she is unable to find anywhere to live. What is the solution for her? The Government are offering nothing at all, and they are even about to rip away from my constituency any social housing—if she could qualify for that, which, frankly, would be a miracle, even in her circumstances.
What are the solutions? The Public Accounts Committee has been looking into the matter intensely, on a cross- party basis. In September, we published a report on the Government’s land disposals programme. The programme was announced at the beginning of the previous Parliament by the Housing Minister at the time, the right hon. Member for Welwyn Hatfield (Grant Shapps), and was intended to dispose of enough land to build more than 100,000 homes—so far, so good. What we discovered, unbelievably, is that the Government cannot tell us how much the land was sold for, how many homes have been built on the land, and whether it was value for money for the taxpayer. The figures even included some land released in the early stages of the previous Labour Government, so the numbers were criticised by auditors.
Perhaps the Minister will respond to one of the Public Accounts Committee’s recommendations:
“In taking forward its new target”,
which the Government had announced,
“to release land for up to 150,000 homes between 2015 and 2020, the Department must only count the number of homes built, or commenced, on land disposed of during the programme. This should also include the number of affordable homes.”
We have been told by civil servants that Ministers expressly said that they did not want the homes built on land disposed of by the Government counted. Let me repeat that, because it sounds unbelievable and people might think that I have misspoken: Ministers have expressly said that they do not want to count the number of homes built on public land disposed of for house building. It is more Sir Humphrey than Sir Humphrey, and it is time that the Minister gave us an answer.
We also now have the right to buy for housing associations. I have no problem with people wanting to become homeowners. I am a homeowner myself; indeed—forgive me, Sir David, I forgot to mention my declaration in the Register of Members’ Financial Interests—I am a landlord in London, so I have no problem with people buying their own home, but not in a way that is taking homes away from other Londoners. That is the thing. The back-fill is coming from councils having to sell their important social housing. The Public Accounts Committee concluded that not only was there no maths done on the right to buy, but it was not sustainable in its current form, with so little detail about how it will work. This is an opportunity for the Minister to work with the Mayor of London to make the policy work better for London.
There is also pay to stay. I have highlighted the multiple households in my constituency in which there are adult children who cannot move anywhere. They are stuck at home with their parents, and are often overcrowded; even if they are not, they are pushing the rent levels up, because as a household, their marginal taxation rate can be immense. I spoke to Peabody the other day, and it has had examples of people who have been reluctant to take on promotions, because households that go over a certain level of income—a £40,000 household income sounds like a lot outside London, but it is not a great deal in London—are suddenly having to pay a high marginal rate of both income tax, potentially, and extra rent.
I must also rail against the loss of secure tenancies. A stable home is a fundamental political principle for me. It is a building block for life, because with a stable home people can think about a job, getting their family sorted, making progress and contributing to the community and society in which they live. Without that, people are living in anxiety. In my constituency surgeries, I am seeing some of the worst housing cases that I have ever seen, and I have been elected for 22 years now. For the record, as we are in the middle of debate about the referendum, I have never once, in my 11 years as an MP, had an eastern European come to me about council housing—they all seem to live in the private rented sector, and certainly they have never come to me asking for council housing.
The Government are seriously damaging our city, but they have an opportunity. I ask the Minister to tell us, seriously, how much he will work with the Mayor. I also have a couple of suggestions, including giving back to the Mayor the land that NHS Property Services took away from London, such as St Leonard’s hospital in Shoreditch. The Mayor should be allowed to turn that land into homes, and to count how many homes he can build in total, and how many are affordable or for key workers. That will do more for our city. There might be a deal struck, so that some of the money goes back to the NHS—goodness knows, the NHS budget is under great stress—but those homes would be vital for our health workers, teachers and so many others.
The Mayor should be allowed to develop a solution for London. I hope that constructive discussions with the Mayor of London are ongoing, both behind the scenes and, soon, more openly, because if the situation continues, our city will be hollowed out and people will not be able to afford to live and work here, which will change the nature of our great London.
Meg Hillier
I am sure my hon. Friend has found in her constituency as I have in my borough that often properties are built and whole blocks are sold over a weekend in Dubai, Hong Kong or such places. Those are not homes for local people. Does she have a comment on that?
Ms Buck
That is absolutely right. It is the well-documented phenomenon of lights-out London. It happens particularly in the wealthiest parts of London, but also with some of those blocks my hon. Friend has mentioned, which are marketed as if they are in the heart of Knightsbridge but are not; properties are being bought up overseas and at the very best used for short-term lets or high-value student accommodation. They certainly do not provide homes. Of course, the consequence, to go back to the intervention by the hon. Member for Enfield, Southgate, is that London boroughs, and particularly those in inner and west London, cannot meet the demand from the people in the greatest need; so homelessness and housing pressures spill over from those boroughs. As it is, it costs Westminster taxpayers £4 million a year to meet the costs of homelessness that are not covered by other Government costs.
We are placing homeless households from Westminster in Enfield, Barking and Dagenham and Newham. Westminster City Council says that it would like to build permanent homes in outer London. I do not know what outer London thinks of that, because in outer London boroughs such as Hounslow and Sutton, homelessness is rising very sharply. I do not see why inner London boroughs should be allowed to get away with that. As the hon. Member for Enfield, Southgate said, those households are being placed far from their support networks, which puts additional pressure on services in the host boroughs.
A shortage of school places is just one example of such pressure. The latest figures show that Westminster has 1,200 unfilled school places, and yet we are exporting our homeless households all over. Meanwhile, in an outer London borough such as Redbridge, which is a receiving borough but also an exporting borough, there is a phenomenal situation, with pressures being dropped there and people having to be placed elsewhere. Only two weeks ago, Redbridge Council revealed that it was going to purchase an ex-barracks in Canterbury in order to place its homeless there, much to the chagrin of Canterbury City Council, which had been negotiating to get the property for itself. This is lunacy, and it is all consequential upon wider problems.
Meanwhile, some get lucky, and some will get luckier as a result of the Government’s Housing and Planning Act. The starter homes policy will be a windfall for households who have the bank of mum and dad and are on joint or single incomes of £80,000 or £90,000. Those people will be able to enjoy the benefits of the discount on a starter home, carry that forward and cash it in. Even Westminster City Council, which is not known for its caution on such things, warned the Government that the potential windfall of tax-free capital gain is “very considerable” and
“wholly to the benefit of a first-time buyer”.
Good luck to them, if that is what the Government want to do, but bad luck to everyone else who either cannot afford that or finds they are at the sharp end of the housing crisis.
Some of the people who have been in my surgery in the past few weeks will not be the beneficiaries or be able to afford a starter home, even though they would love to have one. They include the pensioner I met last week, who has been in his privately rented home for 27 years and whose rent has gone up from £750 a month in 2014 to £2,500 now. Many other individuals are in that kind of crisis.
The Minister needs to address that. He needs to make it absolutely clear that he understands the impact of the crisis and will get behind the Mayor in the measures he intends to take to provide a range of affordable homes across all tenures. The Minister needs to work with other Departments to ensure that the pressures that brought about this crisis in London are resolved, for the sake of our city’s health and for the many people who depend upon a decent affordable home.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Marcus Jones)
It is, as always, a pleasure to serve under your chairmanship, Sir David. I congratulate the hon. Member for Brentford and Isleworth (Ruth Cadbury) on securing this debate on the important issue of affordable housing in London. I can assure her that this is a top priority for this Department and this Government. In the short time that I have today, I will endeavour to respond to the points made by hon. Members.
The demand for affordable housing in London is without doubt challenging. It is clear that the new Mayor has a significant task ahead of him to meet the needs of the growing population in such an important world city. A number of hon. Members asked whether we would work with him, and we certainly look forward to doing so. We all share the same ambitions—to build more homes in London and to help more people to own their own home.
We have a good track record. Since 2010, we have delivered more than 710,000 homes, including 277,000 affordable homes—67,000 in London. Our affordable homes programme delivered 193,000 affordable homes between 2011 and 2015. Last year was a record year for London. We delivered 27,000 homes, including 18,000 affordable homes—the most since records began in 1991. We were the first Government since the 1980s to finish with more affordable homes than when we started. Since 2010, we have helped 290,000 households to become homeowners, thanks to schemes such as Help to Buy and right to buy. However, even though we have delivered a record number of homes in London, there is without doubt more work to be done.
Mr Jones
I will make some progress before giving way, because I am short of time.
Only one third of new homes in London were delivered through the open market. With London’s housing challenges, the market needs to do more, and the Government are certainly doing more. We are focusing on three things—streamlining the planning system, helping Londoners into home ownership and ensuring that housing stock is managed fairly and effectively.
We are introducing further reforms. The Housing and Planning Act 2016 gives house builders and decision makers the tools and confidence to deliver more homes and streamline the planning system to accelerate delivery. Planning permission in principle will provide greater certainty, and registers of brownfield land will make it easier to identify suitable sites, which are at a premium in London.
However, the reforms need to be implemented effectively in every area. We need to see more homes that are planned for actually being built. We have consulted on a new delivery test that drives action where build rates are below expectation. We have been working with the major house builders on how they can be clearer about their delivery plans, and I welcome the statement of intent published by the Home Builders Federation just last month.
We are doubling the housing budget to more than £20 billion to deliver 1 million more homes by the end of this Parliament. That includes £8 billion for 400,000 affordable housing starts, including 100,000 affordable homes for rent. That is the largest affordable housing programme by any Government since the 1970s.
We know that 86% of people want to buy their own home, and we certainly support their aspirations. That is why our programme to support home ownership is so important. With shared ownership, London’s first-time buyers will be able to get on the ladder with a far smaller deposit: £3,500 will secure a 25% stake in a property. Our new London Help to Buy scheme increases the equity loan available from 20% to 40%, and our help to buy ISAs are helping people to save up a deposit for their first home. Our voluntary right to buy gives 1.3 million housing association tenants the chance to buy their homes.
We will build 200,000 starter homes so that young first-time buyers will be able to buy their first home with a minimum discount of 20%. Legislation will place a duty on planning authorities to embed starter homes in the planning system. That will be supported by £1.2 billion of funding to unlock brownfield land. For high-value areas, the Housing and Planning Act allows for off-site commuted sums for delivery elsewhere. We are consulting on the details of how that will work.
We need to make better use of the existing housing stock. The market value of council housing stock in April 2014 was more than £200 billion. By selling councils’ higher-value housing as it falls vacant, we can release the locked-up value to build more homes and fund the right-to-buy discount for housing association tenants; and we will absolutely ensure that for every council house sold in London, at least two affordable homes will be built.
Meg Hillier
It is all very interesting to hear what the Government are planning nationally, but this debate is about housing in London. On the issue of the sale of high-value council properties, there are properties in my constituency that will have to be sold under the current Government proposals. The hon. Member for Torbay (Kevin Foster) has no council housing in his constituency, because it was transferred, so homes will be sold in Hackney to pay for people to buy their homes in Devon potentially, unless the Minister is able to commit now to ensuring that there is at least a ring-fencing of the money from the sale of council homes for right to buy, so that it stays within the M25.
Mr Jones
As the hon. Lady will know, we are working up the plan for higher-value social homes that will be sold. At the moment, it has not been made clear which properties will need to be sold, but certainly they will only be properties that are vacant; and just to reassure her, we are absolutely clear that for every house that is sold in London, at least two affordable homes will be built.