HC Deb 09 February 2000 vol 344 cc105-12WH 1.29 pm
Mr. Andrew George (St. Ives)

I am pleased to initiate this important debate. Since the House resumed in October, I have been requesting a debate on second homes. The Minister for the Environment made a statement on this matter to a fringe meeting at the Labour party conference. No doubt, when he replies to the debate, the Under-Secretary will address himself to that statement and the Prime Minister's response to it.

I welcome the new hon. Member for Ceredigion (Mr. Thomas). "Agas dynargh", as we say in Cornwall. Perhaps there is a translation of that into Welsh—we may find that out later.

It is my experience that it is impossible to raise the issue of second homes without the debate becoming deeply emotional. I want to emphasise that, in calling for this short debate, I am not, unlike some others, engaging in the politics of envy, seeking to wreak revenge or fanning the flames of an absurd class war across rural Britain. That is not my purpose. I simply want to probe Government thinking on this important aspect of policy and to make it clear that we are talking about second residences that are entitled to a 50 per cent. discount in council tax, not about holiday homes on which business rates are payable.

I emphasise that my reasons for raising this issue are not personal. There are many second homes in Cornwall and on the Isles of Scilly, and we are pleased for their owners to come to our communities. Many of them are close friends of mine, so I do not intend my remarks to be personal. Those people are a bonus for the community. Although they cannot be there supporting local services all year round, they make a limited contribution and take pleasure in investing in the local economy. Of course, for some people personal wealth and privilege go hand in hand with arrogance, pomposity and a patronising attitude, but such people constitute a small minority and do much to undermine the good name of the majority, whom I have found to be pleasant and sensitive to local people and to have a genuine interest in the local community.

I seek the Minister's recognition of the social and economic costs of high second home ownership in areas of high unmet local housing need where local services—shops, schools and businesses—become unviable. I am not suggesting that second home owners should be inappropriately penalised, merely that they should not be subsidised as they are at present.

Before concentrating on policy points in detail, it is worth dealing with some of the myths that still surround the often highly charged debates on this subject. Those who defend the purchasers of second homes often maintain that local people, by selling their properties at extortionate prices, have cruelly and cynically exploited unwary and innocent second home purchasers, whose sole interest was to protect vernacular architecture and the fabric of rural areas. That has been the serious contention of people defending such sales, but it ignores the reality of how the housing market works. If a local person sells his house, he must buy another, equivalent house, so he must sell at the market rate. Local people have not sold their birthright. Where will they live? That contention is clearly not valid.

The other contention is that it is not possible to apply policy in this area because it is impossible to define a second home. Those who follow this debate found it remarkable that, when it became possible to obtain a 50 per cent. discount on council tax on second homes, amazingly and miraculously thousands of people were, overnight, suddenly able to define their properties as second homes. We all noted that with great interest.

I accept that in some areas—the north and the islands of Scotland and other places—there is little or no unmet housing need, and second home ownership protects properties from falling down. Such injection of capital in those rural areas may be valuable.

Mr. David Drew (Stroud)

The hon. Gentleman is making a good case. The problem with second home owners taking on a run-down property is that they often knock two cottages into one. They take those properties out of the housing market for ever and a day for people who may, with some support, be able to buy back into the market. Does he agree with that?

Mr. George

I welcome that intervention. The hon. Gentleman is assiduous in this regard. Yes, any property loss—whether it be two properties knocked into one or any property in a rural community where there is a high unmet local housing need for affordable housing—adds to and fuels the house prices in that area, so that they are above that which the local community can afford. That is the issue that we are dealing with.

Cornwall, with a population of 500,000, has about 200,000 properties. A survey in which I have been involved professionally in the past and information from other sources suggest that there are about 20,000 people with an unmet housing need, half of whom—the figure varies from time to time—are on local authority waiting lists. Therefore, the figure is about 10,000, sometimes more and sometimes less. There are about 20,000 second and holiday homes, including those in the business sector, half of which are second residences for the purpose of recreation. It is interesting to relate that housing need to the number of properties that are taken out of local availability in Cornwall.

Such homes are concentrated in some areas more than others. They are in largely coastal areas, estuaries and other areas where there is a lot of sailing, such as Roseland and St. Minver. I am pleased to see that my hon. Friend the Member for North Cornwall (Mr. Tyler) is present. Certain identifiable locations contain higher numbers of second homes and are concomitant with higher house prices. In many communities—some in my constituency—30 or 40 per cent. of the housing stock is under second home ownership.

The new earnings survey produced annually by the Government shows that Cornwall has been pretty well on the bottom since records began. It has the lowest earnings and the lowest gross domestic product of any comparable area. We have one of the biggest mismatches of house prices and earnings anywhere in the country, and that is of great concern.

Mr. Paul Tyler (North Cornwall)

Does my hon. Friend agree that the most significant aspect of this matter is that it is an accumulation of many local problems. The last thing we want is for someone from Whitehall to lay down a strategy for dealing with this situation. We want local communities to have the freedom to say when enough is enough—whether in the Lake district, the west of Wales or our own end of Cornwall. Those who know best about saturation and the economic and social problems are the local people.

Mr. George

I am grateful to my hon. Friend for that intervention. It helps me to make a point that I shall refer to later. There is no doubt that the implementation of new policy in this area would have to be applied variably across the country. Local authorities should be able to interpret the policy as it applies to their own areas, and use their power flexibly in one area as opposed to another.

Mr. Elfyn Llwyd (Meirionnydd Nant Conwy)

I first congratulate the hon. Gentleman on securing time for this very important debate and thank him for allowing me to intervene very briefly. He may know that two years ago I introduced a ten-minute Bill to deal with this problem. My suggestion then was that local authorities could use the classes order: if a property was a part-time property, it would have to have planning permission, in which case there would be the flexibility in each local area to deal with the problem.

Mr. George

Once again, I am grateful for a very helpful and positive intervention. What the hon. Gentleman says falls entirely within Liberal Democrat party policy. It has been our policy for a very long time. I entirely support and endorse the purpose of the hon. Gentleman's ten-minute Bill.

In addition to covering mainland west Cornwall, my constituency includes the Isles of Scilly where the problems are much more highly focused. The Isles of Scilly consists of five inhabited islands and many uninhabited islands, with about 2,000 people and 1,200 properties. About 30 per cent. of those properties are second homes. As in Cornwall, there are very low wages on the Isles of Scilly, but it also has even higher house prices. The smallest house on the islands costs £200,000, and it costs £160,000 to buy a council house there. On the off islands, one might obtain an assignable lease for a small property starting at about £300,000. Clearly, anyone on local wages cannot even look at that kind of property. They have to go to the rented sector, where they can find it. Low-earning islanders do not have the option of commuting to work from a low house price area somewhere on the mainland. That is physically not possible.

There are four areas of policy concern. I shall deal with the first two briefly, because they do not form part of the Minister's brief. The first is capital gains tax, under which cohabiting couples can avoid paying the tax if they register their two homes under different names. Secondly, a matter that concerns many hon. Members is the fact that during national elections second home owners can choose where they can most effectively vote. If one home is in a safe seat and another in a marginal, where, if they are politically aware, will they most effectively place their vote? They can have a disproportionate influence on the way in which elections are decided, and, as there are thousands of second home owners, it is a matter of concern.

I hope that the Minister will respond on the third matter, which concerns the 50 per cent. rebate on council tax referred to earlier. Even the much hated and socially divisive poll tax did not dare do that; people simply paid the poll tax twice. Then, in the haste to introduce the council tax, the clause giving the 50 per cent. discount was introduced. It was justified by the previous Government on the basis that second home owners did not use the more expensive personal services, such as education and social services. But the council tax is a tax on property, at a rate which varies according to the value of the house. It does not depend on which services the council tax payer uses. Many local people who do not use the most expensive service, which is education, are not entitled to a discount or a rebate.

The Government response so far has been disappointing. I have been pushing Ministers. The Under-Secretary wrote to me on 15 November saying: council tax is generally working well as a local tax and … there are no fundamental problems which require our urgent attention. Similarly, the Economic Secretary to the Treasury wrote to the secretary of the south-west branch of the Local Government Association on 29 September 1999, saying that the Government's review concluded that the council tax had no fundamental problems and was widely accepted as working well.

With regard to proposed amendments, the Economic Secretary to the Treasury said in the same letter, in reply to proposals that the discount should be removed: As far as the effect on local revenue is concerned, you will know that the proportion of local authority second homes attracting the 50% relief is reflected in the calculation of Revenue Support Grant. In other words, there are no financial benefits for local authorities if they wish to vary the contribution that they are seeking from second home owners. However, even if that were true in all circumstances—this assumes that all local authorities stick to their standard spending assessments—what about the interests of the taxpayer at the end of the day? If a local council taxpayer does not subsidise the second home owner, the effect, to judge by that reply from the Economic Secretary to the Treasury, is that the national taxpayer does. Therefore, the Government should take a second look at this matter.

There have been proposals from my Liberal Democrat colleagues, from Liberal Democrat councils and others that local authorities should, as my hon. Friend the Member for North Cornwall suggested, be given the powers to vary the rate of council tax in the affected areas. Perhaps that additional income should be ring-fenced to be directed towards affordable homes for local people, or to contribute towards local services that would otherwise not receive the same kind of support because of the existence of second homes in those areas.

The Government need to review that matter again. The rather complacent response that I have received from Ministers so far with regard to their review, saying that the council tax system is working very well in this area of second home ownership, is not accepted on the ground by local authorities that have to work the system.

The fourth matter is one of planning control. Proposals for change in the use class order have been made. On 1 October, the Secretary of State for the Environment, Transport and the Regions proposed the banning of second homes in certain areas. Either way, there would need to be a definition and some kind of use class order—some kind of regulation—to implement such a proposal.

I draw attention to something that the Minister will see in his own records, as I told him before the debate. The Isles of Scilly has pointed out that section 319 of the Town and Country Planning Act 1990 allows the Secretary of State to make orders modifying the Act's application to the Isles of Scilly. The Town and Country Planning (Isles of Scilly) Order 1992 is an example of that—it relates to local authority housing.

Without introducing primary legislation, the Minister could introduce an order giving the Isles of Scilly the power to have a use class order for second homes, use that as an initial experiment and then relate it to other areas. I hope that the Minister will take that on board. The councillors from the Isles of Scilly who have requested a response have not so far received a satisfactory answer.

I shall conclude now because I want the Minister to have ample time to respond to the points raised. I am interested primarily in equity and social inclusion, not in penalising second home owners. I am interested in probing the Government's thinking on this matter. I hope that the Minister will accept that my questions and comments are intended to be constructive. Judging from other comments made by the Government, I believe that this is a matter of concern for some members of the Government. I am asking for simple recognition of the fact that one person's apparent freedom may have both social and economic costs which are worthy of consideration, and that these costs should be reflected in policy, and not overlooked. I look forward to the Minister's reply.

1.49 pm
The Parliamentary Under-Secretary of State for the Environment, Transport and the Regions (Mr. Chris Mullin)

The hon. Member for St. Ives (Mr. George) has raised an important issue and has presented his case very reasonably and forcefully. I shall do my best in the 11 minutes he has left to me to address the points that he raised, although we may have to follow one or two of them up by correspondence.

Although the quality of life is in many respects higher in the countryside than in the city, shortages of affordable housing in some areas are a matter of real concern. I lived in the west country 30 years ago, and even then the issue of second homes was a serious problem in some of the more scenic areas. In many rural areas, particularly those like the south-west, demand for housing is high, both from local people and from those who want to retire to pleasant surroundings or buy a second home. As the hon. Gentleman says, people on low incomes are easily squeezed out.

On a national level, the number of rural second homes is relatively small, amounting to less than 1 per cent. of housing stock. According to the hon. Gentleman, the proportion in popular tourist areas is as high as 30 or 40 per cent. I was informed that it was 20 per cent., but the hon. Gentleman probably has more detailed knowledge of the position.

As we are heard today, such concentrations of second homes are of real concern to communities that are rightly keen to ensure that there is enough affordable housing locally. The Government recognise the important contribution that housing makes to balanced, sustainable rural communities and the need for affordable housing, especially for those on low wages and for young people.

The area represented by the hon. Gentleman is very beautiful, but it is also an area of contrasts. The available employment is predominantly seasonal and low paid, and unemployment, especially in winter, is well above the United Kingdom average. When I was a reporter on the Sunday Independent in the west country, I was sent to St. Ives to write a feature on high unemployment outside the summer season, and I know that such unemployment makes it difficult for many local people to afford housing.

Local authorities, however, can and already do act to alleviate the problem. Penwith district council is currently advising owners of empty properties on how to return them to use. The council is now a member of the West Cornwall partnership with Carrick and Kerrier authorities, which are commissioning housing association projects jointly with the Housing Corporation. That should create some more affordable housing. Penwith has received a 50 per cent. increase in its total allocation from the housing investment programme for the current financial year, and I understand that it proposes to increase its financial support for registered social landlords during the year.

Cornwall and the Isles of Scilly will receive up to £314 million from European structural funds over the next seven years to increase economic prosperity. Although the funds are not targeted directly at housing, they have the potential to support housing initiatives indirectly. I acknowledge that the Government also have a part to play. We have introduced a number of initiatives to help people to buy their own homes through low-cost home ownership schemes; we have also taken steps to improve the quality and increase the supply of affordable rented housing.

The Government have a good record on social housing. We have increased investment significantly: local authorities will receive an additional £4.4 billion for housing during the life of the current Parliament, which will enable many of them to begin to tackle the backlog of renovation. They can use some of the money to provide new social housing in order to meet local priorities. Of the extra resources, roughly £20 million will go to Cornwall, representing an increase of about two thirds.

Local authority housing expenditure programmes will be based on the priorities identified in their housing strategies, which should be based on robust assessments of local need and must take proper account of the needs of rural communities. It is vital for authorities to consult local interests such as parish councils in developing rural housing strategies. The Housing Corporation and the Countryside Agency are jointly funding a project to develop a good practice guide for local authority rural strategies.

The Housing Corporation continues to have a significant role in the delivery of new housing. It will deliver about 40,000 new social lettings in England during the present year, some in Cornwall. To ensure that sufficient priority is given to the needs of small communities, we have set a rural housing target each year. The current target is that 3.4 per cent. of new homes provided by the Housing Corporation should be in villages with populations of fewer than 3,000. Since 1989, when the programme began, it has provided an additional 16,000 homes in rural areas. The Housing Corporation has also established a rural housing advisory group, which is examining current approaches to establish whether they can be improved.

The planning system also has a part to play. Where there is evidence of a need for affordable housing, both low-cost market and subsidised, local planning authorities can require an element of such housing to be included as part of a wider residential development on suitable sites. The rural exceptions policy enables local planning authorities in rural areas to grant planning permission for land that would not otherwise be released for housing. A condition is that "exceptions housing" must be occupied only by people on low incomes.

Both the hon. Gentleman and the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd) suggested that the spread of second homes could be controlled by the creation of a separate category of land use in the use classes order. I have been given a lengthy explanation of why that might not be possible for legal reasons, but time does not permit me to read it all out. I shall merely say that I should be glad to follow up the point in correspondence.

The hon. Member for St. Ives said that my Department had received a formal request from the Isles of Scilly for the Secretary of State to introduce secondary legislation requiring planning permission for housing that is to be used other than as a main residence. The wider issue of second homes has been raised by many people during consultation on the rural White Paper, and the concerns of the Isles of Scilly are likely to be considered in that context.

The hon. Gentleman made a forceful case for changes in council tax. He pointed out that second home owners had no difficulty in defining themselves once it was known that doing so would bring some financial advantage. There may well be a case for doing away with the discount for second home owners, but that might not solve the problem that the hon. Gentleman seeks to solve. Given that second home owners are by definition more prosperous than others, most can easily afford to pay the difference. I accept that that does not deal with the question of whether it should be done, but it is relevant to the problem that the hon. Gentleman has raised.

The hon. Gentleman said that he had received a rather complacent response from the Government, and, indeed, I have here a rather complacent response, which I will not read out. I merely say that the issue was reviewed about a year ago, and at the time there were no sufficiently cogent reasons for a change. I am, however, willing to follow up the point in my Department. Perhaps we can discuss it later.

I entirely accept the point raised by the hon. Gentleman. I am well aware that it is a serious issue in communities such as his. I regret to say that there are probably no easy answers: some problems can be solved, but others are more complicated. I hope that I have at least demonstrated, and that the hon. Gentleman will acknowledge, that action is being taken to address the problem of low-cost housing in his constituency and others, but I recognise that more needs to be done.

Mr. Andrew George

Will the Minister give way?

Mr. Mullin

I think that you are about to stop me, Mr. Jones, but the hon. Gentleman can try his luck.

Mr. George

May I return to this issue of the Isles of Scilly? The Minister says that the Government are reviewing the possibility of introducing secondary legislation. Are they considering a planning rather than a council tax regulation, and will they write to the council shortly?

Mr. Mullin

We shall be responding to the council, and, as I have said, the issue is likely to be reviewed in relation to the rural White Paper, which will have to address the whole issue. We have no plans to do what the Isles of Scilly wants in the immediate future, but I realise that the problem there is serious—perhaps more serious than the problem in any other part of the country.

It being Two o'clock, the motion for the adjournment of the sitting lapsed, without Question put.