HC Deb 06 March 2002 vol 381 cc125-32WH 1.30 pm
Mr. Kerry Pollard (St. Albans)

I am delighted to have this opportunity to debate the important topic of key worker housing in my constituency. St. Albans has the lowest unemployment in the country. As a consequence we have a shortage of key workers and skilled workers. My definition of a key worker is a nurse, teacher, police officer and so on, but I accept that someone who is running a business will consider any employee to be a key worker as companies employ only the people that they need to keep the business running.

The special care baby unit at Hemel Hempstead general hospital was going to be closed down due to lack of staff. One of the prime reasons for not being able to recruit was the lack of affordable housing either to rent or buy. Housing in St. Albans is among the most expensive in the country and the area has one of the smallest rented sectors in the country. Indeed as the local Member of Parliament with a salary two and a half times the national average I could not afford to buy a modest three bed semi-detached house in the constituency. I was therefore pleased when the Government recognised that the provision of key worker housing was vital to many constituencies, particularly in eastern and south-eastern regions.

In the first bidding round for extra funds for key worker housing Hertfordshire did less well than our neighbours. The Tory county council complained vigorously about that. At the same time I pointed out to the Minister for Housing and Planning, Lord Falconer, that our need was greater than almost anywhere else. I was delighted therefore when Hertfordshire came out top in the second round. The Government acknowledged our great need.

It is not just the Government who have been keen supporters and providers of key worker housing. The investment bank Schroders have taken up the cause. A recent article in The Observer states: Have investment bankers at Schroders been smoking dope? What else could explain straight-laced money men investing £45 million in building homes for essential workers at below market rents? Schroders is making a nice return on its investment. In that instance everyone wins.

I have to point out the hypocrisy of Tory-controlled Hertfordshire county council which complained about the lower than average grant for key worker housing when at the same time it is selling off its own housing stock. Even when I wrote to challenge the leader of the county council about that, he wrote back that before any more houses were sold he would personally have to approve the sale. There was no admission of any inconsistency or thanks for bringing it to his attention or an undertaking that sales would now be stopped.

With the concentration on key worker housing, developers have quickly cottoned on to that and are now substituting key worker provision for general social housing provision. Their reasoning is that key workers are perceived as more preferable neighbours than those housed by registered social landlords. Being cynical, I suspect that developers prefer a police officer to an ex-prisoner being housed. That could add to the selling price of the homes on a development that has key worker as opposed to general social housing. St. Albans council has recognised that preference by developers and has conditioned a recent planning decision specifically prohibiting key worker and insisting on general social housing. That is the subject of an appeal by the developer with everybody awaiting the outcome with great interest.

Councils should include in their district plans a yearly target for key worker housing and an appropriate policy. Once the target has been planned for, councils can refuse further key worker units and insist on the provision of general social housing. Once planning permission has been refused, the planning inspectorate must support that decision if it is challenged by the developers—and there is no doubt that they will regularly challenge. If the planning inspectorate does not support it, it drives a coach and horses through all the local district council's policies and will not help with social, general or key worker housing provision. All participants understand what is possible and what is required.

Our public services are suffering as a result of the lack of affordable housing because they cannot recruit staff. One way of helping is to provide homes specifically for these workers—key worker housing. The Government have recognised the problem and allocated additional ring-fenced funds. All the extra money is for homes for sale, but we should also provide rented homes for key workers.

Finally, I would like to highlight an innovative key worker scheme in my constituency. An office block that stood empty for two years with no potential buyers—despite being actively marketed—has been secured by Try Homes with a view to demolition and building flats in its place. I was approached to facilitate this proposal and, after bringing together Try Homes and Hightown Praetorian housing association—one of the major local suppliers of registered social housing—a planning application was submitted. It included one and two-bedroom flats with shared amenity space and a small office for Try Homes. The site is close to the railway station, city centre and other amenities. It is also in a mainly residential area with a similar block of flats opposite.

The uniqueness of the scheme is that the developers have agreed to keep 40 per cent. of the homes available for key workers to rent. The housing association has put together a package that involves no public subsidy and allows the rents to be borne by an £18,000 annual income, making them affordable for teachers, police officers and all the other key workers outlined earlier. Overall, it amounts to 40 per cent. key worker provision, homes for rent, no public subsidy and affordability.

The scheme has received widespread support within St. Albans—from headteachers, the Bishop of St. Albans, health trusts and many others. St. Albans is at the cutting edge of housing provision and the scheme has national implications. However, local authority planners are not sure whether to recommend approval.

We need much more affordable social housing in St. Albans, as we currently house some families in bedand-breakfast accommodation. We also need key worker housing. The Government are helping with special provision for key workers. I have tried to show how active partnering can provide homes and that the Try Homes-Hightown Praetorian scheme is ground breaking. It will be to our council's credit if it approves it.

1.37 pm
The Parliamentary Under-Secretary of State for Transport, Local Government and the Regions (Ms Sally Keeble)

I congratulate my hon. Friend the Member for St. Albans (Mr. Pollard) on securing the debate on key worker housing in St. Albans. I am well aware of his extensive knowledge of, and interest in, housing issues in St. Albans and the south-east, and of his successful work in arranging annual conferences on the subject.

I should like to explain the Government's proposals for resolving St. Albans' housing problems, and the general programmes to help key workers and secure more affordable housing, including the planning system. I shall also comment on the tension between providing housing for key workers and increasing pressure on the same funds for general social housing and tackling homelessness. Such tensions are acute in London and the south-east.

I shall not comment on the current council planning application. My hon. Friend has made his case, but the Secretary of State may have an important role and I do not want to prejudice any decisions.

Schools, hospitals, the police and other public services are vital. In London and the south-east, public services operate in a competitive market and have to compete for skilled staff.

My hon. Friend is right to argue that the private sector also experiences problems with recruiting skilled staff. There are skill shortages in some parts of London and the south-east. However, I agree that we should take a narrower approach to key workers, partly because of the role of public services in underpinning the economy. For example, we must ensure that young people leave school with the right kind of skills for today's job market.

My hon. Friend outlined the difficulty and pressure experienced by key workers in finding affordable housing, which is well understood in London and the south-east. I pay tribute to the excellent results achieved by key workers in my hon. Friend's constituency because, despite their difficulties, teachers in St. Albans helped Hertfordshire to achieve GCSE results that are among the best in the country, and the police helped to ensure that the area has the lowest crime rate in the east of England.

Staffing difficulties in the special care baby unit in Hemel Hempstead general hospital were also mentioned by my hon. Friend. He takes a particular interest in such issues because he is a sponsor of the Royal College of Midwives. The West Hertfordshire Hospitals NHS trust acknowledges the lack of adequate accommodation for staff that has caused problems in attracting nurses to the hospital, although I understand that a post has not yet been refused specifically on those grounds. The hospital is working with English Partnerships to develop new accommodation for nurses, although it will not be ready until next year. I hope that it will help to meet some of the real pressures on nurses looking for accommodation in the St. Albans area.

In recognition of the difficulties faced by key workers, the Government published the Green Paper "Quality and choice: A decent home for all" in April 2000, which set out our policies on home ownership. It included existing schemes and proposals for a new initiative to help people into low-cost home ownership—the starter home initiative.

The aims of the initiative were to help key workers—especially health workers, teachers and police—to buy homes within a reasonable distance of work, thus promoting a culture of opportunity, choice and self-reliance, and giving people more of a stake in their neighbourhoods; to ensure that key workers could buy homes in areas where high demand and prices may otherwise price them out of communities to whom their services are vital; to support other housing related objectives that contribute to the regeneration or development of an area; and to promote a better mixture of housing tenures to achieve more sustainable mixed income communities.

One aspect of providing housing for key workers in London and the south-east is that housing policies must take cognisance of people's housing aspirations and not force them to live in homes that they do not want. We have identified that many key workers prefer home ownership to other types of housing, so the starter home initiative tries to meet those aspirations.

The Government made available £250 million in 2001–02 and 2003–04 in support of the scheme, which is already up and running. The bulk of that, some £230 million, was made available in the first round. It was allocated to 95 schemes in September 2001 to help 8,000 key workers buy homes within a reasonable travelling distance from their place of employment. The schemes included share ownership, equity and interest free loans primarily for the purchase of existing properties on the open market. New-build schemes were also provided to allow key workers to purchase using starter home initiative equity loans or through shared ownership.

In St. Albans, that meant that Aldwyck housing association was successful in obtaining funding based on a county-wide bid under the first round. It will make offers to key workers, including some in St. Albans, during the next few weeks. I shall ask my officials to ensure that my hon. Friend is kept informed about the allocations.

Additionally, Ridgehill housing association was successful in securing funding. It has worked with Hertfordshire constabulary and is providing police officers with three properties in St. Albans that are divided into smaller units. The units are for rent and will be ready in the next few months. My hon. Friend mentioned the need to provide homes for rent under the starter home initiative. Ridgehill is also providing grants to allow key workers to purchase their own homes. It is working with a police officer in St. Albans who will purchase a property with a grant. It is expected that more grants will be approved during the coming year.

In the wider picture, many of the successful bidders in the first round were registered social landlords. Some developer bids were successful and they will be implemented in conjunction with RSLs, who will administer and claim the grant. Other successful bidders included local authorities, an unregistered housing association and a charitable care and support organisation.

The second round of the starter home initiative involved the allocation of £20 million of the budget as equity loans of £10,000 each to help 2,000 key workers in high-cost areas outside London in which further assistance was required beyond that provided by the allocations that were made in September 2001. My hon. Friend is correct that that round addressed a wider area than the first round, which was heavily concentrated on London. There has been a welcome and positive response to the allocations.

Assistance under the second round of the starter home initiative will focus on people who are able to purchase a home with less assistance than that provided by the first round. I am pleased that bidding for the second round is well under way following guidance that was issued in 2002. As my hon. Friend said, Hertfordshire, including St. Albans, is targeted for assistance. Bids are due back on 16 March 2002, and we will be able to announce the successful schemes in May 2002.

I am aware of the disappointment in Hertfordshire that bids for the first round of starter home initiative funding were scaled back. Indeed, several Hertfordshire Members have written to me about that. Nationally, we received bids amounting to over £520 million. That substantially outweighed the available budget of £250 million, so all large bids had to be scaled back. However, the over-subscription of the scheme highlighted that it was popular and that people required such assistance.

We decided to allocate the bulk of the starter home initiative funding—£230 million—in the first round because it was considered important to get the schemes up and running. That was done by careful evaluation of the bids while taking account of a range of factors, such as affordability of housing to people on modest incomes, the proposed assistance to allow key workers to purchase properties, administration costs and whether additional financial contributions were provided by other sources.

However, in the first round, £7 million was allocated to help 267 key workers in Hertfordshire. The second round includes funding to help a further 127 key workers throughout Hertfordshire—70 nurses and other essential health staff and 57 teachers—with equity loans of £10,000 each. If the bids for the second round of the starter home initiative are forthcoming and gain approval, we will have given £8.27 million of support to help a total of 394 key workers throughout Hertfordshire. Of course, that includes people in St. Albans.

The use of the shared ownership scheme has been especially important because it combines the aspirations that key workers and others have for home ownership with the advantages of low-cost ownership. That has been particularly beneficial for people who might have the prospect of a higher salary further down the line, but who start out on modest incomes.

My hon. Friend has pointed out the kinds of prices and financial pressures that people can face when they are starting out and have to pay for high-cost housing. However, I have visited shared ownership schemes where people who are on modest incomes are able to look at buying their own home—albeit, to start with, they will have a smaller share of the equity. I have visited homes occupied by, for example, a fireman and a teacher, or a nurse and a teacher, who have been able to move out of rented accommodation. I am sure that my hon. Friend knows more than I do about the costs of private sector rented accommodation in the area that he represents, but I know of some people who have been able to move out of expensive private sector rented accommodation in a high-demand, high-value area, and into a shared ownership home, where they find that their net outgoings on housing have considerably decreased, and that they have secured a home for themselves.

Other initiatives are being taken to build on shared ownership—and similar schemes—to ensure that we can alleviate some of the current pressures on key workers in high-demand, high-value areas of London and the south-east. The starter home initiative complements other measures that we are taking. We are determined to help key workers find affordable housing. There has been criticism that the starter home initiative is too small. It cannot hope to provide accommodation for all the key workers who want it, but it has succeeded in doing some pump priming of a wide variety of different schemes that will maximise the amount of affordable housing in London and the south-east.

The Government's determination to meet some of the real pressures on key workers in London and the southeast has been highlighted by the establishment in my Department of an affordable housing unit, with a remit to put into place, by the end of 2002, measures that will significantly increase the delivery of affordable housing within three years. Those measures will include bringing empty properties back into use, and the initiatives that my noble Friend Lord Falconer, the Minister for Housing and Planning, has recently announced with regard to looking at ways of using air space by building above low-rise properties to ensure that we provide more housing units.

A great deal of discussion is also taking place about the use of the planning system to ensure that we procure more affordable housing in any housing development—there is even discussion about requiring that from commercial and other types of development. In London, there has been a high-profile discussion about whether we should be looking for 50 per cent. affordable housing. Under the current planning system, St. Albans' local plan requires housing developments to contain 25 per cent. affordable housing. If those kinds of policies are rigorously enforced, that will help to ease some to the pressures on key workers.

We are consulting on radical proposals for more effective delivery of affordable housing through the planning system. The new tariff-based approach that we are proposing as part of the consultations around the planning Green Paper, and associated documents, will mark a radical change from the current planning system. It will ensure that planning is more responsive to the community's affordable housing needs. In many areas we expect the provision of affordable housing—including key-worker housing, where that is a priority need—to be the main beneficiary of this approach.

Mr. Pollard

Does my hon. Friend agree that key-worker housing should be additional to the 25 per cent. requirement, rather than form part of it? In my constituency in particular, and throughout the east and south-east, there is a great need for key-worker housing. However, we also have an overwhelming need for affordable social housing. I alluded in my brief speech to families living in bed-and-breakfast accommodation. That has happened in the past two years, but it did not happen in the 10 years previous to that, and it causes tension. Developers have cottoned on to that need, and are trying to substitute key-worker housing for general affordable housing. We must address that.

Ms Keeble

My hon. Friend has raised a number of issues, and I shall certainly deal with them. There is no definition of affordable housing, but we do not necessarily mean it to be social housing for rent. It could be affordable housing to buy. On requiring key worker housing from the planning system, I refer the hon. Gentleman to the point that I made at the beginning of my speech. We are considering mixed-tenure developments in order to ensure that we do not have monolithic single-tenure estates like those built in the past, which we are now knocking down.

It is essential that local authorities have a clear understanding of housing needs in their locality. When considering economic growth, provision needs to be made for any consequential growth in the social infrastructure, such as demand for school places and health services. That provision must include affordable housing for key staff. Authorities need to be innovative in how they deliver the right mix of accommodation, as they will often provide private developers to procure it and to consider different types of tenures and financial arrangements within a housing development.

Many innovative approaches are being developed locally to St. Albans. For example, in Stevenage surplus business premises are being brought back into use as flats for letting, and Watford and Three Rivers share funding and letting arrangements for new developments. Authorities need to consider whether they should fund shared ownership schemes if they are needed. They might consider the type of developments being made elsewhere. Private sector developers will engage in quite sophisticated partnership arrangements, both with housing associations and with local authorities, to make sure that they have a range of different types of tenures and prices within one housing development. That would mean that residents did not have the social stigma of being a council tenant or a housing association tenant as opposed to a private owner-occupier.

Spending on affordable housing has increased. Funding for the affordable housing programme delivered by the Housing Corporation is set to increase to more than £1.2 billion by 2003–04. That is almost double the 2000–01 level. Key workers will also benefit from our empty homes strategy and our planning agreements for the inclusion of affordable housing in new developments.

In conclusion, affordable housing provided through development is just one way of maximising the opportunities that lie around us. Many of the initiatives that I have mentioned will result in more and better housing in incremental amounts. Together, those initiatives will make a real difference to key workers in St. Albans and other areas with the same difficulty. I am pleased that my hon. Friend highlighted the fact that it is also important to make sure that there is adequate provision of subsidised social housing for people who need to rent it. Often in discussions about London and the south-east there is tension between the needs of key workers and the need for general social housing. Quite often, the needs of the second group are ignored.

There are no simple solutions to the problem. We need to work with our partners in the private sector, in housing associations and in local authorities to make sure that we get the right type of housing, the right mix of tenures and the right prices. We and our partners need to make the best use of land and investment to create more homes and widen the range of housing on offer. I hope that I have set out clearly some of the Government's approaches, and that I have reassured the hon. Gentleman that the Government are aware of the problems of key workers and are taking action that will specifically benefit his constituents.

Question put and agreed to.

Adjourned accordingly at one minute to Two o'clock.