HC Deb 09 September 2003 vol 410 cc61-8WH

4 pm

Jim Knight (South Dorset)

I am pleased to have secured today's debate. Affordable housing is the biggest issue for many of my constituents in South Dorset and for many people throughout the south-west.

If, like me, Mr. Deputy Speaker, you are lucky enough to have a decent job—I see that you do—and own your own home, albeit with a large mortgage, as I have, you only observe the problem of affordable housing. You may even benefit from it. In the past two years, the value of my property in Weymouth has increased by 50 per cent. That is great for those of us who own our own homes, but what about the rest? Dorset county council recently commissioned MORI to carry out a residents' survey. It found that 30 per cent. of people believed that the lack of affordable housing was the greatest single issue facing Dorset. It also found that almost half of Dorset families had a household income of less than £15,000 a year.

Some 70 per cent. of householders in Weymouth and Portland cannot afford to buy their own home. How can we sustain our communities if our young families cannot live in them? Last week, I carried out my own survey of residents in the village of Studland in my constituency. Affordable housing was the most important issue for 68 per cent. of them. We spoke to Charles Orchard, a 24-year-old who is still living at home with his parents because he cannot find affordable alternative accommodation. People such as Charles inevitably migrate to towns with cheaper housing, but sadly not for better pay. The average wages in Dorset are the same as those in county Durham. Our tourism economy does not pay well, nor does the care sector or agriculture. The high levels of seasonal employment mean that our unemployment statistics are misleading. Unemployment is high in the winter months when, ironically, the housing supply problem is eased slightly as some holiday lets and caravans become available.

Our low-wage economy contrasts completely with the housing market. We are very lucky in that we live in a beautiful environment. Our coast has world heritage status. All that is crucial to our tourist economy and for growing the seaside trade to a higher value. By in creasing the length of the tourist season, we are encouraging more leisure tourism including walking, sailing and diving. However, that precious environment is also driving up the price of houses. The south-west is a very popular place to retire to. I referred to the £15,000 household income, which is accounted to some extent by the larger than average number of retired householders who have relatively low incomes but relatively low outgoings.

Not all pensioners are badly off. It is true that the falls in the stock market have hit most pensioners hard as private pensions have taken a serious blow. Low interest rates mean low income from savings, and inflation and council tax have hit those on fixed incomes very hard. Nevertheless, the relatively high spending power of those retiring to Dorset has combined with those buying holiday homes to create a high demand for our lovely houses in our lovely villages.

Naturally, we want to protect our environment. We have not wanted to build more houses to meet the demand, and prices have rocketed as a consequence. In turn, that means that land values for any development have soared. The planning system does not differentiate between land for executive development, residential development and affordable housing development. That lack of distinction becomes a major block in increasing the supply of affordable housing.

Inflation in the private sector then coincides with problems in the supply of social housing. The late 80s and 90s saw the sell-off of council houses under the right to buy, but that was not accompanied by any significant investment in new build. When I visited Church Knowle recently, the chairman of the parish council told me that only three out of 150 houses in the village are owned by social landlords. As we drove around, he pointed out all the other houses that used to be council houses until they were sold. They are lovely houses at lovely prices.

The same story is told throughout my constituency. Today, housing associations produce, at most, only a third of the new homes that the Government have asked them to produce to meet those inevitable regional targets. In my opinion, the proposal from the Tories, who introduced the right to buy for council tenants and who are, sadly, not here to listen to the debate—

Ms Candy Atherton (Falmouth and Camborne)

Nor are the Liberals.

Jim Knight

Nor are the Liberals, for that matter.

The Tories want to extend the same right to buy to housing association tenants, which would only worsen the situation.

The vision must be that people in social housing and low-cost rented housing should have quality and choice. One of the worst things about the housing cases that I deal with in my constituency is that I know that if I can help influence the council to get one individual housed, it is at the expense of the next deserving case. I know that when a young family threatened with eviction come to see me, they are faced with the prospect of bed and breakfast. That is expensive and normally wholly inappropriate, but the council has little choice. Furthermore, once those people are top of the housing list, they must take whatever they are offered, regardless of schooling, work, transport links or the condition of the property. They have no choice, and once they have moved in, the possibility of transfer is slim. If neighbours moved in next to me and I could not get on with them, I might be able to buy somewhere else and move away from the problem. I have a choice; by and large, social housing tenants do not.

A dad in Worth Matravers—another village near Swanage—came to see me about school transport for his daughter to Swanage middle school. He is on working tax credit and his income is therefore marginally too high for the family to qualify for free transport to school. They live just too close to get in on grounds of distance, so they have to walk all the way to and from school, even during winter, for two miles on a perilous, unlit road with no pavement. Most of us would consider moving to Swanage if we could not drive; my constituent does not have that choice as he is a social housing tenant.

We are a long way from delivering the vision of choice and quality in housing. For now, we just need to try to meet the housing need that we perceive in the south- west. I was part of a delegation of south-west Labour MPs who had a meeting with my hon. Friend the Minister on this subject in July. He told us that our region has had a 30 per cent. increase in funding in this financial year and assured us that the recent Rowntree report that highlighted the problem for the south-west, and Purbeck in my constituency in particular, was forcing the Government to reconsider their priorities and the south-west in particular.

The sustainable communities plan, which was published in February 2003, set out the Government's vision for housing and the level of public financing for the development of new and refurbished affordable social housing during the next three years. Some £22 billion has been earmarked, but most of it is going to London and the south-east. My hon. Friend assured us that he would look at the situation again in the light of the Rowntree report. As he knows, I will be going back in a fortnight, having secured a second meeting, for him to meet representatives from the Dorset chief housing officers group and discuss Dorset's particular problems. I am grateful to him for his concern.

Mr. David Drew (Stroud)

My hon. Friend took part in the debate last year on affordable housing, on which the rural group of Labour MPs are publishing a paper tomorrow; that was a quick plug. From talking to my rural housing providers, I know that one issue that has gone down particularly badly recently is the proposal, which the Government are consulting on, to offer grants to developers with regard to social and affordable housing provision. Will he comment on the overwhelming view of the affordable and social housing industry that we should not offer any special grant assistance to developers?

Jim Knight

I was speaking earlier to my hon. Friend the Member for Forest of Dean (Diana Organ), who unfortunately had to go to a Select Committee. Had she been able to come here, she would have made a similar point, as well as commenting on the growth of housing association properties that she has seen in the Forest of Dean in the past six years.

The Government have also legislated to end the 50 per cent. council tax discount for second home owners. There are many second homes in my area, and that significant change was welcomed by my constituents. Councils will soon be able to charge 90 per cent. of the full rate. I hope that that will achieve two things; check the boom in holiday home ownership, which has done so much to inflate house prices, and release money for investment in affordable housing and tackling rural deprivation.

I also pay tribute to the Government's work on planning and how planning can assist in tackling the problem. Increasing the amount of housing development on brownfield sites is important in protecting the countryside. Increasing the proportion of affordable housing within developments is also making a difference, but there is a long way to go. That is why I welcome the consultation by the Office of the Deputy Prime Minister on changes to planning policy guidance 3, entitled "Influencing the size, type and affordability of housing", which recommends allowing planning authorities to designate land in rural areas specifically for affordable housing within their local plans.

However, why stop at villages? Why not include market towns with populations of more than 3,000 and designated development boundaries? Rural towns have few brownfield sites and relatively low land values, so that where there is contamination or other extra development costs it is difficult to have a high proportion of affordable housing without substantial subsidy. However, policy directs those in housing need to those towns. People migrate from rural areas to rural towns, which adds to the housing need of those towns' populations. Such towns have suffered a great loss o previously affordable housing stock through the right to buy. It seems logical to allow planning authorities to designate land for development for affordable housing in those towns, as well as in villages.

In my constituency, sustaining the villages requires developments of one or two dozen affordable homes but that, collectively, will not meet the housing needs of the district, which is generated proportionately in the market towns themselves. However, planning authorities cannot currently generate the capacity to meet that demand.

I also ask the Office of the Deputy Prime Minister to look again at a tariff system on all new homes or other commercial development, as suggested in the planning Green Paper. That would counter the evasion by private developers of the thresholds that require them to build affordable homes. A tariff system would generate money to invest locally in varied schemes to tackle that problem. More investment is needed, so I ask the Government to consider the needs of Dorset and the south-west region in the light of the Joseph Rowntree report "Can work—can't buy" that was published in May and to which I referred earlier. I also press local authorities to play their part.

Ms Atherton

My hon. Friend is making a powerful case about the problems that we face in the south-west. Would he care to comment on the situation of the Liberal Democrat Carrick council in my constituency, which last year failed to provide one affordable house in the district?

Jim Knight

I am not familiar with the details of Carrick, but if no affordable property is being built, the administration at that council should look carefully at the proceeds that it will get from being able to charge second home owners extra council tax, so that there is a resource to use.

In the survey that we carried out in Studland, 72 per cent. of residents wanted the extra money generated by increasing council tax on second home owners to be spent exclusively on affordable housing, not cutting council tax bills. No doubt local councils will call on central Government to increase their funding for housing in the region, but they will also have the opportunity, like Carrick, to put their money where their mouths are.

There are four other areas on which I would like the Department to reflect. The first issue is empty homes. I am told that there are 60,000 in the south-west alone. No doubt if we can bring those into use, it will make a substantial difference. I should be interested to hear from the Minister how the Office of the Deputy Prime Minister is working with councils to release those homes for affordable housing.

Secondly, I am interested in whether there is more that the Treasury can do. I gather that in the United States there is a tax incentive for property owners to rent out their homes. Given the attractiveness of property as an investment, we should consider whether capital gains tax could be waived or discounted if properties were offered to registered social landlords to manage as homes to let to those in housing need. Alternatively, the Treasury could consider a premium rate of stamp duty on sales of homes where the purchaser will not be using the property as their main home. The proceeds of that could then be reinvested in housing and we could offer some disincentive to the growth of second home ownership in those areas where it is particularly strong.

Thirdly, I ask the Government to explore new forms of shared ownership. The Minister will be interested to know that in Studland a 68 per cent. share in a shared ownership property was recently available. The cost of that share was £124,440, which is no longer affordable; great for the seller, but completely hopeless for the future. If the original conveyancing on that shared ownership property broke the link with the market prices, we could keep those properties affordable. Their resale could be restricted not only to local people, but perhaps to the retail prices index or the rebuilding cost plus any land inflation that had taken place in the meantime.

In summary, I ask the Government to acknowledge and prioritise the problem that we face throughout the south-west, to reflect that priority in a continued increase in resource allocations to the region and to be more radical in changing the planning policy, although, as I said, I welcome the moves that they have made. I also ask them to examine the potential for tax incentives and the conditions in property conveyancing to protect local people in areas where affordable housing is needed, so that we can build homes for people throughout the south-west.

4.15 pm
The Minister for Housing and Planning (Keith Hill)

I begin by congratulating my hon. Friend the Member for South Dorset (Jim Knight) on securing the debate and on bringing this important issue to the attention of the House in a lively and thoughtful speech, which contained many ideas that will bear further consideration.

I am pleased to see that my hon. Friends the Members for Falmouth and Camborne (Ms Atherton), for Plymouth, Sutton (Linda Gilroy) and for Stroud (Mr. Drew) are present, giving tangible expression to their shared concern about these matters.

My hon. Friend the Member for South Dorset is right that the south-west is grappling with rapid house price inflation, which has occurred in a relatively short space of time in many places in the region. The situation is exacerbated by the fact that the south-west suffers the double impact of significantly higher than average house prices, and lower than average incomes. My hon. Friend has graphically described the consequences of that state of affairs for his constituents.

Dorset is a very attractive county, and many people are attracted by its quality of life. It has beautiful countryside, pretty towns and villages, and a breathtaking coastline of international importance that has been recognised as a world heritage site. That highly attractive environment means that it is not surprising that "in-migration" to Dorset is among the highest in the country. As a result, Dorset has experienced the second highest population growth among the English counties, and that trend is set to continue.

An increasing population adds pressures in several different ways; for example, on health and other local services. However, perhaps the most obvious consequence is pressure on housing, particularly when households with equity relocate to a county. We can see the impact of that in a variety of ways. House prices in Dorset have risen by more than 35 per cent. in two years. The average house price in the county is £193,795, which is well above the national average, and only slightly lower than the average for the south-east of England. Across the south-west as a whole, the average house price is £164,036, which is the highest nationwide, outside London and the south-east.

Another pressure on the local housing market, to which my hon. Friend the Member for South Dorset alluded, is second homes. The percentage of dwellings in Dorset that are either second homes or holiday homes is more than four times the national average; in Purbeck and west Dorset they represent 5 per cent. of the housing stock.

The factors at play in Dorset are seen elsewhere in the south-west. The rapid growth in house prices is a product of increasing population and a generally successful economy in an attractive region. Overall, the south-west was England's fastest growing region in terms of population from 1981 to 2001. The rate of increase was more than double the national average. Population growth has been mostly in rural areas, and among people over 45 years of age. However, the overall picture obscures some drastic differences across the region.

Gross domestic product per capita in Swindon is just over £18,000, whereas in Cornwall and the Isles of Scilly it is just over £8,000. Average house prices in the Cotswold district are nearly 2.5 times those in Plymouth. In some local government wards in the south-west, mean house prices are eight times the level of mean incomes. The unfortunate flip side of that state of affairs is that the regional homelessness figures showed an increase of 23 per cent. between 1990 and 2000. In 2001–02, the south-west had the third highest proportion of homeless people in England—5.3 per thousand.

In the light of those circumstances, I want to reassure the House that the Government are fully aware of the challenges and difficulties that are faced by many places throughout the south-west, which is a region of huge diversity in its economy and environment. The Government share my hon. Friend's concern about the housing pressures facing Dorset and the south-west in general, and I shall outline some of the measures that we are taking in response.

The Government are spending more money on affordable housing. My hon. Friend the Member for South Dorset has mentioned the statistic; in 2003–04 we shall provide no less than a 30 per cent. increase in funding under the main approved development programme for social housing. That amounts to £20 million extra for housing in the south-west, bringing the total to £81 million. That will deliver about 2,000 more affordable homes for the region in 2003–04.

Affordable housing is a big concern in rural areas and the south-west is the most rural of all England's regions, with 93 per cent. of its area classed as rural. Over half the population lives outside major urban conurbations. A key issue for the region is the provision of sufficient housing to meet increasing demand in its rural communities, particularly for local people who cannot afford high house prices.

The White Paper "Our Countryside: The Future—A Fair Deal for Rural England" sets challenging targets for the provision of affordable housing in rural settlements of fewer than 3,000 people. In the south-west, we aim to deliver 350 new affordable homes in villages in 2003–04, and to increase that to, on average, more than 380 per year in the following two years. I shall certainly reflect on my hon. Friend's suggestion that we might widen the scope and role of the affordable housing scheme in market towns, but I can offer no guarantees on that.

Another key action by the Government that will help the housing situation in the south-west relates to planning. The Government's planning policy guidance note PPG3 seeks sufficient, better designed homes to meet housing need. PPG3 requires that we must build compact developments in towns and cities as a priority. PPG3 promotes well designed housing developments that do not waste land and a more sustainable approach to housing planning, which requires better integration of new housing with transport and other community infrastructure and services.

We have to ensure a better mix of housing that reflects the needs of everyone, not just the market for large detached housing. On 17 July I issued a written parliamentary statement relating to changes to PPG3 to widen the range of housing opportunity in terms of size, type and affordability. I welcome my hon. Friend's support for that initiative. My proposals underline the Government's determination that the planning system must facilitate the provision of new homes in the right place—focusing on brownfields first, but using greenfield land where appropriate—and at the right time, to meet planned numbers. My proposals will help to deliver more affordable housing without affecting overall housing numbers, and a better match between a community's housing needs and supply.

Although we have been mainly concerned today with the quantity of housing provision, it is important to say a few words about quality. My hon. Friend is probably aware that the Government have set a challenging target for all local authority and housing association homes to reach a decent homes standard by 2010 and we are working closely with providers to ensure that that target for social housing is met, and that the £19 billion in arrears for repairs to social housing is at last dealt with. We have also set a target to increase the proportion of private housing in decent condition occupied by vulnerable groups.

The House should also be aware that we are working with local authorities to end families being housed in bed-and-breakfast accommodation except in emergencies, from March 2004, and to sustain the reduction in rough sleeping, so that from 2002 it remains at or below two thirds of the 1998 level.

In 2002–03 more than £2.6 million of additional funding will have gone to 10 local authorities in the south-west to tackle homelessness and rough sleeping: Bournemouth, Plymouth, Bristol, Exeter, Gloucester, South Gloucestershire, Salisbury, Kerrier, Restormel and Christchurch.

We are delivering up to 460 homes for key workers in health, education and the police service over the three-year period to 2003–04 through the starter home initiative, which will ensure the continuing provision of essential services in the years to come. Beyond 2003–04, investment in key worker housing will depend on regional priorities and contributions from Departments and/or employers.

The mention of regional priorities brings me to a further important development in Government policy. The Government recognise that one size cannot fit all regions. We in London cannot, and should not, set out a prescriptive approach for all the issues facing the south-west. It is important that the south-west owns the agenda and seeks its own solutions. That is why we have set up the regional housing boards, to give each region an opportunity to identify its key housing priorities and to create its own response within a coherent national framework.

The south-west housing body has just prepared its first housing strategy for the region. I shall respond formally to its document in due course, but I am pleased that it has promoted a debate with an impressive range of stakeholders on the future of housing in the south-west.

It is important that the region owns its solutions, so the Government are providing the framework and resources to enable regional stakeholders to deliver more and better housing. We know the challenges all too well. Dorset has one of the fastest growing populations in the country, which is making it more and more difficult for local people on moderate incomes to find a home of their own. I assure my hon. Friend the Member for South Dorset that the housing needs of the south-west are firmly in our minds, just as much as those of all the other regions in the country.

My Department's key objective is sustainable communities in all regions. Today's debate has been an excellent opportunity to reinforce the Government's commitment to a better future for the south-west, and I am grateful to my hon. Friend for raising this important subject and permitting me to set out the Government's policies in response.

Question put and agreed to.

Adjourned accordingly at twenty-six minutes past Four o'clock.