Housing Investment

Mr. Mark Field (Cities of London and Westminster) (Con): I congratulate the right hon. Member for Greenwich and Woolwich (Mr Raynsford). As he rightly says, we have not so much crossed swords as spoken on many occasions on various Bill Committees and in Westminster Hall. Like him, the issue of social housing lies close to my heart. On one level, I was disappointed to see that the capital grant funding has been halved, although I entirely understand the reasons behind the Government’s decision given the deficit that we face-I suspect that the right hon. Gentleman will not follow me on that.

I am delighted at the introduction of further rent flexibility to generate a greater borrowing capacity. I take on board the point raised by the hon. Member for Sheffield South East (Mr Betts) and I hope that the Minister will indicate whether the powers are mandatory or, as I suspect, part of the panoply of options open to housing associations.

In January 2009, I initiated a debate in Westminster Hall that highlighted the need for social landlords to be allowed to use their stock more flexibly. At the time, I argued that the current economic climate-which I suspect has not changed much over the past two years-provided us with a once-in-a-lifetime opportunity to create a more flexible rental market. I advised:

“Housing associations are often frustrated that the income they receive from renting a property barely covers maintenance costs and that the rental income from a four-bedroom house is only slightly more than that from a two-bedroom flat… A relaxation in rent policy will increase incentives to build to higher standards and reflect the relative value of a social tenancy.”

My hon. Friend the Member for Banbury (Tony Baldry) referred to that point in his comments.

“Rent differentiation would also provide an incentive for a couple to downsize when they no longer need to stay in a large property when their children are grown up. That would hopefully free-up valuable family-size accommodation to address the problems of overcrowding.”-[Official Report, 14 January 2010; Vol. 486, c. 76WH.]

Such problems of overcrowding are particularly acute in the middle of cities such as London.

I went on to use the example of the housing arrangements of one of my constituents who had recently passed away. She lived as a secure tenant on the Peabody Wild Street estate, at a rate of £75.50 a week, which included services. That estate is moments away from Covent Garden piazza, and the market rent for such a flat would be around £320 a week, probably more by now. When she passed away, the flat was re-let at £116 a week to a tenant with support needs. The difference between the social and market rent was £200 a week, or £10,000 a year. That situation has been worsening over the past couple of years.

With the neediest households receiving priority for housing in my constituency and many other constituencies in the capital, my worry is that such places have become home almost exclusively to either the super-rich or the very poor. That polarisation is not a healthy state of affairs. I do not want to be too London-based; I am sure that the same point applies in Sheffield and many other big cities. All hon. Members will have constituents who earn multiples of the average national wage, who cannot get on the property ladder or afford inner-city rents, but who are regarded as far too wealthy to qualify for social housing. The gap between social and market rents and the inflexibility of the social rent structure has meant that the cost of renting in London remains a significant issue.

I accept that some of the Government’s policies are still in gestation. One hopes that they will take on board some of the concerns reiterated over the years by myself and the right hon. Member for Greenwich and Woolwich. Too often in these debates we end up talking about the interests of existing tenants who are understandably anxious about the idea of their situation changing. In doing so, however, we ignore those less vocal people who make huge sacrifices of time and money to commute to their jobs in the inner cities, or those whose families have been in a local area for generations, but who are forced to move away because of the unaffordability of city centres, particularly in London. It is right to identify the interests of those who will be affected by the new policy, but we should not forget those who have suffered under the existing regime.

The polarisation of our inner cities is a direct result of decades of well-meaning Government intervention from parties on both sides. If some of the Government’s proposals make it easier for young, hard-working people on middle incomes to afford to live in the centre of London, that is a good thing. This week, the right hon. Member for Barking (Margaret Hodge) warned that the Government’s policy will create middle-class ghettos in our inner cities. In truth, the young middle classes have been virtually excluded from my constituency over the past decade. We have the absurd situation where the taxpayer massively subsidises the unemployed to live in the centre of London, while working people pay extortionate amounts to commute to their jobs because they find rent levels unaffordable in the centre of town.

Some of the G15 housing associations have come up with a number of new schemes. I hope that some of that innovation will allow young people and young families, who are particularly important, to live at affordable rents while being able to save so as to move to another property or perhaps to buy a share in one in the future.

However, I also accept that the speed at which the cap is being put in place perhaps ignores some of the logistical problems for local authorities-huge logistical problems for some local authorities-in arranging new accommodation, but also coping with a sudden influx of new claimants. About 80% of the people living on housing benefit in my constituency receive a sum in excess of the housing benefit cap. I suspect that that is relatively unusual, but we are still talking about relatively high percentages even in other parts of the capital. For those individuals, this is an incredibly unsettling time. For the areas to which they will move, there will be huge social upheaval, which will affect health services and education as well as, obviously, the basic housing in the locality.

It is likely that, given the option of being able to rent out central London properties at 80% of the market value, social landlords will, to a large extent, choose to do so. At one level, that is no bad thing, because it will allow them to invest in new stock and improve the derisory levels of house building seen in recent years, but equally, as a number of hon. Members pointed out, some unintended consequences may come into play.

Mr Raynsford: I will not detain hon. Members, because others want to speak, but will the hon. Gentleman clarify whether he agrees with my view that it is right to encourage tenure diversity, as I said in my speech, but it is wrong to substitute the new near market rent tenancies for social tenancies at low rents, because then the poor will be excluded?

Mr Field: I think that there is a real risk of that. We want diversity; we want diversity of communities. The right hon. Gentleman is right to say that the issues will have to be properly identified and nailed down before we move forth.

I appreciate that other hon. Members want to speak, so I shall just make two quick observations. With regard to provision of housing by my own local authority, Westminster city council remains confident that local authorities can deliver more affordable housing, even in a period of economic austerity, provided that they are able to think and act creatively. For too long, as we know, local authorities have over-relied on section 106 agreements and registered social landlords to deliver social housing. In that respect, the establishment of the Westminster Community Homes charity locally and its development arm, Westminster Homes Development, will be critical.

My other observation, which slightly concerns me, is that a number of local authorities look on the revolution that is about to take place as an opportunity to welcome the practice of housing finance being treated as off balance sheet, bringing Britain into line with much of the rest of Europe and allowing local authorities greater flexibility to borrow against the existing stock. I confess that I would not support that. I put on record in this Chamber as long ago as 2007 my grave reservations about off balance sheet financing for private finance initiative and public-private partnership projects by the previous Government. The cost of those will become apparent over the next 25 years. At a time when we need to improve our infrastructure, we have huge costs for schools, hospitals, prisons and road building that have already been put in place. I therefore think that we should above all try to avoid that technique.