Nick Raynsford If public indignation at the coalition’s housing policies were not enough to demonstrate their unpopularity, the doubts of backbenchers within the ruling parties should be
A Westminster Hall debate that I initiated last week proved a revealing occasion. The subject was the impact of government policy and the Comprehensive Spending Review on housing investment and supply. In opening the debate, I highlighted the extent to which all sections of the housing market had been thrown into uncertainty by government announcements and budget cuts over the past five months.
The cuts to housing benefits, which could force tens of thousands of tenants out of their homes, is a form of social cleansing that leaves a bitter taste in many mouths
The housebuilding industry has been hit by ill-thought-out changes to the planning regime, a continuing mortgage famine, fears about rising levels of unemployment and severe cuts to the Homes and Communities Agency (HCA) budget that had been supporting many new schemes.
The private rented sector is reeling from a series of cuts to housing benefits, which could force tens of thousands of tenants to move out of their homes in areas that are deemed too expensive for poorer people to live in - a latter-day form of social cleansing that leaves a bitter taste in many mouths.
Social housing tenants and providers have been shocked by the announcement that security of tenure is to be axed and in future rents for social lettings will be set at 80% of market rent levels. As I pointed out in the debate, in the SE10 postal district at the heart of my constituency, average market rents are estimated at £380 a week. Eighty per cent of that would be more than £300 a week - for a supposedly social letting. Nobody in low-paid work could consider such a tenancy, unless they were to have most of the costs met by housing benefit. And if they did, I can already see some sanctimonious minister calling for further cuts or caps on the grounds people on benefits should not be able to live in such expensive areas.
Tying the future delivery of affordable housing to this type of new tenancy is foolhardy. In many parts of the country it will simply not be financially viable, and in those areas where there are high rents and a heavy dependence on housing benefit it will be a risky and unsustainable option. So it is unlikely to deliver new homes on anything like the scale needed. It certainly won’t match the 57,730 extra affordable homes delivered in the past year through HCA investment.
Without any other funding for social housing, the numbers of low-income households without access to decent housing will almost certainly rise. And that doesn’t account for the extra demand from those priced out of private rented housing.
I can already see ministers calling for further caps on the grounds people on benefits should not be able to live in such expensive areas
The absence of support at the debate for the coalition’s housing policies was notable. Tony Baldry and Mark Field, both Tory MPs, raised questions about the likely impact of the approach and the continuing problems of securing mortgages. Simon Hughes, deputy leader of the Liberal Democrats, remained uncharacteristically silent. Labour MPs were less reticent and highlighted many of the likely downsides of the policies.
Faced with overwhelming evidence that their policies are leading to an intensifying housing crisis and greater homelessness, ministers have only two defences.
The first is to criticise the previous Labour government for its inheritance. The problem with this is that there was clear evidence in the early months of 2010 of market recovery, supported by HCA investment. It is only since the election, the June budget and the cuts in the HCA investment programme that the market has turned down. Responsibility for that rests with the new government alone.
Their second defence is to claim the new homes bonus will miraculously stimulate development. But when challenged about how this much-trumpeted scheme will work in practice, inisters remain curiously silent, or reveal, as Andrew Stunell, the under-secretary of state, did in last week’s debate, an astonishing ignorance about the details of the scheme. He had to apologise for giving misleading information about whether the scheme would apply to all new homes or just to the net addition to the housing stock. The latter, which now appears to be the case, will not incentivise brownfield site regeneration schemes where existing unsatisfactory homes have to be cleared, so there will be no immediate addition to the stock.
As with all local government finance, the devil is in the detail, and the more we probe the detail, the less convincing the scheme sounds. We are promised a consultation paper in November. I suspect the promised panacea may turn out to be a serious disappointment.
Nick Raynsford MP is honorary vice-chairman of the Construction Industry Council and a former construction minister