Affordable Housing — House of Lords, 2015-06-25
Topic: Housing
David Stephen Geoffrey Pollock (Labour, Centre-left): My Lords, one of the questions that must be raised in connection with the crisis in housing concerns the extent to which it has been the consequence of the misguided policies and oversights of successive Governments It is fair to raise this question in view of the success of early post-war Governments in meeting the huge demand for housing that arose from the destruction and neglect of the housing stock during the Second World War and from the need to house demobilised military personnel. We ought to remember the role of Harold Macmillan at the Ministry of Housing and Local Government in Churchill’s Government of 1951. Macmillan was given the task of overseeing the building of 300,000 houses a year. This objective had been adopted by the Conservative Party conference in 1950, and was amply fulfilled The policy of housebuilding depended on close co-operation between central and local government. Local government was empowered to finance house- building by issuing bonds, and there were substantial subventions from the Treasury. The percentage of people renting from local authorities rose to over a quarter of the population—from 10% in 1938 to 26% in 1961 There was a complete reversal of the housing policies of the Conservatives in the era of Margaret Thatcher. The Housing Act 1980 gave a right to buy to council tenants and by 1987 more than 1 million houses had been sold. Thereafter, the building of houses by local authorities virtually ceased, and there have been almost none built since the early 1990s Thatcher’s policy of the right to buy envisaged that the market could be relied upon to assume the housebuilding role of local councils. Rules were introduced that prevented councils subsidising their housing from local taxes, and grants for construction of new social housing were to be channelled to housing associations. However, the housing associations were expected increasingly to borrow their funds from banks and building societies, which proved to be less than willing lenders. Within a decade it had become clear that these policies were not providing the needed housing. The problem was belatedly emphasised in a debate in the House of Lords on the eve of the election in 1997 However, as it transpired, the succeeding Labour Governments failed to meet the challenge. During their periods in office, the ratio of house prices to incomes rose from 3:1 to 5:1, while the levels of housebuilding fell to half of what they had been in the late 1960s. During the Conservatives’ recent period in office, the ratio lurched to something approaching 6:1 before falling back to 5:1 when the trade in properties virtually ceased The Conservatives have reprised Margaret Thatcher’s free-market ideology and have sought to stimulate the housing market from the demand side by offering help to buy. In the run-up to the election, as we have heard, they revived the policy of the right to buy by proposing to dispose of the assets of housing associations at heavily discounted prices. The fact that they do not have the rights of ownership of these assets has not deterred them. In common with so much that the Conservatives have proposed, the policy represents a remarkable triumph of ideology over reason. It is clear that the market cannot be relied upon to satisfy the housing needs of our nation. What is required is a steady supply of new houses at the rate of 240,000 per year. The unaided market appears to be capable of providing, at most, half that figure, and it cannot be relied upon to do so consistently. Its supply of houses is tied to the economic cycle for the reason that the unsupported demand of consumers is likewise tied to that cycle. Moreover, the provision by banks to housebuilders of loans to finance their building projects is also unreliable and tied to the economic cycle Housebuilders have been under an injunction to provide a proportion of affordable houses in each new development but have failed to do so. Among the reasons for this failure have been the various exemptions from the requirement that have been offered by the Conservative Government and, notably, by the Conservative Mayor of London. These exemptions were originally proposed for small-scale developments but have been extended to cover developments where there are pre-existing vacant properties. Under present circumstances, housebuilders in London have found it more profitable to provide houses for speculative investors from overseas, who are prepared to leave their properties empty. There needs to be a radical change in policy with a co-ordinated strategy, overseen at the centre by people charged with fulfilling a national housing policy. The houses have to be built where they are needed by working people and, for this purpose, local authorities must be fully involved. We need to embark on something similar to the early post-war housing strategy Apart from the question of the availability of houses, there is the matter of their affordability. The persistent rise in house prices must be staunched if it is not to end in the bursting of a bubble. This will be hard to achieve at a time when the banks and the building societies, which are the suppliers of mortgages, have been stuffed full of money by the programme of quantitative easing. They must be compelled to make their loans elsewhere than to the housing market. House prices should also be constrained by taxation. Stamp duty levied on the buyers of properties is an absurdity. It should be abolished and, in its place, a significant sales tax should be levied on the sellers of properties in order to capture a fair proportion of their capital gains. This would make investment in houses less attractive, which should serve to reduce their prices We must act now—decisively—to relieve the damage and pain of the housing crisis and put housing on a road to recovery. If we do not do so, the consequences will be dire. I do not have the time to describe these consequences but I trust that others will have done so fully by the conclusion of this debate.