| John Healey MP: Housing after the Crunch |
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Housing after the Crunch: Speech by Rt Hon John Healey MP, Minister for Housing and Planning, 9th December 2009 I’m pleased to join you for this Fabian debate about the future of housing.
At that time, housing was a hot political topic around the start of the twentieth century. The Fabians had published one of their first leaflets on housing in the 1890s. In 1906, under Keir Hardie, the Labour party protested that ‘the slums remain; overcrowding continues, whilst the land goes to waste’. This reflects our commitment to decent, secure, affordable homes which has always been close to Labour’s heart. And Parliament passed the Housing and Town Planning Act a few years later in 1909, aiming to provide a ‘domestic condition for the people in which their physical health, their morals, their character, and their whole social condition can be improved’. It made illegal the infamous back to back Victorian houses, and meant that there could never be less than 50 feet between houses on opposite sides of the road. One MP at the time rightly said that it would ‘lay the foundations of one of the greatest reforms in our city and town life’. So, it was clear to the founders of the Labour party, the Fabians, and the liberal reformers a century ago that improving the nation’s housing meant improving people’s lives. What was true then, remains true now. So I’m puzzled that housing and planning are so low on political agenda these days for some. For two years I saw as Local Government Minister, and all I heard at debates from the Opposition on the subject of housing was Home Information Packs and garden grabbing. In David Cameron’s Conference speech in October, he spoke over 6,000 words, but he only spoke of housing in terms of the ‘stubborn social problems’ of ‘sink estates’. In six months as Housing Minister, I have set out to make housing more visible and more political. I’ve set out to make housing for Labour in Government central to our response to recession and essential to our vision of the future. Because housing is so much more than building houses. The way we shape housing policy can help shape society. And as we look to a future beyond the global recession, this is the time to ask what the future will look like in housing, and what role we want Government to play in shaping that future. We know that the world has changed economically and it won’t go back. Before the global credit crunch and economic downturn, half our new private housing was built by six housebuilders and affordable homes were funded by cross-subsidy from house sales, and land value increases, plus Government grants. In 2007, we built 207,000 new homes – the highest number for 30 years, since the last Labour Government, in fact. But this level was still not enough to close the gap between supply and demand, which is historic and long term. So I’m clear that as we look beyond the recession, housebuilding and housing policy won’t simply go back to business as before – nor should it. But those of us on the centre left who reflect the deep Labour and Fabian traditions of concern for housing, must map out the future. After the crunch, we will be in what The Economist calls ‘the new normal’. How we shape ‘the new normal’ is a test of our principles – not just our innovation in policy or delivery in Government. We’ve faced the first test. Faced with the worst recession for 60 years in Britain and the first time the world economy has shrunk since the second world war, we had a choice. Step back, let the recession run its course and leave the upturn to the market as Government did in the early 1990s, or step in to help the most vulnerable. I am proud to part of a Government that has stepped in. We believe that when times are tough, it is the duty of Government to do what it can to help people through. We believe in the progressive power of public investment. So we stepped up spending and support to help: • Firms stay in business – 160,000 using our tax deferral scheme. • People stay in work – 500,000 jobs being protected by our combined actions. • Families stay in their homes – 330,000 getting help or advice with mortgages over the past year. The comparison between the 90s recession and now is a tale of two recessions. Different political values, different decisions in Government, different economic and social results. We’ve acted rapidly to keep people facing repossession in their homes during the recession; help that was never on offer in the last recession. That’s why at the height of the recession, we’re building 112,000 affordable homes over two years: investment that is creating jobs now and building the homes we need for the future. We have committed to creating almost 3,000 apprenticeships in the construction industry, using public money to make sure private companies take on and train young people with the skills they and we need in the future. But we need to look to the future. This is very much early policy work in progress – which is why I welcome the Fabian Society interest and this event. My question for today is: ‘what is the new normal for housing?’ Well, we will definitely need new homes designed, planned, funded and built in new ways. I see Local Authorities as central. I want to strengthen their role, especially for assessing housing needs in their area, and making sure they’re met. I want councils to be major builders of public housing again. The housing pledge that I nailed with the Prime Minister in June kicked off the largest council building programme for nearly two decades. All 49 Councils will have work on site by March and I’ll announce a second round of investment early next month. In recession, money for building dried up and many builders shut down sites. In the short term, extra public investment has filled the gap as we’ve kickstarted private house building sites stalled in recession. But we need new models of funding and investment and new ways of borrowing for Councils. Borrowing against Community Infrastructure Levy, RHI and Tax Incremental Funding can release funding that allows councils to build now and to put in place the local greener infrastructure needed for growth. Allowing them to create their own funding streams, means they can act more independently from central government to provide the homes their communities need. It’s not just more rented housing in the public sector that we need, but more privately rented homes too. I want to expand the number of homes build for private rent and improve the quality and security of the private rented sector. That means supporting new institutions into this market, including through changes to tax support and incentives. We will also use the resources of the state to help build a new private sector, with smaller housebuilders, more innovative companies and those willing to accept lower profit margins brought into the market. The Public Land Initiative, led by the HCA and part of the Housing Pledge, is one way we’re already using surplus public land to support these companies into the market. Looking further forward I want to see a greater role for co-operatives, mutuals, Community Land Trusts and other third sector providers. It will take time to build Councils’ capacity, and it will take longer to reform and support co-operative forms of development and ownership. Yet, I am convinced of the role they can play in the future; providing new forms of shared ownership for people and capturing community commitment to build and shape their area. To do this, will require state action to support these new bodies and create the conditions for them to thrive; perhaps a public land initiative specifically for new third sector bodies? Or a dedicated portion of affordable housing investment for these types of institutions? Much of our housing is already provided by the third sector – housing associations own 2.2 million rented properties and draw on their philanthropic and charitable roots to provide important social and community services – such as tackling crime, and helping people in to work. And what might ‘the new normal’ look like for homeownership? Well, this decade is the first time ever that homeownership has declined – from 70.9% of all households in 2003, to 68.3 today. Some point to the recession having shaken people’s desire to invest in bricks and mortar. But in reality, homeownership had been dropping since 2005. And I’m not sure that’s such a bad thing. At the moment, up to 70% of the population has their money tied up in property. The proportion was boosted by Margaret Thatcher’s Right to Buy. But you don’t need to be a grocer’s daughter to know that it’s not a good idea to have all your eggs in one basket. Yet not even a drop in the housing market can convince people not to use their home as a store of wealth. A recent article in The Telegraph showed that nearly a third of people approaching retirement are still relying on their home to top-up their state pension. Not only is this property piggy bank unsustainable, it is also unfair. Because increasingly, those without the property-funded ‘Bank of Mum and Dad’ are finding it hard to buy homes of their own. First Time Buyers getting parental assistance has doubled in just three years to four out of every five buyers. And the gap has widened during the global recession – the average age of First Time Buyers with parental assistance has stayed the same during recession, but the average age of a First Time Buyer without the extra money has shot up from 33 to 37 years old. And as housing wealth is passed from parents to children, inequality is compounded over the generations. That’s something that a party that believes in fairness should tackle and I’m pleased that finally the Tories are getting the scrutiny they deserve on their inheritance tax plans. A plan that makes Britain more unequal as time goes on, increasing the unearned windfalls that the children of wealthy parents get. It really shows where their priorities lie. We’ve focussed on those at the bottom and those in the middle during the recession: by building more affordable homes, protecting jobs and helping people stave off the threat of repossession. While the Tories are still committed to a £200,000 hand out for the wealthiest 3,000 families. Home ownership should not be the reserve of the rich. So we need a new ownership model. Not all or nothing, but a flexible system which suits the different stages in people’s lives. With shared ownership arrangements like HomeBuy Direct allowing people to buy more of their home when they can afford to. And in the future, I’d like to see it be just as easy to sell equity in your home back, to the council, housing association, or co-operative, allowing people flexible tenure in the same property, that adapts to their circumstances. People may choose to release equity whenever it suits them and build it back up when they can, and if they want. Of course, not everyone will want to own property. So we need new choices in tenure – more opportunities for everyone to have a decent, secure, affordable home. That means increasing the diversity of tenures, it means allowing people to move more easily between tenures and it means putting them on a more equal footing with home ownership, as they are in other European countries. One great advantage of homeownership is that it allows you to build an asset and benefit from increasing property prices tax free. That’s why so many people choose to make their home their family’s main investment. If we want to make renting an equally valid option and an equally privileged option for those who want to rent, we need to extend that opportunity. That could be done with tax free savings for those who are renting, a deposit for homeownership in the future, a bond for renters to build assets and store wealth as homeowners do. Regardless of tenure, all homes will need to be greener. And, as a Labour Government, we don’t believe that the benefits of eco homes – like cheaper bills, cash back for generating power, contribution to helping the planet – should only go to those who can afford to build their own high spec, top notch green house. Our policy aim for housing and planning is eco equality. We have introduced new standards for the way we plan, design and build homes for the future, like zero carbon standards for new homes, Eco Towns to trial new ways of living in green communities. These aren’t the grand designs of a few, but greener, more affordable homes which help everyone to do their bit for tackling climate change and from which everyone will draw the benefits of greener homes and communities. But I believe a bigger debate is brewing on housing – a bigger debate that reflects the scale of the challenges we face. There will be a big challenge to those of us on the centre-left – that believe in progressive policy, that believe in progressive politics to help to shape this debate in a progressive way. People will have more choices in tenure and ownership to suit their needs, provided increasingly also through mutuals, co-ops and Land Trusts. Renting will be more stable, more secure, of a better standard, and probably more common an option as it is for people elsewhere in Europe. Changing tenure may not mean changing your home, with options to release and buy back equity and convert from renting to owning with Government help. There will be more and new options for those on lower and middle incomes, those who are less likely to get access to social housing at the moment. And the type of home we live in will become less of a marker of our economic status. More socially rented homes will be occupied by working families, because we will have increased the numbers of homes available for rent in public housing. And we will have increased the employment opportunities and we will have provided, by doing so, more choice and better support for lower paid people. In short, housing after the current global credit crunch will mean we’re moving closer to that central Labour aim, that century old Labour aim of a decent, secure, affordable home for all. This vision requires an active state. In many ways it requires an extended role for the state. It is how the state acts that matters, not how big it is. And there’s no iron law either that says state action must be national, central or top down. And for me, Labour isn’t ideologically neutral on the role of the state. The state shouldn’t do everything or indeed, even most things, but equally we don’t want our relation with people to be restricted simply at the points of failure. The vision I have set out today – very much as work in progress - relies on the state to support individuals in their specific circumstances. If we want people to have more choice, it requires an active state to create more diversity of housing providers, including an extension of the role of the local state. If we want to people helped into homeownership, especially those on lower incomes, we need a state which is prepared to support and assist at the right time. If we want more community institutions and independent bodies to provide and manage housing, we need an active and enabling state, which sets a framework for fairness and sets minimum standards as well. It is only through an active state that we can create an environment for co-ops to succeed – building on the role of Housing Associations, whose contribution would after all greatly diminish without the public investment from central government into their housing and into their housing services. Shrinking the state’s role in housing would mean a smaller and meaner society as well as a smaller and meaner state, with fewer opportunities for everyone; less public housing, less choice for those in the middle, and owner-occupiers whose market choice would remain limited to what the top six housebuilders will provide. Our progressive vision demands that the state takes more responsibility not less for meeting the housing needs of British people, by creating new markets, bringing new providers into the mix, and by creating more choices for people. None of that can happen without an ambition. None of that can happen without an ambitious, active state. And none of that can happen without a progressive and centre left government.
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