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22 Oct 2002 : Column 187—continued

Jim Knight: Will the hon. Gentleman give way?

Mr. Steen: No, time is too short, and I have a lot to say.

Most of the pressure for new housing is in London and the south-east. That is why we are tearing down council housing estates in the north-west, in Liverpool, and all over the place. We have to build houses in places where people want to live.

Jim Knight: Will the hon. Gentleman give way? It is on this point.

Mr. Steen: I know that it is on that point, but the hon. Gentleman will have to wait.

The demographic profile is a big issue. Britain has the highest divorce rate in Europe, which means that we need two homes for every married couple when they split up. More people are living longer, and although we are delighted about that, they are occupying houses. More young people are moving out of the family home early and need accommodation.

So, we have a demographic and a regional problem. People do not want to live in urban areas; they want to live in the countryside. Therefore, we have a problem with locating land—greenfield sites—where people want to live.

While I welcome the new Conservative policy—who would not—to give tenants in housing association properties the right to buy, it can only be a long-term strategy.

Mr. Love: Will the hon. Gentleman give way?

Mr. Steen: No, I will not.

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That policy would simply reduce the amount of social housing available to local authorities and registered social landlords. It will work only if it is combined with a massive house-building programme. The state has now based its ability to provide affordable housing on the viability of private developers. It is amazing that the Liberal Democrats have not mentioned the key to the problem—they have mentioned everything else but that. I hope that the hon. Member for Torbay (Mr. Sanders) will refer to it in his reply.

Section 106 agreements under the Planning and Compensation Act 1991 are the key to affordable housing. I hope that the hon. Gentleman is familiar with those. That section allows planning authorities to grant development permission subject to a set of conditions. Increasingly, section 106 has become the main way for local authorities to force developers to provide affordable homes. I do not know whether hon. Members are familiar with how it works. The local authority planners tell developers that they can develop a site, but that x per cent. of the houses built must be affordable. That is where the problem lies. In London, the suggested figure is 50 per cent. In my constituency of South Hams, the Conservative-controlled council says that it should be 66 per cent.

The problem is that developers will develop only if they can make a profit. They cannot do so if 50 per cent. or 66 per cent. of the houses must be affordable. That is why when the Minister replies he will probably say that the Government's yardstick is 25 per cent.

Mr. Streeter: I am enjoying my hon. Friend's speech. Does he agree that it is not only a question of affordable homes? In many parts of the west country, there is particular demand for affordable homes to buy. We know that 93 per cent. of the population aspire to own their own homes, which is a wonderful thing to do. Does my hon. Friend agree that, while the Government are introducing a number of interesting schemes to meet the required number of affordable homes, their mindset is still stuck on social housing to rent? They need to make a paradigm shift and understand that in many parts of the country the pressure is for affordable homes to buy.

Mr. Steen: I hope that the Minister and the Liberal Democrat Front-Bench spokesman will have heard my hon. Friend's excellent intervention. I am sorry that he did not get the opportunity to speak, as he would have concentrated on that important point.

Jim Knight: Will the hon. Gentleman give way?

Mr. Steen: No, I cannot give way again. I have done so once already.

New Labour wants new mixed communities—the special mix in the community. I am not against mixed communities, but one must have affordable housing—both houses to let and private housing. The problem is with the percentage. Private developers are not building enough houses and that is why I started by giving the figures. The Government targets are falling short by 50 per cent. because the developer has no financial incentive to build houses as the local authorities are asking for too high a percentage to be low-cost, affordable housing and the developer cannot build those houses and make a profit. They also have to put in all the infrastructure.

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Section 106 is the key to affordable housing. The building of such housing has slowed down because the developer has no incentive to build. It seems clear that the large affordable housing quotas imposed on developers by the section 106 agreements make many developments uneconomical. Developers still have to pay the market rate for the land, as well as for the materials and labour. They are also duty bound to help to provide the local infrastructure, to resource the new developments and to provide financial assistance for flood prevention, which is a new Government requirement.

Local authorities have forgotten that the provision of housing operates in a market where the usual rules of economics still apply. The result will be twofold. First, developers will not develop—at least, not in the areas where affordable housing quotas are high and housing is badly needed. Secondly, they will simply wait for a policy change, probably at a local level—a reduction in the affordable housing quota. Either way, that will damage our ability to provide any form of housing. It will further deepen the affordability crisis in many areas.

For section 106 agreements to work, there needs to be a thriving market for developers, where capital is available and the baseline margins are enough to satisfy investors. Squeezing margins by demanding high affordable housing quotas will damage the private developer's ability to operate and will cause an ever-growing problem of scarcity, put up the price of housing and lead to demands for higher wages, ultimately creating an inflationary spiral.

Those are the issues, and neither the Liberal Democrat nor the Labour Front-Bench spokesmen have dealt with them. The Conservative Front-Bench spokesman had an insight into the problems—not enough houses being built, section 106 agreements and developers not building. Those are the issues.

7.5 pm

Mr. Adrian Sanders (Torbay): This has been an interesting and sometimes passionate debate, and it is long overdue. My hon. Friend the Member for Bath (Mr. Foster) opened the debate and laid out the case for action. He highlighted the effect of rising house prices on low-income groups. He argued against centralised housing targets and in favour of more powers for local authorities. He committed me to answering the question of the hon. Member for Cotswold (Mr. Clifton-Brown) about land value taxation, which I shall gladly do.

The hon. Member for Totnes (Mr. Steen) is absolutely right. The question is one of supply and the lack of supply of affordable housing. The second problem is that money is relatively cheap to borrow and that cheap money is chasing that lack of supply. It is increasing house prices and raising the entry point to home ownership for lots of moderate and lower income families.

The sale of stock during the 1980s without properly replacing it has exacerbated the existing housing crisis. It is not due to a shortage of land, as some people say, although every hon. Member present will point to a shortage within their constituency. We need a mechanism that will release land—a mechanism that will end speculative windfalls from land that has been kept from the market while the price has risen, that will

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encourage the most efficient use of space, and that will help to bring empty homes back into use. That mechanism is land value taxation, which is sometimes called site value rating. It is our alternative policy to the uniform business rate. It is not an extra tax but a replacement tax.

The Minister recognised that housing markets vary dramatically across the country. That is important when considering this issue. There is not a single solution that will solve the crisis in every housing market. She mentioned the circumstances that the Government had inherited, but she did not explain why we had to endure three further years of neglect. Only now are additional sums of money are being found for housing.The Minister rightly said that housing should not be seen in isolation. It is certainly our view that it has to be considered alongside all other regeneration, transport, health, social services and planning policies—the whole gambit of Government policy needs to be brought in when considering housing.

The lack of supply is causing immense difficulties for many families. Inadequate or inappropriate housing leads to additional social costs. The lack of social housing is of itself a social cost. There is a link between low educational attainment and poor accommodation. It is more likely that a family in poor, overcrowded accommodation will have a greater demand on social or health services. There is a link between crime and poor housing—so the social cost of not having enough social affordable housing is great.

The hon. Member for Cotswold gave us all the statistics and some of the reasons for the problem. I am surprised that the hon. Member for Totnes was not present for his speech. Perhaps he was watching it on a monitor outside, but I do not remember seeing him here until the very end. [Hon. Members: XHe was here!"] He was not here at the beginning of the debate. [Hon. Members: XWithdraw!"] I will withdraw that accusation if the hon. Gentleman was here for the speech of the hon. Member for Cotswold. He was certainly not here for that of my hon. Friend the Member for Bath, which is probably why he made that attack on the Liberal Democrats, in absentia.

The hon. Member for Cotswold rightly set out all the statistics and explained why we need to do something to increase the supply of affordable housing. He then tried to explain Conservative policies. He talked about the pump priming of brownfield land, but he did not explain how he would do that, or what would be cut from public expenditure or which taxes would be raised to support the policy. The hon. Gentleman wants more homes above shops, but, again, he did not say how that is to happen. He wants to encourage more private sector investment—again, answer came there none as to how that would be achieved.

We then heard about the extension of the right to buy. The Liberal Democrat view is simple: we believe in property ownership and we support the aspirations of tenants who want to become owner-occupiers, but we do not support the rundown in social housing stock that

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has led to so many of the consequences raised by the Minister, by the hon. Member for Cotswold and by my hon. Friend the Member for Bath.

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