Select Committee on Transport, Local Government and the Regions Minutes of Evidence


Examination of Witnesses (Questions 240-259)

BEN JACKSON AND ALASTAIR JACKSON

TUESDAY 2 JULY 2002

Chairman

  240. Can I take you on then to the question of planning. Do we need some changes to the present planning system? Or will the present planning system actually provide the spaces for the houses that you just said the industry could build?
  (Mr Alastair Jackson) I am sorry, could I ask you to ask the question again.

  241. Are there sufficient sites available? If you like, will the present planning system make sufficient sites available for the houses that you want constructed? Or do we need a change to the planning system?
  (Mr Alastair Jackson) For the 83,000 to 99,000 houses that we say are required we believe that with appropriate release of sites there is enough space being provided through the planning system for that level of need. There are a series of debates to be had about exactly where and exactly what kind of site those properties would be built on, but yes, the planning system is able to accommodate them.

  242. Is it fast enough to meet that spending that might be available in 12 months' time if you got the figure you are asking for?
  (Mr Alastair Jackson) Yes. The figures for affordable housing are well within the capacity of the planning system to provide land.

  243. What about section 106? Is that going to help to provide this or is that pretty irrelevant to the total needs?
  (Mr Alastair Jackson) Part of the evidence we put in front of you includes an allowance of about 4,000 to 5,000 units a year being provided through the section 106 mechanism. So that is cross-subsidy from the land owner or the developer into that affordable housing. No social housing grant is going in. We have already made allowance for that taking place. Four thousand compared to 80,000 units is clearly five to six per cent of the total, so it is not going to make a significant difference.

  244. Should the housing subsidy coming from the Government be there for ever or really should the second or third generation of tenants be able to walk away with a profit from the profit?
  (Mr Alastair Jackson) It should be kept for ever. There is obviously the Right to Acquire scheme provided through the Housing Corporation but what is provided should be provided as affordable housing and kept as affordable housing.

Ms King

  245. I wonder if you could tell us what you think should be done to increase the role of the private rented sector in increasing the provision of affordable housing.
  (Mr Alastair Jackson) A really important element of that is going to be to sort out problems with the housing benefits system both in terms of its administrative complexity but also in terms of the rent restrictions that apply. I think the housing benefit system is turning potentially willing private landlords away from letting to people in housing need and those people in housing need—again in our evidence to you—are being pointed towards affordable social housing because the market is simply unwilling to provide for them.

  246. You also mentioned tax incentives and certain other proposals that could increase that supply from the private rented sector. If all those measures were put in place, what proportion of the need for affordable housing do you think could come from the private rented sector?
  (Mr Alastair Jackson) At the moment our estimates to you are showing that about 10,000 units a year are being added to the need for affordable housing because at the moment the private rented sector provision is shrinking. I think a first point would be to say, right, we could address that 10,000 by encouraging more, better organised, more responsible landlords into the private rented sector; landlords who are there both to offer a good quality product but also there into the longer term rather than as a speculative investment for a period of a few years. Together with adequate regulations of those private landlords, I think those kind of measures would allow the Government to encourage the private rented sector at nil or very close to nil public subsidy cost, to provide that kind of 10,000 unit provision.

  247. Do you think that different remedies are required in different regions?
  (Mr Alastair Jackson) For the private rented sector as a whole, no. The investment for the encouragement of regulations so that you drive out bad landlords and encourage good ones to stay, the reform to housing benefit, no, those are needed to address the sector's problems as a whole.

Chairman

  248. How would you reform the housing benefit?
  (Mr Alastair Jackson) I think a lot has been said about its administrative complexities and problems and there was a recent audit commission report that looked at just that. Our specific concerns were about the level of rents that are eligible for housing benefit and a recent report for the Joseph Rowntree Foundation that shows that typically landlords are wanting to charge between £15 and £20 a week more than the housing benefit system is willing to actually pay in housing benefit. Part of that might be testing the boundaries of the system and we do recognise that we need to cap levels above which you will not pay housing benefit on rents, but we believe those caps to be substantially below what would pay a decent landlord to provide decent accommodation.

  249. In the past the subsidy went to the bricks and mortar, did it not? Under the present housing benefit system it goes to the tenant or on to the landlord. Do you think that is right?
  (Mr Alastair Jackson) I think this is a 20-year shift that we have seen away from subsidies to bricks and mortar and towards housing benefits. The outcome of this is part of the problem we are talking about, this level of affordable housing need that is not being met at the moment.

Ms King

  250. Could we move on to Right to Buy. I just wondered if you could let us know if you think it should be suspended or restricted and, if so, how?
  (Mr Ben Jackson) Yes, I think we do think that. We have to look hard at the reality that we face of a significant continuing haemorrhaging of properties from the pool of affordable housing. Of course, those properties remain and people live in them, but the reality is that we lose that from the pool of affordable housing. Just to look at last year's figures, in comparison to the 18,000 new units of affordable housing 53,000 were sold through Right to Buy so we are losing something like three times those we are building. In London and so on sometimes the proportions can be higher. It is a huge problem. Not only is it the overall net loss that we are talking about, but also the types of property, particularly larger family homes, higher quality properties that are being lost. It is the actual loss of those from the pool but also a drain from the public purse because of the differentials between the amount we receive—the tax payer receives for the property—vis-a-vis buying a new one. We are also losing large amounts. We estimate something like a billion pounds a year. It is not a small problem. This is something that we now need to address.

Chris Grayling

  251. You say we are losing a billion pounds a year, but how is the tax payer actually losing?
  (Mr Ben Jackson) In terms of the net value. It costs about £50,000 to build on average a new build versus the average of around £20,000 per home. Obviously in cash terms money comes into the public purse, but in terms of that value—if we are to address this problem of affordable housing—it does seem crazy that we are allowing this continued haemorrhage, particularly in high demand areas. And that is really what we are asking, that the Committee would consider that reality and see whether they might raise this issue with the Government in terms of selected suspension in areas of high demand and for specific periods. We have to address that. Obviously, if we have a period later on where there is large expansion of new build, maybe that needs to be looked at again. We need to address the realities. It is interesting to note that in Scotland, as we understand, new powers of this kind will be made available to allow selected suspension of Right to Buy in certain areas that are highly pressured.

  252. Does Right to Buy not offer a vehicle to those on low incomes to get onto the housing ownership ladder in areas of high demand where they would otherwise have no chance of doing so?
  (Mr Ben Jackson) Clearly that is the case, but we have to look in the round in terms of the overall rights of those who do not have any housing, for example, and in that situation I think one has to reappraise the scheme and say that where it is losing those houses from the pool of affordable homes then that has to be more important. Of course, it is a hard choice to make and obviously one understands completely the individuals who want to make use of the scheme.

  253. What I do not clearly understand is that if you have a four-bedroomed house on the edges of London with a family on low income living in there which is owned by a housing association and they exercise the Right to Buy and as such move on to the housing ladder, what you are saying is that you should deny them the right to move onto the housing ladder—because they will not be able to afford to buy otherwise—because in some indeterminate way that is depriving someone else of the opportunity, even though that family will still carry on living in that house for the rest of their lives. That I do not understand.
  (Mr Ben Jackson) That family may carry on living in that house and obviously inevitably over whether it is a shorter or longer term they will sell that house. The likelihood is that as a result of that it would be lost to the pool and therefore it will not become available for another family on a lower income.

  254. That family itself, that family is also lost to the pool because you have one less family which you have to take responsibility for, so it is not as if you are removing a house and knocking it down. You are taking a low income family in a house and leaving them together on the property ladder rather than supported by the state. You are reducing your number of people who need affordable housing and reducing the property at the same time.
  (Mr Ben Jackson) We have a situation where the need for affordable housing is hugely greater than the supply and therefore we have to focus on the supply factor and the house would not be available.

  255. It is full already. You are talking about family houses—my constituency has a lot of these pressures—and I do not know of any families who are living in family homes in the affordable sector and the housing association sector who are saying "We want to move" or "We are going to move out of the market, we are going to buy our own house". They cannot afford to. The only way they will get onto the housing ladder is by exercising the Right to Buy. You have one family one house; the equation stays the same.

Ms King

  256. Is Shelter saying that in certain areas—not like my colleagues here but in an area like Tower Hamlets where families exercise the Right to Buy and then quite often sell it within three years, often renting it back to the council, they are then paying for homeless families to stay there—you want it suspended?
  (Mr Ben Jackson) I am saying that in areas where there is the high demand and the need and the reality is there are thousands of homeless families.

  257. My colleague is saying that they are not going into those houses.
  (Mr Alastair Jackson) Let us say London, where we sold 11,000 properties through the Right to Buy last year, if you assume that only 5 per cent would have turned over last year, that is 500 units that you do not have in London to let to homeless households. And 500 next year.

Chairman

  258. I think we are going to have to curtail this. The thing that worries me is that if you are talking about stopping the Right to Buy are you not going to encourage people to rush in and exercise their Right to Buy in the next few months?
  (Mr Alastair Jackson) I think it would be a matter of stopping the Right to Buy for a fixed period only and in order to meet this really difficult situation on the supply side of affordable housing.

Mr Cummings

  259. In your evidence you seek the need to address the entrenched argument of the NIMBY lobby. How would you combat NIMBYISM in relation to affordable housing?
  (Mr Ben Jackson) I do not think there is an easy answer—but I think we have signs of this developing—we need to have a more informed broader debate about the housing issue. The problem for me is that I think that looking more broadly people do not realise the consequences of the actions of blocking development at every corner. We would see the consequences as those houses of homeless families and many others who do not have access to reasonable housing. Shelter accepts its part in that process. We need to go out and win the arguments more generally in terms of the public and the media and so on.


 
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