It is a pleasure to follow the right hon. Member for Greenwich and Woolwich (Mr Raynsford), whom I know has spoken on housing in this Chamber for many years. It is also a pleasure to speak as a member of the Communities and Local Government Committee, whose report we are debating. I pay tribute to its Chair, the hon. Member for Sheffield South East (Mr Betts), who brought together Members from both sides of the House in the Committee to produce a report that we were all happy to put our names to. He referred earlier to the report’s key finding, which is that there is no “silver bullet” for removing the housing deficit our country faces. The report goes on to state:
“Many of the measures in the Government’s housing strategy will provide a welcome boost in the short to medium term”.
I hope to demonstrate that the pessimism exhibited by the right hon. Member for Greenwich and Woolwich is misplaced.
We know the serious problems we face. Many Members have referred to the need for some 230,000 new homes every year until 2033 just to cope with the increase in household formation. The other factor we must take into account in our deliberations is the state of the economy that the Government inherited. Of course, there will be many areas relating to the financing of new housing where the Government would wish to spend more to achieve more, but we must recognise that at present that is simply not possible. Housing is important not only for providing homes for our people, but for our economy. The previous Housing Minister reminded us that every 100,000 houses built adds 1% to GDP. We certainly need that growth in our economy. The National Housing Federation, which provided a briefing for the debate, tells us that every affordable home built generates an additional £108,000 in the economy and creates 2.3 jobs.
I will speak about each sector in turn: the Government’s initiative in the private sector, the importance of the private rented sector, and changes the Government are making to the social sector. I make no apology for starting with owner-occupation, because fulfilling people’s aspiration to own their own home is a key principle for Conservative Members. As the Prime Minister said in his party conference speech last year,
“We are the party of home ownership.”
Over the past few years home ownership, which currently stands at 65%, has been falling. Lots of statistics abound. My hon. Friend the Member for Meon Valley (George Hollingbery) said that the average age of a first-time buyer is now about 37. It is therefore entirely appropriate that the Government have brought forward schemes to stimulate owner-occupation, of which three are key: NewBuy, First Buy and Funding for Lending. The Select Committee report suggested that the Government should review NewBuy after its first year of operation. When I talk to house builders, I sense that a degree of momentum is building up behind the scheme. Forty builders and six lenders have signed up to it so far, and in November last year the Home Builders Federation estimated that 2,000 reservations had been made.
Statistics show that there were 6,780 sales in the first 13 months of the First Buy scheme. The Government are committed to increasing the funds available to it: the Chancellor announced in last year’s autumn statement that an additional £280 million will be available on top of the £900 million announced in the 2011 Budget. That should help 16,500 first-time buyers.
There has been evidence in the past couple of days that Funding for Lending is not finding its way into industry as fast as we might like, but it is starting to work its way through to mortgages. The Bank of England’s “Credit Conditions Survey”, published on 3 January, found that lenders were intending to increase their mortgage lending significantly in the first few months of 2013 thanks to the funds they can now borrow under Funding for Lending. On 22 January, the BBC ran a news item pointing out that house loans have risen to their highest level in five years—which suggests loans are easier to come by—quoting Halifax’s chief economist, Martin Ellis, as saying that this is due
to the scheme. Mr Ellis says that the benefits of the scheme are now feeding through to the mortgage market. He states:
“I suspect Funding for Lending is having an effect…The scheme has only been in place since last summer, but it’s helping to support, and push up, the level of sales.”
In addition to Government schemes, there are local authority schemes. My hon. Friend the Member for Meon Valley referred to schemes in other parts of the country. I might add that my local authority, Rugby borough council, in conjunction with Lloyds bank, has introduced the Lend a Hand scheme, which lets people borrow with a 5% deposit and puts in a fund of £1 million that will enable 40 buyers to buy their first home.
Much of what people know about house building revolves around anecdotal evidence. Over the past couple of weeks I have picked up two bits of anecdotal evidence in my constituency. The first arose from a visit I made to a volume house builder who told me that since Christmas, inquiries and sales on the development he is marketing have been at their highest level for many years. The second is not so positive. A young man came to see me in my surgery. He has finished his apprenticeship and is on a very good salary of £38,000 working for one of Britain’s best companies. He is at an age and in a position where he is ready to buy his first home, but regrettably he has never borrowed. He bought his car and met all his expenditure out of savings. He is unable to get a mortgage because, not having borrowed, he is unable to demonstrate the ability to pay off a loan. He knows what he needs to do—to take out a loan and repay it on time. This has put back by six months to a year that young man’s aspiration to get started on the housing ladder.
In referring to people’s aspiration and desire to own their own home, it is important to talk about the right to buy. Recent statistics show that the reinvigoration of this Government’s scheme has doubled right-to-buy sales from 1,041 between July and September 2012 to 2,010 between October and December 2012. That means that 3,495 council-owned properties have been sold to tenants since the scheme was launched last April, which is a third more than the whole of the previous year and the highest number of sales since 2007. I know that some in this Chamber will think that that is not a good thing, but I think it is because it enables people to get started.