This has been a comprehensive debate, with great expertise from all parts of the House. I join other hon. Members in congratulating the Chair of the Select Committee, the hon. Member for Sheffield South East (Mr Betts), on an excellent report, which is forward-looking and raises many interesting issues. It poses a number of questions to the Government, and we look forward to hearing the Minister’s reply. I will touch on just one or two aspects of the report.
Today’s debate has already dwelt on the Government’s reforms to the housing targets and the important shift away from the regional spatial strategies towards local plans. It is much better to have local authorities with their own clear plans advocating, rather than resisting, development in their areas. Under the regional spatial strategies, local authorities fought housing targets, used every opportunity to resist housing development and stood up to the last Government in doing so. It is much better to have a system under which local authorities are given incentives to allow development in their areas and, instead of fighting development, are forced to make the case for it. I appreciate that people have raised questions about that point and that several local authorities are still finalising their local plans and targets. The plan by my district council, Shepway, in Kent, which is still being finalised, has at its heart a housing figure greater than the previous target under the regional spatial strategy. It is taking a sensible look at the opportunities for community infrastructure that can arise from development. That is the right way to go.
The Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Grantham and Stamford (Nick Boles), who has responsibility for planning, was in his place earlier, and I make this point for his benefit—so I hope he will check Hansard—and the Minister’s. I ask them both to consider the impact of infrastructure development in communities and on the local economy and housing. I realise that DCLG is considering the planning application for the expansion of Lydd airport in my constituency, which was approved by the district council three years ago. Since then, there has been a public inquiry and we now await the Minister’s decision, which is eagerly anticipated by me, the district council and many in the Bromley Marsh area and Lydd. It would be an enormous boost to the local economy to allow the controlled
expansion of the airport to go ahead. Other transport infrastructure around it could make the area considerably more attractive to inward investment, including in new housing, and help to create new jobs, all of which are needed by the community. I ask the Minister to consider the application carefully, make it a priority, which I know he has done, and give us a timely answer. People desperately need to know where the Government stand on the expansion of Lydd airport.
The other Government reform I wanted to touch on was the liberalisation of planning consent for spaces above shops in town centres. This recognises that our town centres are changing and becoming mixed-use spaces for leisure, retail, work and residence. This could breathe new life back into our town centres. We have a lot of empty office space in many of our town centres, particularly in towns such as Folkestone in my constituency, and I think this would be a good use of space. If we can simplify the planning process and get that empty commercial space being used by residents who need it for residential property, it would be a good thing for residents and town centres.
Some of the specifics in the Select Committee report pose an interesting question concerning social housing and those in the private rented sector who claim housing benefit. Why, despite having a market with no lack of demand and a lot of Government spending underpinning it, do we have an inadequate level of supply? Why do we not have a system where we work with that demand and use it to expand supply? The report hits on interesting ways of doing that. The Committee Chair raised the interesting issue of councils borrowing to fund housing expansion. I would be interested to hear the Minister’s views on that.
Obviously, that exists within the current economic climate, with the country having borrowed too much, so it is right that the Government are concerned and careful about allowing too much further borrowing to take place, but it would be interesting to know what other schemes are available, particularly involving institutions, to invest in housing models. The report made some interesting suggestions for how we could bring together housing associations to manage and build properties, institutional investors with ready funds to lock away in long-term investments and local authorities prepared to work with those two bodies as partners. The funds are probably available from institutional investors and pensions funds that could invest—over not just 30 years, but 60 years—in new housing programmes. Local authorities have no shortage of tenants to fill the spaces. Any private landlord or investor will know that what they want: high levels of occupancy. If the local authority can largely guarantee occupancy of such properties, that will make them an attractive investment. Housing associations can manage such schemes to bring those elements together, so that the institution does not have to put in place a management arm and the local authority gets accommodation.
I know that some models have been put forward. I believe that Barking and Dagenham council in London has looked at putting in place a model—some local authorities in Kent are now looking at this too—whereby the institutional investor effectively builds properties for the council, which supplies the tenants and then gets to keep the housing at the end. There is the question—this was raised in the Committee’s report—of what guaranteed
rate of return the institutional investor has to be given. What rental increase does the local authority have to guarantee? Is it inflation or inflation plus a small percentage increase over a 50 or 60-year period? That has to be carefully considered, but given that in such models local authorities would control the housing stock at the end—either to sell to the tenants or manage for the foreseeable future—they may be able to manage the risk of being locked into guaranteeing a certain rate of rent against the value of assets.
These models are very interesting. Indeed, it would be interesting to hear Ministers’ views on such schemes. As they are new, local authorities might need encouragement and advice to enter into such partnerships, but they pass the common-sense test. There are large amounts of cash sitting in institutions, and we have a social housing sector with an enormous need for new capacity and an almost limitless number of tenants to fill the spaces. That suggests that these elements could successfully come together in a tantalising and interesting solution to many of the problems that the report looks at. The Committee’s report also touches on direct borrowing from the markets, through municipal bonds or local government bonds, as it were. That could be a different way, but if we can bring these elements of institutional finance together to meet the enormous need that is out there, that could be an attractive solution.
Finally, I want to touch on investment in the private rented sector. Throughout this debate hon. Members have referenced case work in their constituencies involving people in housing need who live in squalor and poor accommodation in the private rented sector and claim housing benefit to do so. We discussed this issue in a Westminster Hall debate last week. I feel strongly that it is wrong to pay out housing benefit to slum landlords—people who maintain their properties in a poor state. They know that their tenants cannot afford the cost of moving out or a deposit. I had a case in my constituency where the cost of simply moving from one two-bedroom flat in Folkestone to another—the cost of a deposit, added to the letting agent’s fees—could be over £1,000. People simply cannot find that money. Bad landlords know that and they know they can get away with not maintaining their properties to a sufficient standard.
Local authorities have the power to intervene under the Housing Act 2004, which was passed by the last Government, but there are understandably limits to their enforcement capabilities. The one thing we do control, however, is the money supply for the housing benefit paid either directly to tenants or to landlords. If we could turn off the tap to bad landlords who will not take action to improve their properties, we would have an opportunity to put pressure on the private rented sector and those landlords, to ensure that such properties are maintained at least to a standard whereby they do not fall foul of one of the category 1 or category 2 hazards under the 2004 Act—largely, that people are not living in severe damp and severe cold. There should be no excuse for that. Putting this right is probably relatively low-cost for landlords. If they were faced with losing two or three months’ rent, they would find the money to put such properties right pretty quickly. That would do an awful lot to improve their tenants’ quality of life.
There is nothing wrong with private sector landlords offering accommodation to people on social rent or those renting with housing benefit, but they have the right to expect such properties to be maintained properly. I think all Members are far too aware of social housing tenants who are trapped in the system, living in poor quality accommodation. Months if not years can go by before anything is done to put it right. In controlling the money supply, we have the opportunity to do that and, in doing so, to correct some of the market failures in the system—empowering tenants to move around it more freely by making moving costs more affordable—and give them a better standard and decency of accommodation in the first place.
The Committee’s report has thrown up a number of interesting questions. I will certainly be interested to hear whether the Minister will produce an updated Government response to it, which I am sure we would all read with interest.
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