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Affordable Housing (Rural Areas)

Volume 448: debated on Tuesday 11 July 2006

I am pleased to introduce this debate, particularly in the context of the Affordable Rural Housing Commission’s report that was published in May. I thank the Minister for commissioning the report and congratulate the commission on its work, but towards the end of my speech I shall press her on what the next steps are, because affordable housing is a big problem in rural communities. Although progress has been made, we need to make further progress.

From my experience in Nottinghamshire, people have difficulty moving into the rural villages that surround the Nottingham conurbation. I know a family in Farnsfield, for example, three generations of whom live together—grandparents, parents and children. The children aspire to live in the village, but there is no affordable accommodation for them. There are similar problems in places such as Lambley, Lowdham and Woodborough. They are attractive villages where house prices have spiralled and young people have difficulty getting into the market. The situation is difficult in Nottingham, but I am painfully aware that it is far worse in other parts of the country, particularly the south-west, most of the south and the national park areas.

Everyone has a right to decent housing, whether they live in the town or the countryside. It is important to acknowledge that many people aspire to move out of the town and into the countryside. The Countryside Agency suggests that 100,000 people a year move out of the town and into the countryside, hoping for a better quality of life. We need to ensure that there is not an urban-rural divide. Some people, including some politicians, argue strongly that urban issues are different from rural issues, but rural housing is one side of the same coin—people move out of the town because they are worried about poor educational standards, high levels of crime and a decaying environment.

We need to continue to work hard as a Government to build on what we have achieved, to ensure that our town centres are revitalised and become places where people feel pleased and comfortable to live. The Government have a long history and a good platform on that. We need to continue that work, but of course we need to do things in the countryside too.

That is why I was delighted that our rural manifesto at the last general election contained a commitment to establish a commission on rural housing:

“We will establish a Commission on Rural Housing and ask it to explore measures to ensure that local residents and their families can have access to affordable housing. The Commission will examine a range of models—such as cooperative ownership or shared equity—to see which work well in a rural setting.

We are also keen that they look at the place of government owned housing stock in rural areas in addressing rural housing need.”

The commission was established shortly after the general election. It was chaired by Elinor Goodman and produced a comprehensive and well inter-linked report in May. The commission is keen to make progress with the report and so am I.

The commission has described its report, saying that it offered

“practical solutions which would improve access to affordable housing to rent or buy for those who live or work in rural areas. They were to be evidence-based, draw on best practice and propose action which could be taken forward across public, private and voluntary sectors.”

The commission achieved that aim. Its report contains a range of measures that, taken together, can be a move towards providing affordable housing.

Before I come to solutions, however, I want briefly to consider some of the evidence that the commission gathered. The statistics tell a compelling story. There was a 6 per cent. decline in rural new build as compared to a 29 per cent. increase in urban areas between 1998 and 2005. Average house prices in the countryside rose by 73 per cent., as compared with 68 per cent. in towns, between 2000 and 2005. It is therefore not surprising that, with rising prices linked to spiralling demand and falling supply, house prices for first-time buyers are 12 per cent. higher in rural districts than in towns and that the median house price in a rural area is 6 per cent. higher than in the towns.

If that was not problem enough, the average earnings in the rural economy are £17,400 a year, compared with an urban average of £22,300. The combination of high house prices and low incomes in rural areas means that people seeking to buy, even at the bottom end of the rural market, have to pay seven to 10 times their earnings, compared with an average of 3.4 to four times in urban areas. Rural dwellers, particularly young rural dwellers who have low incomes, face a real problem in accessing the housing market.

The consequence is that someone on such an income could probably afford housing in 50 per cent. of urban wards, but in only 28 per cent. of rural wards and 2 per cent. of rural wards in the south-east. Some 45 per cent. of newly formed households cannot afford to set up home in the ward in which they currently live. It is also important to note that the public sector is not compensating for market sector failure. There was a 22 per cent. increase in urban affordable housing provision, but only a 3 per cent. increase in rural areas between 2001 and 2005, and only 5 per cent. of houses are social housing in rural areas, compared with a national average of just over 23 per cent. Those figures spell out the stark reality for people who are looking for entry into the housing market in rural areas. There are problems of market access not only in Nottinghamshire but across the south, and particularly in the south-west.

What is to be done? Clearly we need to build a lot more affordable housing, not only in market towns—important as that is—but in villages of less than 10,000. They make up 19 per cent. of the population but receive only 10 per cent. of Housing Corporation grants. The commission has calculated how many new homes will be necessary and suggests that 11,000 new affordable homes will be needed in rural areas each year, which would be made up of 7,600 for rent and 3,200 for low-cost shared ownership. No one doubts that that is a big task, but the commission’s recommendations are compelling. We are taking those ideas forward, but we should do so much more firmly.

Let me run through some of the ideas. First, there needs to be a better analysis of rural housing need. Our current methodology is not as robust as one might want. There needs to be a debate, starting in the locality through parish councils and in local authorities, to a regional and Government level, about how we calculate housing figures, what we really need and what the timetable is for delivering those figures.

I am particularly keen to involve regional spatial strategies in the process. The strategies of most regional planning forums are now well under way. We could consider at an early stage what provision and recommendation those spatial strategies make for rural housing. Some strategies acknowledge the need, but some do not. There are some early gains to be made in this area.

I am a great believer in planning. Planning is a Labour concept—a socialist concept—and we should aspire to a planned, spatial structure. We should not be afraid of that, despite the waves in the water at the moment. I am keen for local authorities to introduce plans for rural housing through their local development frameworks. The exceptions policy has served us well up to now, but by itself it is not sufficient. In the new local development frameworks, local authorities need to identify sites for housing. The threshold for affordable housing in new developments needs to be brought down.

We need to revise some planning policies. It is not possible at present to convert outbuildings to housing on many farms in rural areas. We need to consider that matter closely. Last week I visited Beecroft farm in Bulcote, Nottinghamshire, where there was once a big piggery where pigs were fed on swill. However, that business has gone and the buildings are decrepit and decaying. In effect, it is a brownfield site, but our current policy guidance does not allow us to convert the buildings to housing. We should revisit that guidance.

The hon. Gentleman is making an interesting point in arguing that planning has socialist origins. Having said that, does he not agree that planning appears to be fuelled more by greed than need and that when local planning authorities pass permissions—particularly unfettered permissions for housing development in rural areas—they effectively give away lottery sums to landowners? Does he agree that we need to ensure that the planning system in rural areas should meet the need for affordable housing, not stuff the pockets of people who happen to be lucky enough to have developable sites?

I am not always sure that greed drives the planning process—clearly, landowners want to maximise the benefit of their land—but the hon. Gentleman is right that, through their local plans, local authorities are in a position to drive affordable housing. That is the commission’s view and mine, too. I hope that the Minister will continue along that line. Planning policy guidance is already being revised. There are encouraging movements in respect of planning policy statement 3 that will help affordable housing.

I have talked about the need to know how much housing we require and to use the planning process. However, it is also important to retain the existing stock. One can argue for new housing, but there is a strong case to revisit the right to buy in rural areas where public housing is in low supply. I welcome the movement on staircasing in rural areas, so that shared equity can be released—that is a step in the right direction—but if we are concerned about affordable housing, we must maintain the current stock.

We need to move towards financing public housing—affordable housing—in rural areas. I am pleased that in May the Housing Corporation announced an extra £230 million to provide 6,000 new houses in rural areas between 2006 and 2008. That decision recognises that there is a problem and progress has to be made. If the commission is right that we need to create 11,000 new houses each year in rural areas, we need to revisit the allocation from the Housing Corporation and at least double it.

I know—I am sure that the Minister will tell me—that this is a matter for the spending review. We need more money for rural housing. The Government have set up a commission to recommend the way forward and the Minister has considered the commission’s proposals. I hope that colleagues throughout the Government and in the Treasury will reconsider, because given the scale of the market failure, we need to provide more public support for rural housing.

We need to do many more things. Let me canter quickly through some of the things that the commission mentioned. We must continue to look at the public ownership of land in rural areas. The Ministry of Defence and the national health service, for example, are big landowners. A review is under way, but we need to make more progress so that we can define land in public ownership for rural housing. We must secure funding for rural housing enablers, which do tremendous work in bringing together proposals throughout the country, although their funding is not secure. We need to resolve that issue.

If we are to combat the elements who do not want to see more affordable housing in rural areas, we must advance high-quality design proposals that are sensitive to the environment. We need to consider new models of delivery and ownership, such as community land trusts and land-swap levies. We must also have a sensible discussion about second homes. Some people argue strongly that second homes are the problem and getting rid of them is the solution, but that is not my perception. I accept that in parts of the countryside, particularly the south-west and the national parks, second homes are an issue. However, we are considering more systematic market failure.

I look forward to reading the Lyons report at the end of the year, because I presume that Sir Michael Lyons will comment on taxing second homes in the countryside. Second homes are a problem, but we must not be seduced into thinking that it is the major problem; the issue is much wider than that.

It is a major issue in west Cornwall and the Isles of Scilly, which I represent. Does the hon. Gentleman share my concern that not only is it a problem, but it sets the tone for the market price of housing, which is way out of reach of people on the lowest incomes in the country, as is the case in my part of the world? Does he share my concern that in an interview in the Financial Times last week, the Minister said that the Government did not intend to follow the Affordable Rural Housing Commission’s recommendation in that respect?

I look forward to hearing what the Minister has to say about the commission’s recommendation and I shall consider her comments closely.

I accept that second homes are raising house prices to an exceptional level in attractive parts of the countryside like the hon. Gentleman’s, but affordable housing in rural areas is a much wider problem and is not just connected with second homes.

Real leadership is necessary to deliver affordable housing in rural areas. We are not talking about concreting over the countryside. The commission’s proposals would mean that to achieve its targets in population wards of 5,000, we are talking about six houses per community. I believe that that is achievable and sustainable. We must move away from a notion of sustainability in the countryside that focuses solely on landscape and environmental issues. We want a living, changing countryside, a countryside in which investment can take place, and in which investment in new housing is investment in a new future for the countryside. We have heard talk in this Chamber today about the post office network. There are concerns about small village schools, shops, pubs and bus services in rural areas. We must move towards younger, more vibrant and more sustainable villages in our countryside.

The commission has set out an agenda. I do not want it to be an agenda for discussion; I want it to be an agenda for change. If we are serious about a living, working countryside, we must take up the commission’s challenge and make the change. I am confident that the Government, having set up the commission, will look closely at its recommendation, follow some of its policy advice and introduce tools and measures for change.

I congratulate the hon. Member for Sherwood (Paddy Tipping) on securing the debate, which is on an extremely important subject. The lack of affordable housing used to be called the hidden problem in rural areas. It is now much less hidden due to the efforts of the hon. Gentleman and others in this Chamber and outside it.

My constituency, rather like that of the hon. Member for St. Ives (Andrew George), is a south-west constituency. According to figures just published, Torridge is the worst out of 408 English local authorities in terms of wages, and wages in West Devon are almost as bad. The published figures for Torridge and West Devon show that the average house price in Torridge is £186,000, and the average house price in West Devon is £235,000. That is 10.6 times average earnings in Torridge and 9.3 times average earnings in West Devon. No doubt the experience of many hon. Members on both sides of the House who represent rural areas is that their surgeries are filled increasingly with young people, families and single people who find it almost impossible to find a decent place in which to live.

That is why I welcome the Affordable Rural Housing Commission’s report. I agree with much of it. I have questions about parts of it, but there is no doubt that when I began to examine this problem and spoke to the chief executives and the planning and the housing departments of the local authorities, I found that the planning system was centre stage as the main obstacle to the development that both those authorities wanted to carry out. I congratulate West Devon borough council on its pioneering approach in this area. It is doing wonderful things and has recently produced a report that prioritises affordable housing in the villages as one of its main targets and objectives. That must be a good precedent; I hope that it will be repeated.

The planning system, however, is a major problem, and I want to raise with the Minister a specific example from my constituency of a pioneering, innovative scheme, developed by the community. A village in my constituency called High Bickington, which has received some national attention lately, formed a community property trust. The Minister may be familiar with the story. The village needed a new school. The Victorian cramped conditions in which the children are taught have been obviously inadequate for a long time, but instead of deciding to address only the educational need of the village, those in the village who were concerned about their community, of whom there were many, devised a plan that would address not only the need for a new school, but community woodland, affordable housing and the important question—I agree with the hon. Member for Sherwood—of design. If people are to accept the development of their villages, they must be satisfied that the design quality is high enough for them to feel easy and comfortable about the expansion in population and the expansion in building that it requires.

The community property trust in High Bickington worked for several years and many hundreds of hours—with the assistance, I must say, of some Government money—to devise a plan. It was recognised from the outset that that would not be within the local development plan. It was an innovative departure; it involved pioneering ideas. Several Ministers visited the scheme and described it as inspirational. So did the Prince of Wales. The trust’s plans for affordable housing were exceptionally good ideas. It devised a scheme whereby those whom it had identified already to occupy the affordable homes that it was building would receive back, when they handed over the tenancy to a new family, a sum of money that represented a proportion of the rent above cost that they had paid to the trust. They would pay their rent and, at the end of their tenancy, the trust would calculate how much it had cost it to maintain the building, and over and above that the departing tenants would receive a sum of money that was small but sufficient to enable them possibly to move on to a shared equity scheme or some other form of house ownership. Those ideas were immensely precious and valuable.

The trust submitted its application to Torridge district council, but that council was obliged, because the application departed from the local plan, to pass it to the Government office for the south-west. There it languished for many months, until eventually a public inquiry was held and the planning inspector decided to recommend against it on the ground that it departed from the local plan. Imagine the disappointment of those hundreds of villagers and members of the local community who had received encouragement from the Government—indeed, a senior Minister had visited and said that the scheme was inspirational—only to be confronted with devastating failure. That is despite their having received Government money for a scheme—I must make this clear to the Minister—that would always have departed from the local plan.

This is a case, I would submit, of the right hand not knowing what the left is doing. The Minister will know that I have written to the Secretary of State, raising the case and asking for the Secretary of State’s comments. I hope that she will feel able to comment, because there are still hundreds of devastated members of the local community, who have found that when they take the initiative and show the drive and energy necessary to devise a solution, they come up against the planning system. They had identified the local families that would be involved. They had measured carefully the local need. When they take into their own hands the means by which to produce local and radical solutions to the problems that they face, they come up against the rock of bureaucracy and the planning system.

I respectfully suggest that it is vital that the planning system be the subject, from top to bottom, of a radical review as to whether it favours the development of rural affordable housing. Only if we take that concerted approach and have a radical review of the planning system in rural areas—I agree with Elinor Goodman and the commission—can we conceivably begin to address the problem that we face.

The hon. Member for Sherwood talked about the need for imagination. The other day, I was with a representative of South West Water—not a very popular company, I have to say, in the areas that I and the hon. Member for North Cornwall (Mr. Rogerson) represent. I was being told about a plan that South West Water had and I was shown a map. I invite the other hon. Gentlemen here from constituencies in the south-west to make an application for the same map, because it is extremely interesting. Across the map of the south-west—across Devon and Cornwall—there were literally hundreds of dots, which showed brownfield sites. They were disused water processing or other water sites. Many of them were on the edges of villages and would be ideal for the development of two or three houses. There were about 100 such sites in my constituency alone. At least some of those would present potential opportunities for the development of affordable housing.

The company was telling me that it would like to make the land available for the purposes of affordable housing. It might be difficult for it to develop it profitably and viably if it were not permitted at least one market-priced house, but it does not, as I understand it—some hon. Members may be sceptical—seek to make a substantial profit. It wants instead to cross-subsidise, by the production of, say, one market unit and two, three or four other affordable homes. If there are 100 such sites on the edges of villages in my constituency alone, I ask the House to reflect on what a difference they might make to the problem in my constituency and other constituencies in the south-west. As the hon. Member for Sherwood said, however, that requires will and leadership. It requires a coherent and joined-up approach, which is what currently seems to be lacking.

The hon. Gentleman mentioned farmers. There is no question that many farming families in my constituency would like to build a bungalow or put up a building for members of their own family on the farm, so as to be able to work the farm. However, the planning system makes that very difficult. The hoops that people must jump through and the hurdles that they must get over are extremely rigorous. It should not be so, particularly if they are willing to have an agricultural tie on any such building. I agree with the hon. Gentleman that barns and redundant outbuildings are also wonderful opportunities to develop affordable housing. However—and I say this merely to enter a caution—it might not be profitable to do that unless at the same time there was permission to provide perhaps one market-price unit for the purposes of cross-subsidy.

I shall conclude—I know that other hon. Members want to speak—with an appeal to the Minister. It is critical that the Government should show that what we are debating is a crucial priority within their rural housing policy. It is vital that instead of a regional spatial strategy that is always urban-focused in relation to development, we should have a specific mainstream policy that will allow villages to breathe. I know that there is concern about nimbyism. There is no doubt that people who retire to villages or come to live in them at other times feel uncomfortable about what they may see as a threat to the precious way of life in which they have invested, which was the reason they went there. It is not only retired people or those who have arrived lately who feel that way. It is precisely those concerns that can, I believe, be tackled by the concern for design that the hon. Gentleman has spoken about.

I ask the Minister seriously to consider the sort of radical reform of the planning system, or at least the kind of leadership and will, that the Affordable Rural Housing Commission has spoken about. High Bickington was a classic example of a community taking its future into its own hands. However, it was confronted by bureaucracy and astonishing Government blindness to the effects of their own policy. That policy both paid for the development of the plan and then brought about its defeat, because of the objection, which had been apparent throughout the three or more years of the scheme’s development period, that it would mean departing from the local plan. We must have greater imagination and flexibility, and I urge the Minister to take that message back. Nothing is more important in the countryside at the moment than genuinely and urgently tackling the housing problem.

I apologise, Mrs. Humble, for the fact that you must listen to me again, but, as I said in the debate on post offices and community services, the debates this morning have a unified theme. They are not only about how we deliver services but about how people can live in the countryside and use them.

I thank my hon. Friend the Member for Sherwood (Paddy Tipping) for securing a debate on this issue now, and for explaining it so carefully and clearly, with numbers that even I can understand, to show the depth of the current crisis and why we must do something about it. I am pleased to follow the hon. and learned Member for Torridge and West Devon (Mr. Cox), if for no other reason than that the Minister may hear his plaintive cry for the High Bickington scheme. It is a brilliant scheme and one that needs to be moved forward. I know that planning rules exist, but I have always believed that rules are there to be broken if that would lead to a better outcome; we sometimes have a negative way of turning things down for reasons that are difficult to understand.

As my hon. Friend the Member for Sherwood would expect me to say, one of the pleas that needs to be made is for progress with the idea of community land trusts, which feature prominently in the report. I hope that the Government will sign up to the report lock, stock and barrel. It is really very good and well written, and it is possible to read it and think, “This makes sense.” Nothing less is to be expected from a body chaired by Elinor Goodman, the political journalist. If she cannot put the information across, no one can. However, its quality is due also to other members of the commission, including our late lamented colleague Peter Bradley, and Mark Shucksmith, who probably understands more about rural communities than most of us would ever claim to. There are people of real importance involved, and I hope that the Minister is presently not just dwelling on the report but considering the points for action.

The report is a road map that will take us forward. It contains ideas whose time has come, among which are community land trusts. I shall quickly plug the Cashes Green scheme in my community, which receives a mention in the report. It is described as a model, but things seem to be somewhat more complicated than they might. We need to unravel the complexities and recognise that such schemes are a way to move forward in rural communities such as High Bickington. The problem is often about locking the land away. If it is possible to control the land, the equity value that can be taken from it, and which people can share in, provides people with a reward. The important things are the land, its ownership, and communalising that.

I am not here to have a dig at the Minister, but perhaps we can clear some of the history of local authority ownership of housing out the way. The Government have a brilliant record on the decent homes standard. We do not congratulate ourselves enough, but we are driving that forward and it is almost certain that we shall reach our target by 2010. I feel slightly argumentative about who should own the property in question, but I do not want to get bogged down in that. The most important thing is to recognise that social ownership of housing is a key factor.

The Minister was at a seminar that I attended a couple of weeks ago. It was interesting, because we examined some of the complexities in models of social ownership across the domain, but particularly in rural areas. I made the point that local authorities have a key role to play and that leadership is sometimes lacking. It is too easy to abdicate responsibility and blame the planning process. I expect local authorities to be determined, and to make it clear that they will keep coming back until they deliver the schemes in villages and market towns as well as urban areas. That is their responsibility and what they are elected to do. They must sometimes take on the nimbies. This is about pointing out to people—this is linked to the previous debate—that there will be no services in rural Britain unless people of different ages, classes and, dare I say it, ethnic backgrounds move in to regenerate those communities. That will have to happen and will have to be encouraged.

I have two more points to make; I know that other hon. Members want to contribute. I hope that we can agree across the parties that the commission is brilliant and is worthy of full support, and that this is simply a question of pushing the Government even further in trying to get more resources going in faster.

I was interested to receive a paper from Shelter on this matter. Too often, we think of homelessness as an urban and city problem. Purely by chance, I was talking to a couple of people from a Christian group in Stroud called Marah, which was set up four or five years ago. Its initial aim was simply to offer a warm meal in the day, and it now operates on at least three days a week, providing meals for people who need them. One would think that we were talking about two or three people, but the group regularly feeds 70 people, 50 of whom it believes to be genuinely homeless, although not necessarily on the street. In rural areas there can be a lot of sofa surfing and people are often able to find residences for a while. Many such people have dependency problems with alcohol and drugs and believe that they are forgotten. Indeed, there is a great deal of evidence that they are. Inevitably, we are talking about people who can speak for themselves and aspire to some form of ownership or look to get some form of social rent, but let us remember that there are people below that level in rural areas—as you well know, Mrs. Humble—as well as in more urban settings.

My next point is, perhaps, sometimes forgotten. One of the key reasons for providing accommodation in rural areas is because a lot of jobs are being created in such areas at the moment, but that cannot work if there is no housing for people to live and work there. This is about squaring a circle: we must be cleverer in market towns and villages. We must recognise that if we are to provide for our older people, we need the people who can provide such care to live and work locally, or that will not happen. In the Cotswolds, and coming into my constituency, there is a care problem. People simply are not able to live and work there because they cannot afford to travel from Gloucester or Cheltenham. That is a real problem.

My hon. Friend makes an extremely interesting point. In urban areas, we face demand pressures from people who are coming from the rural hinterland because they cannot afford to live in the market towns and villages. Indeed, they are the very people who we need to take up the employment that is now in those areas. In Plymouth, we now have the third-highest-rising house prices in the country, and that is partly because of the pressure on our young people to leave towns and villages and go to urban areas where they can afford housing.

I thank my hon. Friend for her comments, because I have always believed that rural and urban problems are not separate, but interlinked. Problems in different areas may have different gradations and stresses, but they are essentially the same problems.

We should not isolate housing from either service provision, which depends on people coming and enhancing vibrancy in communities, or employment. It is a myth that people want to live in rural areas and commute miles and miles. If they do, they are wrong, and they may have to take slightly less well-paid jobs so that their quality of life will improve, which is, of course, why they moved to a rural area in the first place. The sustainability which is so vital, and for which we must all change our lifestyles, can be achieved only if people recognise that they have to make some sacrifices. If they want to live in those communities, they must work more locally. The good news is that, with the rolling out of the internet, plenty of jobs are being created in the service sector in rural areas; we simply need the houses there for people to live in so that they can do those jobs.

It is, as ever, a pleasure to follow the hon. Member for Stroud (Mr. Drew), who speaks with great articulacy on issues concerning rural communities, as well as international issues. He is certainly known as a rural champion in the House.

I congratulate the hon. Member for Sherwood (Paddy Tipping) on having secured this important debate and on having set out so accurately the issues before us today. I am keen to hear the Minister’s response to his points, and will therefore do my best to keep my remarks as brief as possible to allow the winding-up speakers to give the Minister as long as possible to address the relevant issues.

I congratulate also the hon. and learned Member for Torridge and West Devon (Mr. Cox) on his speech. We are relatively near neighbours, although he represents an English seat and I a Cornish one. Our constituencies are not many miles apart, and we therefore share a geographical connection. Our constituencies are both affected by many of the same issues.

I return to a point that I mentioned in my intervention on the hon. Member for Sherwood. The Government’s figures on second home ownership clearly show that Cornwall has by far the highest level, proportionately, of second homes anywhere in the country, followed by Cumbria, Dorset, Norfolk, Devon and East Sussex. This is not simply about the politics of envy. I still count among my friends many people who own second homes in my constituency, despite all that I say about the impact that they have on the local community. This is a question of the practical management of the existing housing stock and the impact that it has on local people.

Given the way in which the housing market works in areas such as mine in west Cornwall and the Isles of Scilly, it is almost as though local people—Cornish folk—do not have any right to live there. I can speak only about my area, although I know a little about the housing market in other parts of the country, having worked as a quasi-rural enabler in Nottinghamshire, Devon and elsewhere. The only options available to local people are to leave the area or live on low-cost reservations. Surely that is not the way forward if we are to have a housing supply that provides any sort of equity for the community who have been living there.

We know that the market is dysfunctional and that house prices are high, having doubled in the past five years in Cornwall. Figures on this are regularly trotted out, and I could trot out more, but I will not, which show clearly that the bottom rung of the housing ladder is now well beyond the reach of local people. Last year, I undertook a survey of local estate agents, which showed that twice as many properties in my constituency were sold to second-home buyers as to first-time buyers. I was surprised that any properties had been sold to first-time buyers, because I could not believe that any properties in my constituency were any longer affordable to local people. They must have benefited from the recent loss of an aunt or other rich relative. It is certainly not possible, on local wages, to get on to even the bottom rung of the housing ladder.

In addition, the public rented sector is extremely small; it is well below 10 per cent. of the housing stock, compared with 15, 16 or 20 per cent. in many urban areas. The private rented sector is smaller still. In many urban areas, such as London, the private rented sector might be expensive, but it is relatively healthy. The rents chargeable on private rented properties in my area are well in excess of anything that the housing benefit system is prepared to offer. Local reference rents are entirely unrealistic, compared with what local people are charged in the market. As a result, the situation is extremely difficult.

The hon. Member for Stroud referred to the problem of homelessness, but where does the problem go? It does not go on to the streets, but into quarries, caravans at the backs of farms, garages and garden sheds on the Isles of Scilly. People do not sleep on park benches quite so much but they do live in lichgates outside churches and elsewhere. Yesterday, in the Salvation Army hall in Penzance, I was a panel member at a Cornwall independent poverty forum hearing, which was organised by the diocese of Truro. Local young single men told us about people who were earning a living, but who were unable to afford even to rent a flat. We are talking not about people who are unemployed, but about people who are actually earning and who cannot find a place to live. That is happening in west Cornwall and, indeed, on the Isles of Scilly. That is the serious nature of the problem that we face.

Of course, simply building homes is not the answer. People talk rather blithely about the Kate Barker report and about the thousands of houses that are needed to meet housing need in rural areas, but that is a simplistic response, which will not address the problem. Over the past 30 years, Cornwall has had one of the fastest growing populations in the country, as well as the number of houses that have been built as a proportion of the overall housing supply. However, it has one of the worst housing problems—if not the worst housing problem—in the country, so simply building houses is not the answer.

Although I think that the planning system was set up with entirely honourable intentions, it deals, sadly, only with the supply side of the demand/supply equation, as I said in an intervention on the hon. Member for Sherwood. It must be recognised that it is creating scarcity on the supply side, which affects the market value of the land on which it allows people to build. Sadly, human frailties being what they are, that means that the system is fuelled by greed, rather than need. Landowners go to extreme lengths to persuade the local planning committee that they must have permission to build on their land. They know that getting that permission will turn one acre of agricultural land, which might be worth about £3,000, into something that could be worth £500,000 or more. Planning committees are, in effect, writing cheques for lottery sums for landowners, and we end up with people not having to work terribly hard to gain a great deal of income.

What does that do for local housing need? The answer is absolutely nothing if there is no affordable element. Even if one uses the planning gain approach, which I describe as the planning bribe approach, and builds some affordable housing, that still multiplies the price of the land to a large extent. We must therefore address the need to construct a new rung on the housing ladder. The intermediate market is not there and it needs to be constructed. Shared equity, mutual housing and other forms of property semi-ownership clearly need to be created.

In an interview in the Financial Times on 3 July—I think that the Minister knows my views about it—she said that second home ownership was

“not a significant factor affecting affordability”.

Well, it is in an area such as mine and in many other parts of the country. It might not be a significant factor affecting affordability throughout the country, but in areas where it is an issue, it is very significant; it sets the tone for the market price and has a tremendous impact.

On the issue of second homes, the commission discussed the option of tighter fiscal controls, and many contributors felt that higher taxes on second homes and holiday lets might be the way to go. Does the hon. Gentleman have a view on that?

There are only two ways to go. One is to make second home ownership fiscally less attractive. The Liberal Democrat tax commission has made it publicly known that we are looking at adding further taxes to capital gains tax to discourage second home ownership in certain circumstances. The other way is through the planning system. The knotty problem has always been how to define second homes, and I think that it can be defined through the taxation system. Once we agree on the mechanism that we use to define it, we can describe second home ownership as a separate and quite distinct use from permanent occupation. Under the use classes order, such use would be subject to a planning application that gave the local authority the opportunity to constrain the number or proportion of second and holiday homes in communities where the scarcity of properties had caused housing problems.

There are therefore two approaches to addressing the issue of affordability. I should say in parenthesis that my comments on second home ownership and planning should apply only to the lifetime of the occupancy; otherwise, we would have a stupid situation, in which we would all be applying to change our properties from first to second home use because of the premium market value that would apply to the property after the change.

My final point relates to the intermediate market. Clearly, that is the direction in which Government policy needs to go in rural areas where the mismatch between very low earnings and very high house prices is creating such tremendous problems. Although this sounds counterintuitive, one of the best ways to make progress would be to start by saying that there will be no further development in rural areas, but that, as an exception, we will use planning policy statement 3 to constrain land prices. Land prices are the big constraint on achieving any sort of affordable housing.

I should like to echo the sentiments of other hon. Members in paying tribute to the hon. Member for Sherwood (Paddy Tipping) for securing this debate, which is particularly important and timely, given that the Affordable Rural Housing Commission report, to which he and other hon. Members referred, was published some weeks ago, and we are now moving towards the recess, so hon. Members will have a valuable chance to comment on it and seek indications from the Minister as to how the Government intend to respond.

The hon. Gentleman gave a clear indication of the size and nature of the problem that is facing communities in rural areas. The housing dimension interacts with other problems in rural areas where, in the past, poverty has been concealed. The report by the Commission for Rural Communities highlights the fact that one in five people in rural areas is living in poverty, and seeks to show that these issues are interrelated and that the unaffordability of housing has a great impact on people’s ability to exist on the income that they receive.

In many cases, the examples of poverty do not show up because they are in small pockets in what would seem to be wealthier communities. That reflects the need for housing. As the hon. Gentleman said, we are not talking about huge developments in villages; we are talking about the need for one or two, or perhaps five to 10, houses in small villages and the fact that they would have a huge impact in tackling the problem of unaffordability.

The problem is getting worse in that the disparity between incomes and house prices is growing. The nature of the right to buy has meant that many villages now do not have any, or have very few, homes that are still available in the conventional social rented sector. People are forced either into staying on longer with extended family, if they still have family in those communities, or into relocating to other parts of the country or to urban areas, as we heard in the contribution from the hon. Member for Stroud (Mr. Drew) and the intervention by the hon. Member for Plymouth, Devonport (Alison Seabeck).

The consequences of the shortage of affordable housing in rural areas include overcrowding, where young adults, young couples and so on are forced to stay on longer in the family home. That can have health implications. I have seen in my surgery, as other hon. Members will have in theirs, the genuine anguish that exists in families and the impact on children who are growing up in inadequate housing. There can be problems whereby relationships then break up because they cannot cope with the strain. I saw a recent example where the number of children in a family was not quite enough to secure a banding that would have allowed the local authority to prioritise this particular application under the homefinder system and choice-based letting. The pressure of the circumstances in which that family was living was great. The couple broke up and a new dimension was added to the problems that they were experiencing.

The issue has effects not just on people as individuals and as families, but on the rural economy. If people cannot afford to live in rural areas but they still work there, they need to travel back into those areas, as the hon. Member for Stroud pointed out. We hear about sustainable development being that in the larger towns and on their edges, but that is not the case, because people are being forced to commute, almost invariably by car, back into the rural areas, and that has an effect.

The issue has an effect on the rural economy in terms of local shops and businesses. If younger families are not able to exist and to live in rural areas, those business will be affected. In my constituency and those of many other hon. Members in rural areas, small schools are a valuable part of village life. They, too, are under threat. We are now entering a period in which the change in the demographics might mean that a number of small schools will face problems. That can only be exacerbated by the lack of affordable housing in rural areas.

The break-up of extended families undermines the social network that exists to ensure that where problems are experienced relatives are on hand to lend a helping hand. In effect, some rural villages, particularly in the south-east, are becoming dormitories and commuter villages.

As with all problems of this nature, the causes are complex; they are never straightforward. It is clear that one dimension is the lack of supply. We need to build more. The report that I mentioned discusses—Shelter has supported this, as we have heard—the need for about 11,000 affordable homes a year to start to meet the need. I understand that the Housing Corporation has set aside the funding for about 3,000, so there is a huge gap to be made up.

We also need to examine the issue of planning. The contribution from the hon. and learned Member for Torridge and West Devon (Mr. Cox) was timely, and he gave a heartbreaking example of how a community’s hopes had been raised, people had been invited to participate in coming up with innovative solutions and then the existing system had failed them at a crucial juncture. I look forward to hearing the Minister’s comments on the issues he raised.

Does my hon. Friend agree that part of the planning issue derives from a lack of flexibility for local communities to identify their own particular problems and to find their own solutions? Does he agree that the Sustainable Communities Bill, which has the support of more than half the House in an early-day motion, might be one mechanism to allow local communities to identify their own problems and solutions, and to get Government support to help them overcome those problems? We could overcome the problem of the unintended consequences of national policy on the local community.

I thank my hon. Friend for her contribution and pay tribute to her work in support of the Sustainable Communities Bill. I am a signatory to that early-day motion and have spoken at a public meeting in my constituency—I know other hon. Members will have done the same in their constituencies—in support of the Bill’s concept. The Bill will make a valuable contribution to allowing local communities to take control of these issues, come up with innovative solutions and, hopefully, put them into practice; unfortunately, I have not been able to do so thus far.

There are also problems in respect of the new regional spatial strategy, as the hon. Member for Sherwood pointed out. The pressure to examine sustainability in terms of public transport infrastructure, travel-to-work areas and so on is having the effect of encouraging regional spatial strategies to focus new developments almost completely within larger settlements or on their edges—on green belt land. We have heard that there are examples of brownfield sites in the rural areas, and we need to be examining those as well. I hope that the Minister will reassure us that the regional spatial strategy process, as it moves forward, will also include more support for small, appropriate schemes in smaller towns and villages.

The problem is also caused by the issue of land pricing. My hon. Friend the Member for St. Ives (Andrew George) made a valuable contribution when he spoke about his area’s experiences of development, the attitude of some landowners to the planning process and how their land might be used to meet—or not to meet—the problems that their community is facing.

Local councils do not always insist on enough affordable housing. There are examples of councils that have taken a tougher line on the matter and I hope that we will encourage councils to take the opportunities that exist to deal with the problem. There are a number of indications in the Commission’s report of where it feels that Government policy could expand that area to give more opportunities to local authorities to tackle these problems. We also need to be aware that some guidelines could be clearer and the message could be stronger for local authorities to take advantage of existing possibilities.

I will touch on the crucial issue of second homes as a cause, which my hon. Friend raised. We have heard about the league table that shows which counties that is a particular problem in, and I speak not just as a member of my party’s team of spokespeople on this issue but as a Member of Parliament for a Cornwall constituency. In North Cornwall it is a huge problem. The parish of Crantoch in my constituency wrote to all the parishes in Cornwall to ask them to come up with a figure for the number of second homes in their parishes. Some appalling statistics came back from some parishes and showed the distortion. I believe that in Manaccan in my hon. Friend’s constituency the figure was 80 per cent. That is clearly unsustainable. Sustainability in the round is vital.

For solutions I refer hon. Members to South Shropshire where councils have taken a robust line with developers to ensure every opportunity of providing as many affordable homes as possible. We must look at methods of providing council homes, whether through the taxation system or, more helpfully, a planning category for second homes. The Government must make every effort in their spending commitments to ensure that additional money is provided for more affordable rural housing schemes.

As we are straying into planning policy, Mr. Hood, I declare an interest as the director of a property and building company.

I congratulate the hon. Member for Sherwood (Paddy Tipping) on the sensible and measured way in which he introduced the debate. With housing matters, it is usually easier to identify the problems than to identify the solutions, but, unusually for a debate in this place, a number of good ideas have come out of our debate today. Some have come from the commission’s work and some from hon. Members’ experience, which proves that there are solutions. However, I am not sure that they are solutions from the centre; I think that they are solutions that must be delivered in those communities with the greatest difficulties.

I shall set the context. The number of affordable homes being built has fallen over the past half a dozen years. In 1996-97, 32,489 were built and in 2004-05, 22,823 were built. Although the trend is now upward, we did not expect that fall when a left-wing Government were elected. There has also been a substantial collapse in the number of first-time buyers. There were 503,000 in 1997, which fell to 320,000 in 2005. Some of that fall is due to changes in the housing market and some to lifestyle changes. Some people want to do their own thing in Kathmandu and to buy a property in their 30s rather than in their 20s, which was perhaps the case in the 1980s. Nevertheless, there is a real problem.

The hon. Member for Sherwood set out clearly the problems in rural areas. A statistic that I saw recently was that in 2003 37 per cent. of people in rural areas paid more than half their income in mortgage payments whereas only 26 per cent. in urban areas did so. Some of that is a feature of lower wage levels, but certainly people are willing to gear up to get their little corner of England. The result is that there are real burdens. Those who were born and grew up in an area face substantial competition and difficulties.

I feel that I should say something nice about second home owners, partly because of the tone of the debate. I do not consider them necessarily negative, negative, negative. I understand what Cornwall Members are saying. We have the same problems in Dorset, and they cause particular housing problems. The hon. Member for St. Ives (Andrew George) mentioned some of the problems, not least definition. Second home owners are often people who have grown up in an area but have moved away to work and intend to return when they retire. They inject money into the local economy. Second homes are sometimes rented to tourists and tourism is very important in the south-west.

It is interesting to note the personnel who have taken part in the debate. Although they have changed a little during the past hour and a half, two thirds of the hon. Members in the Chamber are from the south-west of England. If one put a pin in the area with the real pressure, it would be the south-west.

I am interested in what the hon. Gentleman is saying about second homes. With the benefit of hindsight, does he think that it was a good or bad idea to spend hundreds of millions of pounds through the council tax subsidy under Conservative legislation subsidising wealthy people to have second homes when so many thousands of people in areas like mine cannot afford a first home?

That has changed now, and those people pay 90 per cent. of the council tax. My party has accepted that, but when second homes are sold they attract capital gains tax, which first homes do not. Most Members of Parliament have a second home for their work and face capital gains tax on either their property in London or their property in their constituency. There are fiscal disincentives. Even if a definition could be found, I am not sure whether two housing markets could be created. That is possible in the Channel Islands, which have special status, but I am not sure that it is possible here.

To return to the tenor of the debate, if we focus heavily on second home owners, we miss the point, which is finding land for development. The key point that was raised by my hon. and learned Friend the Member for Torridge and West Devon (Mr. Cox) and the hon. Members for Sherwood and for Stroud (Mr. Drew) is the difficulty of finding suitable sites for affordable homes. Most of my experience of rural areas comes from when I was a district and county councillor in Wiltshire. I was always surprised that growth was pushed into towns and that the villages had lines drawn around them that were so fierce—they sometimes went through people’s gardens—that it was almost impossible to have any organic growth.

The hon. Member for Stroud made an important point about services and one factor is that unless there is some organic growth in villages, a proper cross-section of people and ages is not retained and services such as post offices, schools and rural transport are not provided as the population becomes slightly more elderly and perhaps slightly better off, so the way in which the area grows is distorted. The growth factor is important.

On the question of farms, in my experience there are sometimes opportunities for both light industrial use and housing growth on farms on the edge of villages, but that tends to create strong emotions. When I was leader of a district council, we made proposals for certain villages to become local centres to allow more growth. I have never been faced with such a large avalanche of letters and protests from people in those villages who did not want them to grow. The difficulties are understandable.

The solution is to give a lot more flexibility to local planners. If local people are given the ability to vary local planning without an inspector overruling them, they are in much the best position to create local solutions to local problems. I know numerous examples of district and parish councils signing up to schemes, but being overruled by national planning policy. I hope that when the Minister looks at planning policy statement 3 she will allow a degree of flexibility for housing in rural areas.

We heard that 11,000 units are needed, which is not an awful lot, and it should not be beyond the wit of people in rural communities to provide that. We have heard today of water companies, the Ministry of Defence and a number of public corporations that have sites in rural areas that could be adjusted and used. The local solution is the best solution and some sensible ideas have come up today. I understand the strong passions and emotions about the second home argument, but I do not think that it is the key. The key argument is to provide suitable sites for land so that our villages can grow more organically.

Design is terribly important. Sometimes, the best way of getting the design that one wants is to control the land, which Prince Charles has often done, particularly with his developments in places such as Poundbury in Dorset. His control of the land allowed him to do rather more with the development. We must consider giving local planning committees more flexibility on design. I am not sure that we want all housing to look the same, whether it is in Warrington, Basingstoke or Plymouth. Local materials and the local look not only add diversity but can make our country look more attractive.

I congratulate the hon. Member for Sherwood (Paddy Tipping) on securing the debate, and on raising the issue of the Affordable Rural Housing Commission report, which is widely agreed to be extremely important and weighty. The Government added to that report. We set up the commission precisely because we were concerned about affordability pressures in rural areas. Such areas face all sorts of additional challenges and wider issues to do with affordability. We are looking to develop some of the recommendations and to take forward the commission’s work. I shall try to give hon. Members a flavour of some of the work now under way.

However, we recognise that there is a wider problem of affordability that affects both rural and urban areas; my hon. Friend the Member for Sherwood is right about that. Housing supply is simply not keeping up with housing demand. More than 200,000 new households are formed each year, but only about 160,000 new homes are built a year. The level of house building is significantly lower than it was, say, 30 years ago. As long as there is that gap between new household formation and the number of homes built, there will be growing pressures on affordability across the country in future. Our assessment and research suggests that if we simply carry on at the current rate of house building, over the next 20 years the proportion of 30-year-old couples able to afford their own home is likely to drop from more than 50 per cent. to nearer 30 per cent. That is simply unsustainable, given the aspirations of first-time buyers and the next generation.

My hon. Friend is right that rural areas face particular problems, and hon. Members raised a series of issues. Problems can include restrictions on areas in which homes can be built, the planning system, and the quite proper need to protect the countryside in rural areas. It is important to recognise that there can be different levels of wages in rural areas; in particular, agricultural wages can be much lower. We also have to recognise that there are wide variations between rural communities. Small coalfield villages that face regeneration challenges are different to affluent commuter villages, which are different again to coastal villages. Rural areas will face very different challenges, and we should not make the mistake of assuming that there is a single answer for all rural areas.

Equally, we need to recognise the challenges set out in the Affordable Rural Housing Commission’s report. The commission challenged the approach to sustainability that was built into the planning system some time ago. Often, the well-intentioned response to the need to protect brownfield development and to ensure sustainable development in terms of transport, including public transport, has been to focus the vast majority of new development around big cities and towns. However, as the commission makes clear, the consequence is that some of the wider issues around sustainability that affect rural areas have not been considered.

Hon. Members have pointed out the challenges that result when young people cannot afford to buy homes in the villages and rural areas where they grew up. They move out, and local schools can become unsustainable as a result. Just as there is an ageing population, there can be ageing villages, as young people often cannot stay in the area because there are no homes for them to move into. The approach taken by the commission is right, and we need to consider the idea of the living, working, and changing countryside, as my hon. Friend said. That is why we have stated that we need to reform the approach through planning policy guidance, and through our new draft policy on planning for housing, planning policy statement 3. The commission welcomes our approach to PPS3, and says that it builds in the kind of flexibility that we need when approaching the subject of rural areas. We need to allow them to grow where necessary, and to respond to local demands.

The hon. and learned Member for Torridge and West Devon (Mr. Cox) mentioned a case in his constituency. He will be aware that I cannot comment on individual planning cases. I was not involved in the decision, and although I am aware of the case, he will know that I cannot comment on its details. However, I would like to address some of the broader issues linked to it. He asked a question that was really about whether there should be more flexibility for small sites in rural areas where needed housing could be developed. I agree that there should be, and that is exactly why PPS3 tries to incorporate that approach for the future.

The hon. and learned Gentleman asked, effectively, whether it should be easier to adapt to housing need and not to be bound by out-of-date local plans. I think that it should be easier to update local plans, and that is why we are changing the approach to planning to encourage local development frameworks. Aspects of such frameworks can be updated much more easily. Also, the change will mean that decision makers need not simply respond to decisions that may have been made years ago about the housing needed in a particular area, but could instead consider current need and market demand, and so could be more responsive to market approaches. That is our new approach as part of PPS3 and as part of the response to the Barker inquiry.

There are two ways for hon. Members who face such problems in their area to deal with the issue. First, they can think about what can be done to update local plans more rapidly and to take advantage of the changes that we have made to the broader planning system; secondly, they can consider how applications measure up against the new approach in PPS3. We hope to publish the final version of the planning policy statement later in the year; we have already published the draft for consultation. It is useful to compare planning applications that are currently coming through with the approach in the new guidance.

Hon. Members mentioned the need for shared ownership and social housing, which is an important subject. Predominantly rural districts account for about 23 per cent. of the population, and get about 21 per cent. of the social housing budget. My hon. Friend the Member for Sherwood mentioned smaller local areas. Some 19 per cent. of the population live in settlements of fewer than 10,000 people, and just 10 per cent. of the programme budget is spent on them. That suggests that, although a proportionate share of resources goes to predominantly rural districts as a whole, my hon. Friend is right that social housing is being built predominantly in market towns and larger communities. My hon. Friend the Member for Stroud (Mr. Drew) asked what we would do to support social housing, and asked whether we could use community land trusts. I agree with him that we have an important opportunity to support more social housing and shared ownership in smaller communities.

There are particular opportunities for the use of section 106 of the Town and Country Planning Act 1990, which the hon. Member for North Cornwall (Mr. Rogerson) mentioned. Nationally, 140,000 new homes were built in 2004. Of those, 100,000 were built with no developer contribution at all to either affordable housing or infrastructure. That is not fair. As a result, rural areas in particular can end up not getting their fair share of shared ownership and social housing. Our assessment was that if all rural communities could do as well as the best rural communities in getting resources out of section 106 and the planning gain system, there would be substantially more affordable homes being built in rural areas, and we particularly support that.

The hon. Member for St. Ives (Andrew George) raised the issue of second homes. The Financial Times asked me about the national approach, and we were talking about the national economy. The fact is that second homes account for about 1 per cent. of overall housing stock. There are plenty of rural and urban areas in which second homes account for less than 0.5 per cent. of housing stock. The reality is that the national housing market and the national affordability problem is driven by lack of housing supply, not by issues to do with second homes.

However, I recognise that in some areas second homes create particular pressures. Some communities do face particular pressures; we have always recognised that. We asked the Affordable Rural Housing Commission to look into that because we thought it such an important issue. However, the challenge faced by the commission is one that hon. Members have long debated in this House: it is the issue of what workable measures can be used to address the problem. That is difficult, but we have to recognise that there are broader issues, including the amount of affordable housing and new supply. We have to do something to challenge that problem across the country.