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Affordable Housing (Durham)

Volume 486: debated on Tuesday 13 January 2009

The Minister will be aware that I have been concerned for some time about the supply of affordable homes in Durham. I thank him for speaking at the seminar that I held a year ago in Durham to raise the profile of the issue. It would have been nice if that seminar in September 2007 had led to a change in attitude by the Liberal Democrat council and if it had taken more seriously since then the issue of improving the supply of affordable homes, particularly family homes. Alas, I must report that that is not the case.

It was therefore surprising to me and a great many of my constituents that although an Audit Commission report published in August 2008 acknowledged severe weaknesses in Durham’s strategic housing services, it commended the city for its affordability record. Initially, I thought that the local paper must have been reporting incorrectly, and when I read the Audit Commission report, I thought that the city council must have been building secret housing estates somewhere in Durham of which I as a local resident was simply unaware. The truth, of course, was not as sinister as that, but only just. Nobody in their right mind could think, based on the evidence available, that Durham city’s record in recent years of providing affordable homes could be good, let alone effective, so I decided to investigate further.

I hope to put the record straight and flag to the new unitary authority in Durham, which will come into being this April, the appalling housing legacy that it will inherit from Durham city council. I am speaking today about the lack of affordable housing, but the record on council house repairs and the decent homes standard is probably even worse. Council tenants are definitely not a priority or a concern for the Liberal Democrat council. I place the blame for poor housing services firmly on the lead councillors, not the hard-working council staff who work in difficult circumstances to deliver the best service they can. However, even the Audit Commission report listed that service as only fair, giving it one star. At one point, it referred to the council as one of the worst performing in the country.

The issue of affordability was of huge importance when I raised it before the credit crunch, but now it has particular pertinence, as the downturn in the housing market is leading more people to seek affordable and affordable rented housing. In its brief to me for this debate, Shelter noted a rise in the number of people on housing registers in the area. It also noted that 272 households are currently homeless in Durham and that repossession claims had risen 3 per cent. from last year. Data from the National Housing Federation state that Durham’s rate of new homelessness, 5.2 per 1,000, is the highest in the county and the third highest in the north-east. Waiting lists for social housing are also longer than the national average. Affordability has always been an issue in Durham, but the NHF reports a massive affordability ratio of 8.4 per cent., the highest in the county.

The Audit Commission report said that Durham had developed 300 properties for sale and 60 for rent with £19 million from the Durham Villages Regeneration Company partnership—a joint initiative between the local authority and a private company—that had been channelled into social housing or community projects.

There are two big issues to address. First, the figures for housing completions in the Audit Commission report are quite modest, but the claim that DVRC invested substantially in social housing led me to examine the social rented housing figures further. I started with the statistical appendix to the housing strategy for 2006, which I eventually found after some hunting on the website of the Department for Communities and Local Government. Interestingly, the appendix showed no new local authority dwellings for 2005-06, and only 36 planned for registered social landlords.

I was bewildered to discover that the DCLG table for social rented homes in Durham showed 130 homes built that year; hence my view about secret housing estates. I thought that somebody must be building houses somewhere that none of us could see materialising. I contacted local RSLs to ask whether they had built houses that no one knew about. Of course they had not, so I went back to the tables. How come completions were zero and 10 respectively for 2003 and 2004 but 130 for 2005?

I remembered that not long after I was elected, I had opened a new housing complex built by an RSL for postgraduate students at Durham university, so I inquired at DCLG whether that could be the problem. Apparently, the DCLG figure inaccurately recorded that student accommodation as local authority-owned housing that would contribute to social renting locally, but the DCLG figure also appeared to have been inflated by the inclusion of some DVRC housing. That is especially the case for 2006-07. DCLG figures for that year show 240 completions for social rented housing in Durham. Now I really was in the realm of secret housing estates. That time, of course, the figure was totally incorrect. The sole reason for it was that 184 of the houses built for sale by DVRC had been listed as local authority-owned and presumed by DCLG and others to be social rented housing.

I have asked that the figures be corrected, and to be fair, the Government have issued new ones. Instead of 88 completions for 2005-06, 184 for 2006-07 and 99 for 2007-08, the figures now read: zero, zero, zero. For social landlords, they now read 178 for 2005-06, of which 120 were purpose-built student accommodation units, 55 for 2006-07 and 23 for 2007-08. The picture is broadly similar to that in other local authorities in the region, but worse than in Easington and Sedgefield—hardly the exemplar that Durham claims and the Audit Commission apparently confirmed.

The corrections, however, do not appear to be in the public domain, as recent figures that I received from Shelter still listed local authority completions last year at 99. Will the Minister ensure that DCLG displays the correct figures on its website? It is important not simply because it will show that the Audit Commission was wrong but because the uncorrected figures lead to an inaccurate view of how much affordable housing is available in Durham.

The situation is complicated further by the fact that Durham city claims that a number of houses built for sale by DVRC are affordable. I have always been fair to the city, and have accepted that that is undoubtedly the case. However, it has not been able to provide me with purchase costs for houses sold or the number with an equity share arrangement attached. How we are supposed to confirm that those houses are in fact affordable is anybody’s guess. When I last looked at some DVRC properties, they were on the market for almost £200,000, which is hardly affordable.

I do not know how the figures came to be inaccurately recorded, but I do know that the Audit Commission should have picked up that discrepancy in the social rented figures before I did and I would now like to ask that the report is corrected, with proper figures implemented and a reasonable assessment made of Durham’s record on affordable housing, given this new information.

I am not knocking the DVRC model. It was established by the previous Labour administration and if it had been used correctly, rather than funding the pet projects of the Lib Dems, it could have provided more affordable homes in Durham. Indeed, the former chief executive of the city council confirmed that at my housing seminar. However, DVRC has not provided much affordable housing in recent years, and as we know, much of what was provided was for sale at market rates.

In fact, the situation is even worse than current completion figures suggest. DVRC developments that could have carried an element of affordable housing did not do so. Consequently, I believe that the claim stated in the Audit Commission report that the money from DVRC was used to support social housing needs to be investigated further, in order to substantiate it. Therefore, not only was the DVRC model distorted by the Lib Dems but they failed in many instances to apply local housing policy H12, which required affordable housing to be a percentage of housing developments above a certain size. Indeed, when I first tackled the Lib Dem council on this issue, it did not seem to know that it had a policy that it should have been implementing since 2004.

I want to ask the Minister why the Government office seems to have no powers to insist that affordable housing policies are adhered to when planning permission is being granted. There have been a number of recent developments, including the development at Byland lodge, where the planning application was in breach not only of local policy H12 but of planning policy statement 3.

The second issue arising from the Audit Commission report is that it concluded that by August 2008 DVRC had built 360 houses, but the Lib Dems claim that DVRC has built 1,000 new homes. I am still working on that discrepancy.

In the few minutes that I have left, there are some other issues that I wish to raise briefly with the Minister. Where new houses have been built in Durham, little attention has been given to the PPS3 requirement to build mixed and sustainable communities. Indeed, PPS3 identifies exactly what the problem has been in Durham. It states that too often in recent years developers have focused on building one and two-bedroomed flats at the expense of family homes and it states that planning must acknowledge the need for larger houses for children, with space for children to grow and play. That has not happened. Often where houses have been built in Durham—which has mostly been in the villages—population densities are high, and when considering planning permission, no thought has been given to the impact on local schools or infrastructure, or the need for play facilities and green space. I know that anyone living in Durham will concur with these comments and there is now a growing fear that it is too late to restore balance and families to some of our city-centre communities.

There appears to have been a breach of PPS3, and the failure of the planning department in Durham city to enter into section 106 agreements for affordable housing on DVRC and other developments is also a breach of Government guidance. It would appear that no monitoring system exists to ensure that local authorities abide by national planning guidance and the Government office seems to have no powers to intervene.

I know that the situation in Durham is further complicated by the demand for student housing, particularly in the city centre, but the university and its students are vital to our city and they are positive aspects of Durham and the Durham experience. We need sensible planning and housing policies that allow a mix in some areas of student and more general housing and also an understanding of how the needs of students and long-term residents can be accommodated. It does not help either group if too many areas of the city lose family or general needs housing completely to student landlords.

I hope that the Government will use the review that they have carried out of the licensing of houses in multiple occupation, and their private sector review, to enable local authorities to have more powers to plan neighbourhoods, so as to prevent a preponderance of one type of housing tenure developing where that does not make sense locally. It is also necessary to align the definitions of HMOs in planning and housing law, and to give more powers to councils to control the siting of HMOs and how they are managed. I will make representations to the Minister about this issue in due course.

Lastly, I come to the issue of the economic downturn. If we are not to lose the excellent construction skills that we have built up over the years in Durham, it is absolutely essential that we get house building moving again. I hope that the new unitary authority can learn from the mistakes of Durham city council with regard to the lack of affordable housing and the mismatch between housing need and supply. I ask the Minister to use the review of the housing revenue account to bring about a change in policy, to enable local councils to build social housing themselves or to enter partnerships with RSLs to achieve that aim with the Homes and Communities Agency. I would also like the new unitary council or RSLs to take over housing in the private rented sector that is currently vacant for social rented use.

Beyond that, however, there is a need for a level of planning that I hope will appear in the new local development framework that the unitary authority is now preparing. That framework should concentrate on the need to produce mixed communities that have the infrastructure in place to support them and where the needs of different household types and incomes can be accommodated. This important strategic thinking in terms of planning was entirely absent from the council run by the Lib Dems. Instead their greed for money from private development allowed such development to take place at any cost to the local community and often at enormous cost to the quality of development in Durham. Durham deserves better and I hope that the Government can help the new council to do better once the economic conditions for development return. In particular, I implore the Minister to set up a meeting between the new council and the Homes and Communities Agency soon, to see what can be done.

I want to begin by congratulating my hon. Friend the Member for City of Durham (Dr. Blackman-Woods) on securing this debate. Durham is only down the road from Hartlepool, my own constituency, as is your constituency, Mr. Cummings. I want to see Durham do well. A lot of people from Hartlepool look towards Durham as a sort of ceremonial centre for our area, and I think that it has a great place in the north-east of England.

I want to pay tribute to my hon. Friend. We had many extremely constructive debates and she contributed immensely during the Committee stage of the Housing and Regeneration Bill, which is a key piece of legislation that will help to tackle the problems that she identified in her excellent speech today, particularly regarding the creation of new affordable housing.

My hon. Friend has a long-standing concern about the lack of affordable housing in her constituency. It seems a long time ago now, but I was extremely pleased to attend the seminar on housing that she organised, to talk about housing in Durham and what we can do to help her constituents. I am disappointed that progress has not been as great as she would have liked, because of the incompetence of the local authority. However, I am hopeful that, as we move to a new framework for the local authority in her area, we will see a lot more progress.

The issues that my hon. Friend has raised, both today and in the past—the need for more family housing, strong mixed communities and sustainable home ownership for lower-income households—absolutely chime with what we are trying to do nationally. My hon. Friend’s chairmanship of the all-party group on balanced and sustainable communities, which examines the issues of sustainable communities and particularly the problems associated with studentification, shows that she is leading the debate on those issues nationally and helping to frame policy.

I agree absolutely with my hon. Friend that, fundamentally, none of these problems can be resolved without a major increase in the supply of housing. That means an increase in the supply of all types of housing, including homes for private rent and ownership, but an increase in the supply of affordable housing is absolutely critical, as she has so rightly said today. She has also quite correctly mentioned the recent economic downturn. In this crisis, which is the biggest global financial crisis since the 1930s, that goal of building more housing undoubtedly becomes more difficult to achieve. However, it also means that the supply of affordable housing becomes more important than ever.

Lending to first-time buyers has fallen by more than half, and they are therefore finding it more difficult than ever to get on to the property ladder. For those people, affordable housing represents a truly affordable and sustainable way of getting the safety and security of homeownership without having to overstretch themselves. Therefore, I want to spend the remaining time that I have left to describe some of the measures that we are putting in place to help to achieve the long-term goal of increased house building and what implications they may have for my hon. Friend’s constituents.

We set the framework nationally and provide supporting funding, but my hon. Friend is right to point out that local authorities have a critical role to play, through PPS3 and other policy statements, in securing delivery and making sure that the homes that local residents need are built. She has mentioned the Audit Commission report, following its February 2008 inspection of affordable housing. The report gave her local authority a one-star, “fair” rating and identified uncertain prospects for improvement. As she has said, the people of Durham deserve better, and I hope that we can all work together to achieve that. With her strong leadership in this field, I hope that she will continue to champion speedy delivery for housing and to work with local partners to make that happen.

My hon. Friend has expressed concern about whether progress has been fast enough, and she has mentioned the establishment of the new unitary authority. This is a good opportunity to revisit those issues and a chance to re-establish a shared vision and an agreed way forward. Frankly, the people of Durham have been let down by the Liberal Democrat council, and the new unitary authority provides us with greater ambition. When the Liberal Democrats were running the council, they failed to take into account the huge potential of my hon. Friend’s constituency. I think that the whole region will get behind Durham’s ambition to become the European city of culture, which shows that Durham will once again start to punch above its weight. I know that my hon. Friend will play a key role in that.

Let me describe the context for delivering affordable housing nationally. We have provided more than £8 billion for investment, planned by the Homes and Communities Agency, over the next three years, as my hon. Friend will know, because she helped to establish the agency through her work on the Housing and Regeneration Bill. We anticipate that that will deliver about 70,000 new affordable homes, including 45,000 homes for social rent, each year until 2010-11.

Registered social landlords operating in the Durham city council area have so far been allocated £5.1 million-worth of funding through the three-year programme, which we expect will deliver 110 homes. Overall, schemes in County Durham have been allocated £12.3 million, and we need to consider whether to refresh that funding. Durham city council has so far received the highest allocations of all the boroughs within County Durham.

As my hon. Friend and I have both said, there is serious concern about how the programme and related ambitions will be affected by current economic conditions, but she will know that we have acted speedily to bring forward £550 million of the £3 billion investment for spending on social housing, so that we can help people now. That will provide real help to those facing housing shortages and problems, and it will stimulate activity in the construction industry that is vital to our region. That will help us to get the homes that we need, and I am confident that it will provide work for construction firms and will keep people in jobs.

Flexibility is a key word at the moment. We are looking for imaginative ways to continue to increase the supply of affordable housing. We have given the HCA greater flexibility on the grant rates that it pays to its investment partners. We are still looking for value for money, but we are balancing that consideration against the need to ensure that homes are built. The new rent to homebuy scheme will give registered social landlords an ongoing rental stream for reinvestment and a potential capital receipt later.

My hon. Friend has discussed the need for local authorities to be able to build houses. I agree. She will be aware of the measures in the Housing and Regeneration Act 2008 that allow councils to do that. Local authorities can now bid for social housing grant, so that they can add directly to the contribution to affordable housing that RSLs make.

We are taking this opportunity to buy new, unsold stock directly from developers. Since May, we have spent £160 million on 4,800 new homes for affordable housing. Given that the scheme has been running for only a few months, there has been great progress. Substantial further funding is available for other suitable homes at the right price.

Will my hon. Friend clarify whether local authorities such as Durham city council—or, indeed, the new unitary authority in April—may apply to the Government for grants? May they apply in partnership with RSLs to buy houses or apartments that might be surplus in the private rented sector for use in the social rented sector?

The short answer is yes. We will shortly be consulting on provisions in the 2008 Act as to how local authorities can build new housing. That will be welcomed by all hon. Members across the House, because local authorities have a key role to play. One part of that is providing strategic delivery by establishing what housing, particularly affordable housing, is needed in their areas. The Liberal Democrat council has let my hon. Friend’s constituency down in that regard. Another part of the local authority’s role is providing a direct delivery route. That flexibility is important, and I hope that she will work with me, the HCA and others to achieve it. The key watchword is flexibility, and I shall continue to keep her and the House updated on developments.

Ambitious and proactive local authorities are in a strong position to help the construction industry and the local economy in tough times. My hon. Friend holds an extremely strong position in the region through her role as a deputy regional Minister. We need to keep in mind the bad news that we have had in our region in the past few days about job losses at Nissan. Local authorities have a key role to play in that regard. People will be frightened and concerned about the economic conditions and their continuing ability to afford a house. The Government are keen to address that, so that we can minimise repossessions as far as possible and provide housing that we are all proud of.

The key point is that we need to work together in partnership. I have mentioned my hon. Friend’s role as a deputy regional Minister and her strong position. Regionally, an action plan is being developed to tackle the effects of the credit crunch, and I look forward to seeing the results. We have a strong regional team at the HCA. The new regional director, Pat Ritchie, has asked me to facilitate a meeting with the new unitary authority and the HCA, and I am happy to do so. I would welcome my hon. Friend at the meeting to facilitate further ongoing work to ensure that affordable housing is provided in Durham.

Our goal is not only to build more housing, but to help more first-time buyers to take advantage of that housing. With that in mind, we have expanded and introduced schemes to help people to take their first step on to the property ladder. The HomeBuy Direct scheme gives people an equity loan worth up to 30 per cent. of the purchase price of a new build property on selected sites. The loan is offered jointly by the Government and developers, and there is no fee for the first five years. Some £400 million has been available nationally for the scheme, which we anticipate will help up to 18,000 people, while supporting house builders. I am pleased to say that my hon. Friend’s constituents might be among the first to benefit from the scheme, as there are seven sites within Durham city and another 15 throughout County Durham that offer homes through HomeBuy Direct. A number of other options are on offer, such as shared ownership schemes, rent to homebuy and subsidised rents. The key is flexibility, and the idea is to give people choice, so that they can choose the tenure and the scheme that best suits their circumstances.

We have primarily been discussing affordable housing, but that forms just one part of our plans for housing growth. The south and east Durham areas have recently been assigned as growth points and are joining the £600 million programme for the first time. That funding is being made available for the essential infrastructure, such as shops, schools and transport, that makes communities tick. My hon. Friend will know, as the chair of the all-party group on balanced and sustainable communities, that we cannot just plonk housing down without regard to the wider area, but her council has, unfortunately, done that in the past. We need to ensure that housing is properly planned to have a good, balanced community that has high-quality public services. Her constituency will benefit from a better marrying up of supply and demand through Durham.

I conclude by thanking my hon. Friend for the high-quality debate that we have had. We can work together with the Department, the HCA and the new unitary authority, which seems to have a more ambitious approach than the Liberal Democrat incompetence of the past, to ensure that we have the affordable housing in Durham that her constituents deserve.