This weekend Emma addressed the inaugural meeting of the North East’s Labour Housing Group, where she explained Labour’s plans to increase housebuilding and set the UK on course to achieve Ed Miliband’s target of 200,000 new homes a year.
Emma spoke about the Lyons Review, chaired by Sir Michael Lyons, which was commissioned last year to look at how a Labour government could transform planning and building rules to get more new homes built.
The review was set up following Ed Miliband’s announcement that a Labour government would aim to boost housebuilding so that 200,000 new homes are built a year by 2020.
Under David Cameron housebuilding levels have fallen to their lowest point since the 1920s, and the failure to build homes is one of the reasons prices are out of the reach of many. A recent report by the housing charity Shelter showed that the average family in South Shields needs to save for at least 8 years to be able to afford a deposit on a new home.
The Lyons review shows how Labour’s ambition can be achieved, by giving councils a more proactive role in bringing forward new housing projects, and by giving them new ‘use it or lose it’ powers that allow them to tax developers who hold land without developing on it.
The review also stresses the importance of social housing and affordable rented housing, as well as making homes for purchase more affordable through mechanisms like shared ownership.
Emma explained that affordable housing was at the heart of Labour’s mission to tackle the rising cost of living. She said that Labour’s pledges to abolish the Bedroom Tax, establish fair and stable rents, and put an end to rip-off letting agents’ fees would help to bring housing costs down for struggling households.
The meeting was the first of what it is hoped will be regular sessions to discussions the housing issues facing the North East. The event was attended by housing specialists from across the North East, who discussed the potential for Labour’s plans to tackle the housebuilding crisis.
You can read Emma’s speech below.
Emma’s speech to North East Labour Housing Group
Good afternoon friends. Thank you for inviting me here today to speak to you about the Lyons review and what it means for us in the North East.
The shortage of adequate and affordable housing is one of the biggest challenges we face over the next few decades. We all know how a bad home can impact on people – if you live in squalid, damp, cramped conditions and are struggling to pay your rent your quality of life will be greatly diminished.
I vividly remember the awful conditions people used to live in before the last Labour Government, before the decent homes programme. I am reminded of this because I am seeing it happening again under this Tory-led Coalition Government.
Housebuilding has declined so much that we are now failing to build even half the number of new homes needed each year to keep up with demand. The effects of this are creeping up on us: fewer and fewer people are able to afford a home of their own; housing is becoming more cramped and more unsafe as pressure on the housing supply grows; and homelessness is on the rise.
There can be no solution to these problems without addressing the gap in housebuilding, but under the Tories and Liberal Democrats we are seeing fewer homes built than at any time since the 1920s. If David Cameron is in Downing Street again after May, and the current rate of housebuilding continues, the gap between housing supply and demand will be 1.3 million homes by 2020. So if we do not want this crisis to deepen, it is a Labour Government we need in 2015.
But closing the housing gap is no easy task, which is why last year Ed Miliband asked Sir Michael Lyons to carry out a comprehensive review of housing.
Before I talk about the review more generally I want to pick out one recommendation that I think is particularly important for the North East, the need for social housing. Sir Michael in his review talks about councils “returning to their historic responsibility to build affordable housing”, an approach which I think we can all agree is welcome.
It could make a big difference in our part of the country, where nearly a quarter of households are social renters. Social housing is also by far the best at responding to the housing needs of vulnerable residents. So in a constituency like minein South Shieldswhere we have high proportions of elderly residents and people with long term conditions, having good social housing stock is a must.
Sir Michael also identifies two major causes of the housebuilding crisis we are seeing today: that there is not enough land being brought forward for new homes and that there is not enough housebuilding capacity.
On land use, he explains that the lack of land available for development creates incentives for developers to hold on to land until it becomes most profitable to develop it. This means houses are built at the rate that suits developers, not the rate that they are needed by the local community. So it is clear that the market is not working as it should, and there is an urgent need to allocate more land for housing.
Sir Michael contrasts the situation in Britain with Europe, where in many countries local authorities are given more powers to bring land forward for development. At present there are over 130,000 potential homes on sites where planning permission has been granted, but where development is slow or has been put on hold entirely. Bringing those to completion would only solve part of the problem, but it would make a difference.
That is why the Lyons review supports what has come to be known as a ‘use it or lose it’ policy to prevent land from being left undeveloped. It calls for the lifetime of planning permission to be shortened to two years; for local authorities to have the option of taxing dormant land; and for stronger powers to compulsorily purchase land in extreme cases where land is going unused.
But clearing the roadblocks to development alone won’t help us build enough homes. We need to increase capacity in the housebuilding industry. A combination of the recession, a decline in Small and Medium Enterprise (SME) building and repeated private sector mergers that have led to a more concentrated industry means fewer houses are being built.
The review recommends steps to support smaller builders, who are crucial to boosting housebuilding because they are more likely to develop smaller sites that the large firms will not. 59 per cent of residential planning applications made in 2014 were for developments of 10 houses or more – that is six per cent of new homes. But the up front costs deter some SME builders, and so Sir Michael recommends re-introducing “redline” applications to reduce the barriers for smaller builders and attract SME builders into the market. It also support’s Labour’s call for a “help to build” scheme to make it easier for SME house builders to get loans.
Of course, one of the other challenges facing housebuilding is the skills gap in construction. Four in five respondents to a recent survey by the Chartered Institute of Building believed there was an industry-wide skills shortage. A lack of quality apprenticeships is one problem, but so too is the lack of cooperation between the industry and education, and the perceptions young people have of construction as a career. Labour’s plans for new City and Guilds TechBacs will help to drive up the quality of technical education and improve the status of technical work. We also want to revitalise apprenticeships – too many apprenticeships are low level and so of little use to employers. We want all apprenticeships to last a minimum of two years, and to be at Level 3 (Higher Level) or above.
However key to all of this is affordability, these changes will not mean much if the homes that are built are beyond the means of the average family or person. Last month Shelter released research showing that in many parts of the country, first time buyers have to save for more than a decade before they can afford to put a deposit on a home. A lot of the young people I speak to are struggling to even afford rent, let alone feel that they will ever own their own home. What we are seeing is a growing number of people trapped in an increasingly expensive and insecure private rented sector.
Another important point that the review makes is the effect welfare reform is having on housing costs – you cannot look at housing in isolation from what is happening elsewhere. If rents rise and incomes stay static, then taxpayers end up making up the difference. The number of working people claiming Housing Benefit has risen by nearly two thirds since 2010, and the Tories’ Bedroom Tax has forced many families out of the social sector and into private rented accommodation, pushing the bill up still further. Housing Benefit now makes up 3 per cent of all public spending, with more and more of it going straight into the pockets of private landlords.
In constituencies like South Shields you can see just how ridiculous the tax is. The majority of people affected are single occupants or people without children living in two bed accommodation, but the ratio of households affected to one-bedroom properties available is more than eight to one. The Bedroom Tax is cruel and it doesn’t work – that’s why Labour has pledged to scrap it.
Sir Michael is also clear that councils need to have an important and bigger role in delivering affordable housing, local leadership and trust in communities to understand what is best for their own areas matters for the North East because I think we can all agree that in housing, as in other areas, the North East often gets ignored by Tory governments. An approach that gives our local authorities and communities more freedom would allow us to respond to the housing challenges of the future in a way that is right for us.
This is consistent with Labour’s approach to devolution, which will devolve £30 billion worth of powers into Britain’s regions, giving local councils greater say over not just housing, but things like transport and skills. The challenge is to reform not just local decision making systems but financing, planning and more, and it’s a challenge that a Labour Government will meet head on.
Labour’s headline ambition for housing is to build 200,000 new homes a year over the life of the next parliament. When Ed Miliband announced that at party conference two years ago some commentators said it was a nice ambition, but questioned whether it was achievable. But it was not an empty promise – the Lyons review shows that Labour is committed to decent affordable housing for all.
It seems to me that is what the Lyons review is about and what it means for us in the North East.
Once again, thank you for inviting me here today.