Sir George slams Government on affordable housing cuts
29 Apr 2003
Sir George spoke in the debate on Community Services. The text of his speech follows:

Sir George Young (North-West Hampshire): It is a pleasure to follow the hon. Member for Reading, West (Mr. Salter), my almost near-neighbour. I endorse part of what he said in his speech, particularly his hope that these elections will be fought responsibly and that no political party will do anything to exacerbate race relations. I want to return, in my brief remarks, to a point that he made about housing.
The hon. Gentleman should not, however, be allowed to get away with everything that he said, particularly the bit at the beginning when he traced the history of the Labour party's vote in Reading and, later, when he expressed the hope that the party would do well on Thursday. In my constituency, just a stone's throw from his, we shall never know how the Labour party will do on 1 May, because in huge swaths of North-West Hampshire, it is not putting up any candidates. In fact, the only party contesting every ward in the constituency is the Conservative party. So this vision of the Labour party sweeping all before it in the Thames valley is rather a selective view, as we have grown to expect from the hon. Member for Reading, West. We have a great affection for him, but we always have to discount some of his more hyperbolic remarks.
Jim Knight: I have listened to what the right hon. Gentleman said about the Labour party in his area. Does he not share my astonishment that, in Labour's most marginal constituency—namely my own, in South Dorset—out of the 12 seats up for election on Thursday in the borough of Weymouth and Portland, the Conservatives could find candidates for only five?
Sir George Young: The hon. Gentleman should not play that game without some caution, because I suspect that we can all find wards in our constituencies in which the Labour party is not putting up candidates; in some cases, wards that it used to hold within recent memory.
Mr. Jonathan Djanogly (Huntingdon) rose—
Sir George Young: I suspect that my hon. Friend is about to provide just such an example.
Mr. Djanogly: I am. My right hon. Friend may wish to know that the Conservative party nationally is putting up over 1,000 more candidates than Labour across the whole country.
Sir George Young: My hon. Friend puts it far more succinctly than I could. He has issued a warning to Labour Members not to play the game of arguing which party is putting up the most candidates.
I want to make a brief contribution and to focus on the subject of affordable housing, which was touched on by the hon. Member for Reading, West. Community services are provided by people who need to live near their place of work. If there is one issue in my constituency that commands almost universal agreement, it is the need for more affordable housing. We depend on such housing for the delivery of key public services. Without housing, posts remain unfilled.
Housing in my constituency is expensive. The average house price in Test Valley in September last year was £212,774. Although many of my constituents are prosperous and can afford to buy, many are not, and 87 per cent. of concealed households in Test Valley cannot access open market housing. The annual income needed by new households to access the cheapest properties in Andover is £30,000, which is way over what people can earn, especially at the beginning of their careers. People in the public sector and subject to national pay bargaining face particular problems if the supplements, such as those for the police, do not reflect the extra cost of servicing a mortgage in Hampshire.
The motion refers to the switching of local authority grant, and I want to focus on local authority social housing grant, a subject familiar to the Minister for Local Government and the Regions. When my party was in office, we began a number of initiatives to tackle the problem of affordable housing, one of which was to use the planning system to generate more affordable homes. I am glad that that approach is being pursued. We also promoted the policy of large-scale voluntary transfer, which had as its by-product the generation of a capital receipt that could be invested in affordable housing. The Labour party resisted that policy at the time, but I am happy to say that it has subsequently taken it to its bosom.
Like many other local authorities, Test Valley transferred its housing stock to a housing association after a ballot of its tenants, which took place in March 2000. There were three reasons why the council and its tenants opted for that route: first, to improve the conditions of the local authority stock, as the resources available from the Government were inadequate for that purpose; secondly, to peg rent increases below the level required by Government; thirdly, and crucially, to provide more affordable homes. Using local authority social housing grant, the council planned to provide 100 new affordable homes in each of the six to seven years following transfer, as against the 30 or so that they were achieving before transfer.
Jim Knight: Will the right hon. Gentleman give way?
Sir George Young: No, I have already given way.
In fact, the council has been able to do better. That was going fine until, suddenly, at the beginning of this year the Government decided to abolish local authority social housing grant with effect from 1 April. I asked why and, in a letter to me, the Minister for Housing and Planning said:

"LASHG was an unfair funding mechanism that did not allocate funds to areas of greatest need, consistently under-spent nationally, and gave unfair advantage to debt-free local authorities."
Test Valley borough council is not debt-free, it has never under-spent its local authority social housing grant and it certainly has an enormous need for affordable housing; ask the teachers, nurses and policemen. Although there may have been some imperfections in the regime, the Government have lived with it for six years. To abolish it at a few weeks' notice, with a less than perfect substitute, is bad government and bad news for those in housing need who provide key public services.
As a result of those rule changes, Test Valley cannot now proceed with its planned programme, which is now grinding to a halt. Without going into the details, it is important to understand how the system works. When Test Valley transferred its housing stock, it got a capital receipt of some £21 million. It has spent some £10 million to £12 million of that, giving grant to housing associations to build affordable homes. It has reclaimed the grant from the Housing Corporation and used that to pay off debt. The capital receipt is used to build affordable housing, and the impact on the revenue account is broadly neutral.
The Government have suddenly and unilaterally changed the rules; the rules, incidentally, on which the tenants voted for transfer, which the council recommended to the tenants. In a nutshell, the Government have said that the grant will no longer be repaid, with a clear impact on local authority cash flow. Test Valley had hoped that the transitional arrangements would be of some benefit; now we have the detail, we know that that is not the case. It is a with-debt authority, and it will benefit only from revenue relief drawn from a capped £11 million set nationally. If it gets that, it will only be in year one. If not, it will have to find the money from its own resources. It has already set its budget for this year and cannot take such risks with the revenue account. Therefore, the schemes for affordable homes that had been planned in my constituency will either be lost or placed on hold.
The Government said that local authority social housing grant was under-spent, but this policy change will result in less being spent on affordable housing in my constituency. For every million pounds that the council now spends on the regime, it will lose some £50,000 of investment income. The council will be able sustain the programme only by cutting back on other services or putting up the council tax. This change comes from a Government who have the nerve to accuse my party of slashing public investment by 20 per cent. In Test Valley, they have halved the planned programme of affordable housing. Yes, they have exempted the receipts from right-to-buy sales from receipt pooling, but 75 per cent. of that is frozen and has to be set against debt.
Unless the Government's view is that the need for affordable housing in North-West Hampshire has suddenly dried up, they should reconsider what they have done. They may not resurrect the regime that they have abolished, but they could enable Test Valley and other local authorities—even Reading—to do what they, the tenants, the council tax payers, those on the waiting list and those in key public services all believed they would be able to do. It would also enable the council to hit the Government's own target on getting families out of bed and breakfast. If the Government did that, we could make progress in housing the people who provide the key community services that we are debating today.
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Copyright Sir George Young Bt. 2015