Everyone has the right to a standard of living adequate for the health and wellbeing of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control.  Article 25 – Universal Declaration of Human Rights

1         SUMMARY

This paper attempts to describe the current chronic national housing situation, place it within the context of Cheshire East and suggest some ideas for the development of local and national Labour Party policy.  Since work on this paper was started there has been a growing awareness of the depth of the housing crisis in England.  The labour party has brought forward proposals to use a levy on energy company profits to fund the building of 100,000 more houses.  Even the government now accepts that far more needs to be done.  In the writer’s opinion current proposals are not enough.  The Labour Party needs to develop a comprehensive housing policy that initiates the kind of generational change that Thatcher achieved in the 1980s under the Right to Buy scheme. 

The key facts are:

·         Not enough houses are being built in England and those that are being built are often far too expensive for many households;

·         The majority of the shortfall in housing can be traced back to the effective ban on building by local authorities imposed by the Thatcher government in the 1980s.  The private sector has proved unable to replace the numbers lost through this policy;

·         The scale of the shortfall is unlikely to be met solely by utilising brown field sites and bringing unoccupied houses back into use.  There will need to be substantial use of green field sites;

·         Changes to planning regulations, combined with the lack of a Cheshire East strategic plan, are leading to speculative development applications across the area;

·         Cheshire East has consistently failed to meet affordable housing targets;

·         Large council house estates suffer from poor reputations and in some places are unlettable;

·         Without a substantial, and unlikely,  fall in house prices, occupier ownership will continue to be out of reach of many, especially the young, leading to an increase in renting;

·         Inflated private sector rents are the main cause of increases in the overall level of housing benefit payments;

·         As well as building new houses, there is a need to replace many of the older poor quality housing, especially in towns and cities;

·         The scale of housing development required will place a strain on infrastructure.

There is a housing shortage in the UK, in England alone we need 230,000 new dwellings a year and we are building about 130,000.  We have been building about that number a year since 1980 when the Thatcher government introduced the right to buy and when it stopped local councils investing in new social housing.  The shortfall equals the number of council houses that had been being built prior to 1980.  For the past 30 years the private sector has been unable or unwilling to fill the gap.  We need to restart local authority house building.

Land is available; indeed private house builders have been hoarding land for which planning permission exists.  Increasing land values are more profitable for them than building houses.  Limiting the supply of housing helps keep house prices high.  We need to reverse this practice.

Whilst it can be electorally attractive to support local opposition to new housing builds, we should consider whether we are really representing the needs of people as a whole.  Many reasons are given for objections to new housing builds – lack of infrastructure, environmental issues, use of greenfield sites and so on – but too often the underlying reason is the current residents’ and landlords’ fear of a reduction in house prices.  National statistics show that planning applications are far more likely to fail in high cost areas than low cost areas.  England is not over developed - 90% of land has not previously been built on. 

Home ownership is becoming increasingly difficult for first time buyers.  The private rental sector is growing rapidly.  Social renting is unable to meet demand.  Too many of our towns are becoming too expensive for first time buyers.  The next generation are not able to set up home in the same towns as their parents.  Demographics are changing.  The population is ageing and there is a significant need for more single person houses for senior citizens.  We need to encourage more balanced communities, with home owners and renters living side by side.  We need to shift housing provision away from expensive three or more bedroom houses towards a greater number of single person dwellings and small starter homes for young families.

The lack of affordable social housing means that more and more people are living in the private rental sector.  Rents are increasing and the result is that ever rising levels of housing benefit is being paid to private landlords.  We need effective rent controls that offer people security and reasonable rents.  We need to expand tenure options by introducing co-operative tenure.  We need to move expenditure on housing away from benefits towards building new affordable houses.

In December 2009, the last Comprehensive Area Assessment for Cheshire East concluded “Housing is a significant challenge in Cheshire East.  House prices are high, which puts buying a home out of reach for many people.  Homelessness has not been well managed in the past and the condition of private sector rented housing is mixed.  A growing older population with specific housing needs means different types of accommodation are needed.

House prices make buying homes in Cheshire East impossible for many people.  The Council estimates that even if prices fell by a quarter they would still be unaffordable for most people.  The number of properties made available for people to buy has been lower than numbers needed for many years.“

Labour in Cheshire East supports the council’s stated vision “ ... that all our residents in Cheshire East are able to access affordable, appropriate and decent accommodation.” [1]

A radical programme needs to:

·         Ensure that sufficient land is available, brownfield where possible, but also be willing to take political risks by not needlessly preventing developments on greenfield sites.  This would exert some pressure on land and house prices in general and deter developers from hoarding land and planning permissions;

·         Consider taxing unused land banks;

·         Recognise people’s aspirations for home ownership whilst also promoting renting as a viable and acceptable option;

·         Focus public sector funding for housing, either through guarantees or direct funding, on housing associations and local councils to enable to dramatically increase their building programmes.  This could involve the establishment of a publicly owned development bank and would be made easier if the Treasury rules on public sector borrowing for investment were brought in line with those used internationally;

·         Encourage sustainable, balanced communities by reinforcing the requirements for affordable housing within private developments;  and by allowing the public sector to invest in joint developments with the private sector;

·         Enforce planning policies that require good levels of amenitirs particularly for family homes;

·         Promote housing  developments in town centres, both to ensure the continued viability of such areas and to replace poor quality ageing housing stock;

·         Stabilise the private sector rental market by introducing rent and tenancy controls that recognise tenants’ interests so we have neither an ever inflating benefit bill nor homeless or poorly housed people.  In addition, policies must recognise the impact of an ageing population and what is happening to pensions.

·         Legislate to introduce co-operative tenure;

·         Determine how best to bring empty housing back into use;

·         Invest in bricks and mortar not benefits. 

·         Change the perception of housing benefits by countering the myths promulgated by the Right.  The reality is that most families receiving housing benefit include one or more people in work and increases in housing benefit are going to landlords who increase rents above inflation.

Many of these policies could cause political difficulties, but the fact remains that we have both  a severe housing shortage and substantial numbers of poor quality houses.  It is naive to think that we can provide reasonable housing for all our people without some impact on the environment; a reduction in the value of houses; and strain on the infrastructure.  The alternatives are overcrowding; excess profits for the few; and the further division of society.

The remainder of the paper outlines the evidence for these proposals under the headings:

·         The need for more housing

·         Empty housing

·         The availability of land

·         The context in Cheshire East

·         Housing and the young

·         The third age generation

·         Rent or buy

·         Invest in bricks and mortar not benefits

·         The effect on the economy as a whole

For information the official definition of affordable housing is included as appendix A.

2         The need for more housing

Over the past decade the private sector has demonstrated that it is unable or unwilling to build sufficient houses to meet the current level of, and projected growth in, the number of households.  A chronic shortage of housing has led to inflated house prices that put home ownership out of the reach of many, especially the young; inflated rents that force many people into housing poverty[2], enable landlords to make excessive profits from housing benefits and give rise to the prospect of ‘social cleansing’ in many of our inner cities; and increases in multi-occupancy and homelessness[3].

Housing became an investment not a home.  Failure to meet rising demand led to a classic inflationary scenario.  People object to planning applications to protect their investment and the easy money situation up to the crash just added to the inflationary spiral.  Restrictions on council house building further stoked up demand.

Governments, both Tory and Labour, capped local authority spending in order to manage the national debt to GDP ratio.  Treasury accounting rules count such spending, as well as other spending by public corporations, in the overall public spending total.  This is not the case in other countries.  Hence French energy companies (EDF) and German rail companies (DB), majority owned by their respective governments, can invest in British companies.  International markets use the worldwide definition not the UK one when assessing national debts, so releasing the cap would not affect our standing in the market.[4]

At least 232,000 new homes are needed every year from now until 2030[5].  In the last year 105,000 new homes were started[6], which was an improvement on the previous year, but still over 100,000 short of the number required.  The market and government policies are not responding to this need.  The latest statistics report[7] from the Department for Communities and Local Government for the period March to June 2012 shows that:

·         Seasonally adjusted house building starts in England stood at 21,540 in the June quarter 2012. This is 10 per cent lower than in the March quarter 2012;

·         Completions (seasonally adjusted) also fell, down 6 per cent to 29,470 in the June quarter 2012;

·         Private enterprise housing starts (seasonally adjusted) were 7 per cent lower in the June quarter 2012 than the previous quarter, whilst starts by housing associations were 23 per cent lower;

·         Seasonally adjusted private enterprise completions fell by 5 per cent and housing association completions fell by 11 per cent from the previous quarter;

·         Annual housing starts totalled 98,670 in the 12 months to June 2012, down by 10 per cent compared with the year before.

One person households are projected to increase by 159,000 per year, equating to two-thirds of the increase in households[8] .  Much of this will be accounted for by the rapid increase in over-65s.[9]

 Although local authorities are granting planning permission, developers are slow to build and banks reluctant to provide mortgages.  Housing associations are finding it hard to raise funds and local authorities are constrained from investing in housing.

The market isn’t working.  Supply is being constrained to maintain high prices.  Governments, both Labour and Conservative, have tried to manipulate the market to persuade developers to build, but with little effect.  We believe that more radical action is necessary to ensure that affordable, appropriate and decent housing is available to all.

Even the Government agrees.  “Without urgent action to build new homes, children will grow up without the same opportunities to live near their families, young people will struggle to get a place to call their own and older people will not have the choice and support they need.”[10]

Such radical action would aim to create a housing sector that would “... allow people from diverse backgrounds to live in everyday contact with each other, on safe streets, in accommodation over which they are able to exert significant control.  It would help more individuals and their families to meet their own personal aspirations for homeownership at the same time as living well among others who choose to rent.”[11]

“Housing will be one of the greatest and one of the earliest tests of a Government's real determination to put the nation first.  Labour's pledge is firm and direct - it will proceed with a housing programme with the maximum practical speed until every family in this island has a good standard of accommodation.”  So said Labour in its 1945 manifesto.  It is no less true now than it was then.  Despite facing a deficit that dwarfed that which we are facing today, the post-war Labour government embarked on a massive programme of housing and infrastructure development.  We need to repeat that.

3         Empty housing

Across England, in April 2008, 3 per cent of all private sector stock was empty, as was 2 per cent of all local authority stock, 2 per cent of registered social landlord stock, and 6 per cent of other public sector property: a total of over 700,000 empty homes.  It is inevitable that there will always be some empty homes – for example, in between transactions – and this might even be a welcome sign of liquidity in the market.  But that does not account for this excessive total, of which 300,000 had been empty for more than six months.[12]  Of course empty housing may be sub-standard and in need of refurbishment; or simply in the wrong place. 

In East Cheshire the empty housing stock has decreased from 6,439 in 2009 t0 5,485[13] in 2011. 

4         Land

Land is available, planning permission is being given but builders aren’t building.  Instead they are hoarding land. 

Such expensive land makes for low levels of output and poor quality homes.  It has meant that the big developers have become, first and foremost, land traders rather than house builders.  The capital structure of many developers is based on high land values.  Any decrease in such values might put developers at the risk of failure.  Hence, there are sites for 170,000 homes in London which already have planning permission but which have simply been banked, undeveloped, by developers[15] .

Given the need for more houses the choices are:

·         Bring unoccupied dwellings back into use

·         Use brownfield sites where it is available, for instance unwanted public sector land as per current government policy  - Government plan to release public land to build 100,000 houses[16]

·         Increase density of housing, smaller houses, smaller plots, multi –occupancy, etc

·         Build on greenfield[17] sites - despite popular misconceptions, land in the UK is relatively undeveloped, that is not built on, (for example, around 90% in the case of England)[18].  Therefore, even if all the required new housing was built on greenfield sites, the effect would be minimal;

·         Build new towns with a mix of owner occupiers and renters, with appropriate infrastructure and employment opportunities.

It can be electorally attractive to support local opposition to new housing builds, but are we really representing the needs of people as a whole.  Many reasons are given for objections to new housing builds – lack of infrastructure, environmental issues, use of greenfield sites and so on – but too often the underlying reason is the current residents’ and landlords’ fear of a reduction in house prices.  National statistics show that planning applications are far more likely to fail in high cost areas than low cost areas.

Objections are often raised by a vocal minority.  Too rarely we hear the voice of other parts of the local population:-

5         Context for Cheshire East

The average house price[24] in Cheshire East in Quarter 1 2012 was £206,083 compared to £150,937 across the North West.  There is a significant variation in the average house price across East Cheshire.  For instance in the Crewe area the average price is £125,000 whilst in parts of the Macclesfield area it is over £300,000.[25] 

There were 8,725 households on the council waiting list, an increase from 6,896 in 2010[27].  The empty housing stock has decreased from 6,439 in 2009 t0 5,485[28] in 2011.  Of these over 2,300, or about 1.5% of the housing stock, had been vacant for over six months.[29]

About 40,000 private sector homes in Cheshire East, across both the owner occupied and rented sectors, are classified as failing to meet the decent home standards.[30]  Whilst this represents a lower percentage of total housing stock than England as a whole, it is still over 27% of the total stock. 

Using the situation in Macclesfield [31] as an example of the general situation in Cheshire East, key local housing problems include:  

·         Rents are too high, and continue to increase, due to an acute housing shortage;

·         House prices prevent many young people living near their parents, many cannot even live in the next town;

·         House prices deter many key workers from living anywhere near their place of work, this increases peak-time congestion as they travel further to that work;

·         Approved planning applications are not being constructed;

·         New affordable housing numbers are too low;

·         An issue that is specific to the centre of Macclesfield Town, but which may also apply to areas of Crewe, is that the very dense old terraced housing constitutes a significant area of low amenity housing (far worse than the Moss Estate in amenity terms according to the Office for National Statistics) whose problems need some mitigation and recognition in the planning framework.  The number of undeclared houses in multiple occupation is an increasing feature of the town.

Although most people in Cheshire East live in the towns, rural areas also face housing issues.  Rural areas have suffered from unrestrained right to buy and a general shortage of affordable houses.   For instance young couples in villages like Wybunbury have no chance of moving into a house in their own area, so they migrate to Crewe.  Thus the age profile in Wybunbury goes up and, with it, many aspects of local village life.

In Cheshire East, Labour should:

·         Generally support applications for housing development;

·         Prioritise brownfield site developments where possible, but also support greenfield development on the basis of need;

·         Seek ways to promote housing association and local authority built housing;

·         Promote the development of small scale affordable housing schemes in rural areas.

6         Housing and the young

Young people are particularly affected by the housing shortage.  The high levels of deposit required are preventing many of them from buying their first house or flat and high rents are preventing them from saving for a deposit.  The proportion of first time buyers aged under 30 requiring financial assistance from their family rose from 36 per cent in 2005 to 77 per cent in 2010[32].  Younger recent homeowners, many of who are young families, are finding it harder to ‘trade up’ as their families grow.  

 As a result around 1.5 million more young people aged 18–30 will be pushed towards living in the private rented sector by 2020, reflecting the growing problems of accessing both home ownership and social renting.

Three groups of young people are increasingly marginalised in the UK housing system: young families, those on low incomes and those who are vulnerable due to their support needs; the push of these groups towards private rented housing requires a renewed focus on improving the supply, quality and stability of housing in both the private and social rented sectors.

Social landlords could help to reduce the challenges facing young people by helping them to access private rented tenancies and offering more shared tenancy options at local housing allowance rent levels as part of a varied housing offer.

Young people’s attitudes to home ownership are also changing.  A survey[33] found that only 44 percent of 18–25-year-olds favoured home ownership (contrasting with 75 percent of those over 55), and that respondents valued housing affordability and security ahead of ownership. 

At the same time high house prices and the lack of rental opportunities are denying the young the chance to remain in the communities in which they grew up, creating unbalanced communities.

Without fundamental reform to the housing system to create suitable options, marginalisation of young people will continue to increase in a poorly functioning system.

7         The third age generation

Half of all households in England are older ‘established homeowners’.  Some 42 per cent of these are retired and 66 per cent own their own home outright.  Limited choice in the housing market makes it difficult for older households to find homes that fully meet their needs.  Whilst many would choose to remain in the family home even though their children have left, others would like to downsize.  In particular, one person households are projected to increase by 159,000 per year, equating to two-thirds of the increase in households[35] .  Much of this will be accounted for by the rapid increase in over-65s.[36]

As life expectancy increases, more of these households will need support to remain in their homes in later life.  Someone living to a great age in their own property on a low fixed income finds ownership much more affordable.

8         Rent or buy

There is an assumed social bias for home ownership.  However the share of households that own their home has actually been falling since 2005.  After rising steeply from 57 per cent to 68 per cent between 1981 and 1991, rates stabilised at around 70 per cent before falling back to 68 per cent in 2008.  However home ownership rates in Britain remain well above those in France  (55 per cent) and Germany (41 per cent) but are lower than or comparable to other major OECD countries such as Spain (83 per cent), Australia (70 per cent), the US (69 per cent) and Italy (68 per cent).[37]

We need to support people’s aspirations for home ownership whilst also promoting renting as a viable and acceptable option. 

Home ownership is becoming increasingly restricted to those with high incomes, or those who receive assistance from family or friends.  Over 800,000 households are currently estimated to be in negative equity. [38]  Without a sustained and long-term increase in new housing supply, demand side initiatives to bridge the deposit gap for aspiring homeowners risk maintaining the inflated house prices they are meant to overcome.

Recent government plans have suggested that local authorities will be required to provide an additional affordable home for every house they sell.  However if sales are heavily discounted it is hard to see how a one-for-one approach can be funded without additional financing.

Too many of our towns are becoming too expensive for first time buyers.  The next generation are not able to set up home in the same towns as their parents.  At the same time overall demographics are changing.  People are forming families later and the population is ageing.  Hence here is a significant need for more one person houses for both young singles and senior citizens.  We need to encourage more balanced communities, with home owners and renters living side by side.  We need to shift housing provision away from expensive three or more bedroom houses towards a greater number of single person dwellings and small starter homes for young families.

Home ownership is becoming increasingly difficult for first time buyers who are increasingly turning towards the rental sector.  The lack of affordable social housing means that more people are living in the private rental sector.  Nationally, the private rented sector has grown rapidly in recent years – there are now 3.4 million households privately renting, and 30 per cent of them have children.

According to the Buy-to-Let Index from LSL Property Services, rents hit a new record high in July 2012, rising to £725 per month.  Average rents rose by 1% compared to June, pushing annual rental inflation to 2.9% and tenant arrears rose for second successive month, with 9.3% of rent late or unpaid. The index found that:

·         Rents rose to a new record high in July 2012 as rents rose for the fourth month in a row.

·         The average rent in England and Wales in July rose by 1% to £725 per month, surpassing the previous high of £720 pcm in October 2011.

·         The pace of annual rental inflation has also increased, climbing to 2.9% from 2.4% in June 2012.

·         On a monthly basis, rents rose in eight out of ten regions in England and Wales.

·         Rents in the South East climbed the fastest, increasing by 2.2%.  The West Midlands saw the next largest increase, rising by 1.8%.  London’s rents hit a new high for the third consecutive month, following a monthly 1% rise to £1,057.  Rents are still rising fastest on an annual basis in London, with rents in the capital climbing by 4.8%, compared to 4% in June 2012.

So rents are increasing and the result is that ever rising levels of housing benefit is being paid to private landlords.  Rising rents mean that renters are finding it more difficult to save for a deposit on a house and access to home ownership has become increasingly difficult as those deposits increase.  Median house prices are now seven times median earnings, compared with three and a half times in the mid-1990s.[40]  

We need effective rent controls that offer people security and reasonable rents.  We need to protect renters from unfair deposit schemes.  For instance, the Scottish government has introduced an independent deposit holding scheme to prevent misuse of tenants’ deposits[41].

We need to look at alternative forms of tenancy.  A recent Fabian Society report[42] highlighted the bill proposed last year by Labour and Cooperative MP Jonathan Reynolds to introduce a new form of tenure - co-operative housing tenure.  Under this form of tenure people would have a right to live and occupy the property they live in by virtue of being a member of the co-operative who owns it.  This would offer a genuine alternative to the only legal forms of tenure currently available, which are owning or renting.  Cooperative members would pay an amount appropriate to their income to build up equity in the co-operative that could then be sold when they wish to move.  Cooperative housing is a major element of the Swedish housing market and the Labour administration in Wales has stated its intention to introduce it in Wales.  

9         Invest in bricks and mortar not benefits

We need to move expenditure on housing away from benefits towards building new affordable houses.

The government is perpetuating the biggest myth about housing benefit: that it is a benefit for the unemployed. The truth is that just one in eight claimants is out of work (not a statistic that you’ll find reported in most papers).  The majority of those who claim housing benefit, including the under-25s, do so to compensate for substandard wages and extortionate rents.  A recent study by The Building and Social Housing Foundation showed that 93 per cent of new housing benefit claims made between 2010 and 2011 were made by households containing at least one employed adult.  The inflated housing benefit budget, which will reach £23.2bn this year, is the result of a conscious choice by successive governments to subsidise private landlords rather than invest in affordable social housing[43].   If the Government was serious about cutting the housing benefit bill, it would build social housing, phase in rent caps and introduce a living wage[44]. 

10   Effect on the economy as a whole

Home ownership in the UK generates more personal debt than many other developed countries. 

In an opposition day debate in the House of Commons in September, the Labour Party spelt out some of the advantages of an economic stimulus focused on housing:

·         Construction makes a significant contribution to the economy of 3% of GDP.

·         In 2008 it generated £91 billion of economic output and accounted for over 1.5 million jobs.

·         For every £1 of public money spent on house-building, studies have shown the economy gets £3.50 back.

·         Faster transmission time of economic benefits than infrastructure projects such as rail or road.

·         New homes in the right places enhance labour mobility and facilitate local economic growth.

·         Increase in consumer spending: New homes mean a demand for kitchen, bathroom, bedroom, and other furnishings and appliances.

Without building new homes our economic recovery will take longer than it needs to. The construction workforce has fallen from 2.35 million just before the credit crunch to 2.1 million today and is likely to have been mostly in house building. This 10 per cent fall is around four times greater than the decline in the overall workforce[46].  The 2012 Q2 GDP figures predict a 5% fall in construction output. 

A sustained house building programme would provide long term security to the construction industry, boost employment and provide the opportunity for a substantial apprenticeship programme to get our young people started on a long-term career path.

Appendix A - Social and affordable housing

The definitions of social and affordable housing are given below for information[47].

Affordable housing is social rented, affordable rented and intermediate housing, provided to eligible households whose needs are not met by the market.  Eligibility is determined with regard to local incomes and local house prices. From April 2012 affordable housing is defined in the National Planning Policy Framework (prior to this the definitions in Planning Policy Statement 3 apply).

Affordable housing should include provisions to remain at an affordable price for future eligible households or for the subsidy to be recycled for alternative affordable housing provision.

Social rented housing is owned by local authorities and private registered providers (as defined in section 80 of the Housing and Regeneration Act 2008), for which guideline target rents are determined through the national rent regime.  It may also be owned by other persons and provided under equivalent rental arrangements to the above, as agreed with the local authority or with the Homes and Communities Agency.

Affordable rented housing is let by local authorities or private registered providers of social housing to households who are eligible for social rented housing.  Affordable Rent is subject to rent controls that require a rent of no more than 80 per cent of the local market rent (including service charges, where applicable).

Intermediate housing is homes for sale and rent provided at a cost above social rent, but below market levels subject to the criteria in the Affordable Housing definition above.  These can include shared equity (shared ownership and equity loans), other low cost homes for sale and intermediate rent, but not affordable rented housing.  Homes that do not meet the above definition of affordable housing, such as "low cost market" housing, may not be considered as affordable housing for planning purposes.