Log in | Register

Housing costs driving London towards “economic and social crisis” – MP

Words: Simon Wicks

London is heading for an economic and social crisis because housing is becoming so unaffordable to workers on average and below average salaries, an MP has claimed.

Ruth Cadbury, Labour MP for Brentford and Isleworth, said some London businesses are struggling to recruit as skilled and semi-skilled workers leave the capital for other parts of the UK where homes are more affordable.

Speaking at the inaugural meeting of a new All Party Parliamentary Group (APPG) for London’s Planning and Built Environment, Cadbury argued that the Housing and Planning Bill – currently going through Parliament – would “accelerate demographic change in London”.

In particular the starter homes policy, which obliges councils to provide 200,000 subsidised homes for first-time buyers across the UK – would “recycle” various housing subsidies which had previously supported a mix of social housing.

“The Bill marks the end of general needs social housing in London. There will be no more"

A cap of £450,000 has been put on starter homes in London. These new homes, she feared, would be minimal two-bedroomed homes unsuitable for families – even those that can afford them.

Combined with reductions in housing benefit which brought the benefit below the level of market rents in the capital, many Londoners on average wages were face with a dilemma: sleep on sofas at friend’s houses or quit your job and move to a part of the country where homes are cheaper – and employment is likely to be harder to come by.

“The most significant thing is that it [the Housing and Planning Bill] marks the end of general needs social housing in London. There will be no more,” said Cadbury.

She continued: “We are talking about working families. They are told to go and find somewhere and there’s nowhere…. I think we are heading for an economic and a social crisis in London – and, apart from Labour MPs, I don’t see a lot of people saying much about this.”

In addition to starter homes, the Bill extends the right to buy to housing association tenants, compels councils to make a register of brownfield land, introduces planning permission in principle on small sites and obliges authorities to sell off “high vale” council housing when it becomes void.

Peter Eversden, chair of the London Forum of Amenity and Civic Societies, reinforced Cadbury’s view, arguing that the starter homes policy “looks like a massive switch of subsidy from providing rental homes to people on low wages to providing owned homes to those on higher salaries.”

He lamented the loss of CIL contributions from new developments that would arise from the Bill and condemned a new 1 per cent reduction in social rents which would mean London boroughs “facing up to a £20m shortfall in income. This will impact on the building of homes for people on low wages.”

“Are we risking depopulating central London completely of key workers?” he asked.

Investment in social and intermediate housing

Responding to criticism of the starter homes policy, London’s deputy mayor for housing Richard Blakeway noted that the £450,000 figure was a maximum and the more likely scenario would be that “the first time buyer in London will pay about £290,000 [for a starter home]”.

He stressed that the Mayor largely welcomed the Bill, but with provisos – and supported an amendment tabled by London MPs seeking assurances that the sale of each high value council house in London would provide two new affordable homes.

Cadbury also sought assurances that receipts from the sale of housing association properties in London would be spent on more social and affordable housing within London itself. Her fear was that this would be used to build homes outside the capital where land is cheaper and more homes can be built with the money.

Blakeway insisted that in his conversations with housing associations they were committed to reinvesting in London housing stock. Addressing the issues around a loss of housing aimed at a variety of income groups in the capital, including ‘intermediate’ housing, he said: “It’s important that we provide homes for the most vulnerable, but also that we have creativity and ambition around the mid market.

“About two per cent of London housing is defined as intermediate housing – a tiny fraction. There are a number of ways to expand that market. We would like starter homes to work effectively alongside other products such as shared ownership."

Blakeway also welcomed the founding of a Land Commission for London which would record publicly owned land and be used to identify sites that could be developed.

“We have a 30-year deficit in housing supply in London. This requires some really radical things to happen and some really radical thinking. We welcome many of the measures in the Bill aimed at achieving that.”

He added: “How does London maintain mixed and balanced communities? This is a really important issue and one which every big city around the world is grappling with.”

The APPG has been convened by the London Society as a cross-party forum for the discussion of issues relating to London’s built environment. The group met on the eve of the comprehensive spending review which is expected to introduced more housing measures for the UK.