The future of housing policy

Thank you – it's a pleasure to be here. I can think of no better audience than a Fabian audience to talk about a topic that goes to the heart of our needs and desires as a society.

Housing is crucial to all of us, in many different ways.

It is vital for every individual and family. We all need somewhere we can be proud to call home.

Housing is vital for our communities. Where we live, in what kind of house, and who our neighbours are, says a lot about our society.

And housing is absolutely essential for the wider economy.

Ownership and Independence

Most of all, property and ownership is about providing security, supporting aspirations, and giving people a bigger stake in their community.

A concern with decent housing and asset ownership has deep roots in the traditions of the centre-left.

From Thomas Paine to Anthony Crosland, there have been progressive thinkers who have seen the opportunity to own property as a fundamental civic right.

These thinkers and others have emphasised the importance of the state helping people do things for themselves, rather than looking to the state to do things for them.

And they have seen private ownership as a key part of achieving this.

I am keen that we on the centre-left don't see housing solely as a safety net – crucial though that role is.

We must also see it as a ladder, enabling people to lift themselves up, to realise their potential and fulfil their ambitions.

Solid foundations

We can move forward today from a position of strength.

In 1997 we inherited a massive £19 billion backlog of social housing repairs, more than 2 million homes failing basic decency standards and the scandal of 1,800 people sleeping rough on our streets.

The memory of Tory economic mismanagement was still fresh. 15% interest rates, negative equity for hundreds of thousands of families, and, at the start of the nineties, a quarter of a million homes repossessed in just three years.

I am proud of what we have achieved since then.

Economic stability, low interest rates and greater confidence for people to invest and buy homes is the foundation without which everything else would be so much harder.

Mortgage rates have been at their lowest since the 1950s, cutting £4,000 a year off the average mortgage.

Home ownership has continued to increase in every region, with 1.8 million new homeowners since 1997.

And in many towns where once boarded-up windows and abandoned buildings were commonplace, the market has revived.

And with the fundamentals right we have been able to make a real difference to the lives of the most vulnerable in our communities.

We should be proud of how we have tackled the worst manifestations of homelessness. Rough sleeping is down by over 70% since 1997, and we can now step up our efforts on preventing homelessness for groups such as young people.

So that is why at the end of last year - on the 40th anniversary of Cathy Come Home – I was pleased to announce that by 2010 we will end the scandal of 16 and 17 year olds being placed in B&Bs, except in emergencies.

We are already taking this forward. It is part of a wider national youth homelessness scheme, being developed with a consortium of organisations led by YMCA and Centrepoint.

Estates and social housing are no longer falling apart. And we are well on the way to meeting our target of ensuring that all social homes are warm, secure, and with modern facilities.

Communities from Kensington to Kirklees have seen their areas transformed by our massive investment. So for, we have invested £20billion in improving social housing.

Four Key Next Decade Challenges

But we have to ask whether we can do more to respond to people's changing aspirations and demands.

And it is because of the progress we have made over the last decade that we can candidly face up to the challenges of the next 10 years.

So I suggest we face four big challenges in housing policy over the coming years.

First – more homes in decent communties. Getting a first foot on the housing ladder is harder than ever today. It is clear that building more homes, in well-planned communities, will be vital to help first-time buyers.

Second – greener homes. With housing responsible for 27% of national carbon emissions, housing policy must play its part in tackling climate change.

Third – while in recent years the rising value of property has brought benefits for homeowners, some have been excluded. As it gets harder to get the first foot on the ladder, how do we ensure that no-one is left behind?

Four – making social housing more responsive to each individual, taking into account their own particular circumstances. Social tenants want and deserve more than a one-size-fits-all approach.

These are complex issues.

All are interrelated. All are part of a wider picture.

And all require much closer examination.

There's no quick fix. It will take time, ambition and imagination to get it right.

That's why today I'm setting out the big challenges, and asking where we want to be not in 6 months' - not in 2 years' - but in 5 or 10 years' time, and beyond.

The review to be published next week by John Hills, into the future of social housing, and the review being carried out by Martin Cave, into regulation of the sector, will inform that debate.

But I don't want ideas to come straight out of Whitehall. In the coming months, I look forward to working with housing professionals, councils and tenants over the coming months– the people who know what is needed and what works best.

Today I'd like to set out my initial thoughts on the challenges in more detail.

More Homes in Decent Communities

The first challenge is for more homes in decent communities.

This is an issue that has come into sharp relief in recent years.

Ten years ago, nine in ten first time buyers could afford a home without support from their parents or relatives.

Today, nearly half rely on that support.

That underlines that we simply must do more to increase affordability.

Already today there are many people in their twenties from all kinds of backgrounds – teachers, young professionals – who like the flexibility of the private rented sector.

But as those people get a little older, settle down and have kids, they want to buy - and struggle to get what they need at a price they can afford.

If we do nothing, it will only get more difficult.

So the bottom line is that building more homes is vital.

Homes that are decent, well designed and environmentally friendly.

It would be simply irresponsible to duck this question – as the opposition persistently seek to do – at every turn trying to avoid a commitment to the building that the country so desperately needs.

So today I want to reaffirm the Government's ambition to build 200,000 new homes a year by 2016.

And on social housing, let me be explicit that we need to go beyond the 30,000 social homes per year we are currently building.

We will set out our ambitious plans for increasing social housing supply, with new investment alongside further efficiencies and innovation in provision, as part of the 2007 Comprehensive Spending Review.

And these new homes must be high quality. We have turned our back once and for all on the failed "superestates" of the past.

Instead, development should be well built, in keeping with its surroundings. Child friendly, with green spaces. In short, well designed – and in fact last week's Cabe report highlighted the need to improve design standards across the board.

And our overall goal remains what my department has long called "sustainable communities" - homes with the infrastructure, and the access to jobs, that make them great places to live.

Greener Homes

It's also clear that the new homes we build must be greener – and this is my second challenge.

The Stern Review and the latest UN reports underline the irrefutable case for urgent action to tackle climate change.

With our homes responsible for 27% of the UK's carbon emissions, the housing sector must play its part.

Last week I launched the carbon challenge, encouraging housebuilders to design and build flagship zero-carbon and low-carbon communities.

This will help us make radical reductions in carbon emissions from new housing. But looking ahead, I am ambitious about improving the existing stock, too. This means giving people the information they need to save energy and cut their fuel bills. For example, Energy Performance Certificates will make it easier for people to take decisions that benefit us all.

And longer-term we should also look at the potential of regulating for higher standards to help curb emissions. This should be part of discussions over the coming months, as well.

Making Sure No-one is Left Behind

The third challenge is making sure that no one is excluded from the benefits of owning housing assets.

That is of course about social justice. And it is about allowing people to get on in life and continuing to break down the barriers to social mobility.

The combined value of our homes stands today at a record £3.8 trillion.

Many homeowners, and not just the very richest, have benefited from the growth in prices in recent years.

The problem is what happens to those who are unable to get a foot on the bottom of the property ladder.

They do not share in the wealth generated by rising prices. And they will find it harder to help their children benefit from ownership.

We cannot be indifferent to the worrying prospect of a group being locked out of prosperity, of disadvantage passing down from generation to generation and throughout the community.

It harms those individuals, and it harms our society too. It means fewer people being able to support themselves, and a growing social divide.

These are complex issues, that will inevitably take time to resolve, but we cannot duck them.

As I've said, building new homes – particularly more social homes - is a vital part of making housing more accessible and affordable for all. But on its own it is simply not enough.

We need to build on the success of existing shared ownership schemes, which have benefited 80,000 households since 1997.

Government showed a lead – helping key workers like teachers and nurses, who could not afford to buy outright, to start to build up equity in their property at a rate they could afford.

And the market has responded to growing demand, with commercial providers now developing products for a wider range of people.

Working with the industry, we hope to see a further 160,000 households take a share in ownership by 2010.

But this should not be the limit of our ambition.

And I am asking what more we can do to further stimulate the market, and to help more young families and individuals start to build up a stake in their future.

A new right to own?

Equally, we must not hold back the aspirations of social housing tenants.

Social housing is still vital for nearly four million households. It remains an important safety net for some of our most vulnerable people – the elderly and frail; those with severe disabilities; and people rebuilding their lives after a time of personal crisis.

Social housing should provide that security. If anything, it needs to fulfil that role more effectively, not just putting a roof over people's heads – but helping people play an active role in our society and in their community.

But many actually also want it to be a stepping stone. We must ensure that it continues to help people get on.

The right to buy tapped into the British psyche.

Since 1980, 1.6 million people have taken up the chance for security, aspiration, and a bigger stake in their community.

That has made a real and welcome difference to people's lives.

There were problems though – underinvestment in the remaining stock of social housing. Too few houses being replaced. And little regard for those who could not afford to buy outright.

Today, some 1.7m social tenants still aspire to become owner-occupiers.

But fewer can afford to buy outright, and this raises fundamental questions about what our approach should be.

Last year, for the first time, we introduced the opportunity for social tenants to buy a share in their homes. It's called Social Homebuy.

Starting off with a minimum share of 25%, tenants can build up their stake over time, sharing in the benefits of rising property prices, and enjoying the sense of pride and security that ownership brings. And, unlike with right-to-buy, the money from any sales is reinvested in more housing.

It's early days, and we will need to learn the lessons. But I see it as us dipping a toe in the water. We need to ask whether what we're offering is flexible and ambitious enough.

For example – the minimum share a tenant can buy is 25%. Not everyone can afford this. Is there a case for offering the opportunity for people to start with a smaller stake – say, 10%?

And not all landlords offer their tenants the chance to own a stake through Social Homebuy. Fewer than 5% of tenants are currently given the opportunity. Is there a case for giving all social tenants the right to own a share in their property?

I want to examine the different ways this could be done, and have a thorough debate that looks at all the evidence. We should look, for example, at how Notting Hill Housing Trust are piloting smaller shares of 10% in their NewBuild Homebuy scheme.

Let me be clear – while we examine the options for a new scheme, we must also increase the social housing stock.

This is certainly not a question of either, or. We want many more social homes but at the same time we can do more to support people's aspiration.

Of course any policy must pass 3 tests – it must be sustainable for tenants, affordable for government and workable for landlords.

But in the future we could even see these opportunities to own in full or in part as a single modern set of rights for all tenants – regardless of landlords – the "Right to Own."

A way of government support giving people the opportunity to help themselves get on.

And we would want to make sure that support benefited responsible tenants who make a real contribution to their community, rather than the disrespectful and disruptive minority.

Responsive Social Housing

This brings me to my fourth challenge - making social housing more responsive to people's needs as individuals. This means thinking about housing not in isolation, but in terms of how it fits in with job opportunities and training. It means ensuring we have a joined-up approach to break down the barriers that prevent people from getting on.

As social tenants' expectations have changed over the past 20 years, so the sector has evolved, and the world around has changed dramatically.

This is why I asked John Hills to undertake his review.

He has brought to the task his unrivalled insight and his passionate commitment to social justice. And I look forward to joining him for the launch of his report next week.

On particular problem is that sometimes government's approach to social housing is like a Victorian parent's: well meaning, but too paternalistic.

We are not doing well enough at the moment. The trends show that social tenants are getting less and less satisfied with their housing over time – especially those aged under 45.

I don't want to pre-empt John's report, or Martin Cave's review, but there are a couple of issues in particular we need to address.

One is that social housing doesn't offer enough flexibility for those who want or need to move for reasons of work. With two thirds of social tenants economically inactive, we must seek to break down any barriers that prevent them fulfilling their potential.

The second is that people can sometimes be frustrated by managers whose performance is poor. So we should think about how we can give people more opportunities to influence decisions when they want better for their estates. And we should think in particular about how we can give more power to residents who pay their rent on time and contribute positively to their area.

Conclusion

Now I've outlined four key challenges.

Of course that's not the whole picture.

That's why I want a real debate with you over the months ahead, looking across the board at how we get a housing policy that is

• right for individuals,
• right for communities,
• right for the environment,
• and right for the economy.

I don't want debate for the sake of debate. I want debate:

• that sets out the evidence for all to see;
• that puts the people most affected at the heart of change;
• and that starts to bring about the change in attitudes and culture that makes reform stick.

The scale of the task might seem daunting.

But let me assure you that our ambitions are on the same scale too.

I look forward to a vital debate in the months ahead that will help us all build on what we have achieved:

Continuing to respond to people's aspirations:

Reinforcing the protection for those in the need of most support:

And optimistic that our housing policy can deliver for the 21st century.

Ruth Kelly is Secretary of State for Communities and Local Government. This lecture, in the Fabian Next Decade series, took place on 13th February 2007 at One Great George Street, Westminster. The Fabian Society is grateful to Home for their support of this event.