Deputy Prime Minister and First Secretary of State

Homebuy - Expanding the opportunity to own

Check against delivery

1. Good morning everyone, and thanks for coming. Gordon and I are joined by Keith Hill, the Housing Minister, and Richard McCarthy, our Director-General of Sustainable Communities.
2. I'm going to kick off and then Gordon will follow. We'll then have a short time for questions.
3. Gordon and I have been working closely together on the delivery of our 5 year housing strategy, "Homes for All", which is what today is about.
4. Our £38 billion Sustainable Communities Plan is already making a huge difference. We're:
   • providing more homes to buy or rent
   • improving the social housing stock
   • promoting greater homeownership
   • giving more people a share in their home
   • and we're creating more mixed tenure communities.
5. It is this Government which has made housing a priority after years of disinvestment and neglect.
6. We're tackling the scandalous £19 billion backlog of social housing repairs we inherited. Through over £40 billion of public private investment, we're on track to make 2.2 million social rented homes decent by 2010. We've already reduced that figure by over a million.
7. And thanks to continuing economic stability - which has meant lower interest rates, lower inflation, and lower unemployment, there are over a million additional homeowners since 1997.
8. We are determined to tackle the different housing challenges we face - such as low demand in parts of the North and Midlands and lack of housing supply in London and the South East.
9. We're investing over a billion pounds in the first phase of tackling low demand in the North and Midlands. And we're providing for 200,000 extra homes in the growth areas like the Thames Gateway, which I visited with the Prime Minister yesterday.
10. But creating sustainable communities is not just about bricks and mortar - it's about responsible growth. Using land better and protecting the environment.
11. Our record on sustainable development is second to none. Compared to 1997 -
    • There's 19,000 more hectares of Green Belt
    • 67% new homes are built on brownfield land compared to just 56%
    • Density of new housing has increased by around a third in the South East - so we are building more homes on less land
    • New buildings standards are reducing fuel bills and waste in construction
    • And there's a new emphasis on better design and better planning
    • People and businesses are coming back into our towns and cities.
12. There's been real progress, but there's still a lot to do.
13. One of the problems we face is the gap between rising incomes, and rising house prices, which have priced many people out of the market in the South - despite the halving of interest rates.
14. Ten years ago house prices were 3.5 times people's annual salary. Now - as a consequence of economic success and historic undersupply of new homes - house prices are 6 times the annual salary.
15. At the same time, construction costs have risen by 3 times the rate of inflation.
16. So we've tried to make housing more affordable by increasing investment and supply, at the same time as cutting costs.
17. We've achieved that in part by improving efficiency in the supply chain and by promoting modern methods of construction. The Housing Corporation alone is spending over a billion pounds on these modern methods, including offsite construction.
18. As well as that, we're separating the cost of construction from the escalating cost of land. If we can get costs down and acquire land, we can make more homes available to more people.
19. Some of you will remember that at last year's Labour Party Conference, I said you could build a well designed, quality home for £60,000, excluding the cost of the land.
20. The surveyors said it was pie in the sky. The finance people said it was impossible. And I won't tell you what the house builders said...
21. English Partnerships responded to the challenge of producing a £60,000 home at the Sustainable Communities Summit in Manchester.
22. They showed it could be done - for £60,000.
23. EP's Summit House created a real buzz and people started to change their minds. Now they're telling me they can build a quality home for even less than £60,000.
24. It can be done - so I am announcing today the details of our competition to build high quality new homes for £60,000 or less.
25. I'm announcing the first 4 sites where developers are going to build homes under the competition - which is called "Design for Manufacture" and is being run by English Partnerships.
26. These first 4 sites are near Leeds, Milton Keynes, Aylesbury and Northampton, and will be followed by many others across the country, including here in London.
27. It goes to show that we can use land more effectively to provide homes that people on lower incomes can afford.
28. In the past, we sold off public sector land for housing, only for me to ask Gordon for a subsidy to provide social housing on the very land we've just sold. It didn't make any sense.
29. I want to keep that land in public ownership and use it for housing. So that we keep the land asset and have more social housing.
30. We've been exploring this with English Partnerships. They've been working with Ken Livingstone to extend the use surplus public land in London to provide homes for key workers. We're also talking to other Government Departments like Defence and Health about the surplus land they have available.
31. Today I'm pleased to announce that next week we will complete our groundbreaking deal with the NHS. This will see English Partnerships acquiring 100 redundant sites over the next 2 years to build 15,000 homes.
32. This innovative deal involves an initial payment of £320 million, which will be reinvested in healthcare.
33. So we're reducing construction costs, and using public land for affordable housing. And we're also giving people more of a choice in housing - not just buying on the market, or taking up the Right to Buy, but the option of part buying a home and building up an equity share.
34. Today we are launching a consultation on our HomeBuy and equity share schemes which I announced in January.
35. We estimate that these initiatives could help up to 400,000 people get a foot on the housing ladder through shared ownership. About a quarter of this 400,000 figure are key workers and first time buyers. Approximately three quarters are people who don't have, or can't afford, the Right to Buy.
36. We're offering 3 products to people - "New Build", "Open Market", and "Social" HomeBuy. The details are set out in the consultation document.
37. Since I first proposed our equity share scheme for first time buyers, we've been talking to the Council of Mortgage Lenders about the role their members can play.
38. I'm pleased to say we've made excellent progress. In January, I announced that our equity share scheme would deliver new homes for over 80,000 first time buyers by 2010. But I'm delighted that we can go further.
39. As Gordon announced in the Budget, the lenders are helping an extra 20,000 first time buyers through private finance to fund equity loans, bringing the total to 100,000.
40. I also want to see how we can further develop these schemes with the local authorities, the house builders, and the lenders.
41. As well as helping people in the private sector, HomeBuy will give people in social housing more chance to buy a share in their home.
42. These tenants can acquire as big a share of the home as they can afford.
43. The scheme will protect the social housing stock - because the council or housing association will be able to buy the homes back, and re-invest any receipts in new social housing.
44. This will also help deliver more mixed tenure communities and help us to narrow the gap between people with housing assets and those without.
45. So, together the measures we are announcing today will increase fairness, choice and opportunity in housing across the country:
46. We've more than doubled investment in housing.
47. We're holding a competition to drive down the cost of construction of new homes for people on lower incomes
48. We're offering greater opportunities for housing key workers who maintain our public services.
49. We're using public land to deliver more affordable housing.
50. And we're offering up to 400,000 more people the chance to own an equity share in their home.
51. This is keeping housing right at the top of the political agenda - exactly where it should be.
52. We couldn't have achieved all this without economic stability and lower interest rates.
53. So it's my pleasure to introduce the man who has made that economic stability possible - the Chancellor of the Exchequer, Gordon Brown.
54. Thank you.

Speech by the Deputy Prime Minister, John Prescott on 1 April 2005