Baroness Ford
To ask Her Majesty’s Government what steps they are taking to increase the supply of affordable housing.
Baroness Ford (Non-Afl)
My Lords, I am pleased to have secured this debate this evening. I should immediately remind the House of the housing interests that I have declared on the register. I am a director of Taylor Wimpey plc, the housebuilder, and Grainger, the residential landlord, and, as the House probably knows, I have previous form as chairman of English Partnerships, the predecessor agency to the HCA, and most recently of the Olympic Park Legacy Company.
Housing is fundamentally important to us as individuals and as a society, and once again the issues of the supply and, critically, affordability of housing have found their way to the top of the political agenda. We hear frequently that we live on a crowded island, and standing on the District line today, I could certainly relate to that, but I also use domestic flights frequently and as I look out occasionally, I am struck by how little of our country is developed. In fact, only 12% of the UK is developed but, as we all know, this 12% is very highly concentrated around our great cities and suburban areas, and it continues to be where demand lies for more housing, creating more and more pressure on land, transport and public services.
The fact is that we cannot separate successful economic areas from demand for housing and vice versa, which is why the intervention from Sir David Higgins, chairman of HS2, last week was particularly interesting. His hypothesis is that HS2 would start to move the economic centre of gravity away from London and attract high-value businesses out of the capital. He suggests that, among other things, this would begin to stabilise house prices in London. That remains to be seen but it starts a debate that is well worth having and intelligently makes the important link between housing and transport infrastructure. He is attempting to think long-term, which is how we must think if we are to make the breakthrough we need to increase the supply of affordable homes.
Housebuilding is highly cyclical in nature and very sensitive to changes in the banking environment and the mortgage market, so we have fallen into developing housing policy that mirrors that cycle and is often reactive and short-term. We react to today’s problem. Many very worthy policy initiatives have been undertaken over the past 20 years but, of themselves, have not led to the breakthrough in affordability and overall supply that I think we all recognise is required.
We do not need to look any further than Kate Barker’s excellent 2004 analysis to understand the scale of the problem. All of the issues that Kate set out still remain. The link between house prices and earnings has deteriorated still further in the past 10 years, and not enough affordable homes are being completed. Yet we know how to solve this because we have done it before. Housing completions in 2012 totalled 143,500. In 1968, completions totalled almost 430,000. In the peak year in the previous century for housebuilding, 1968, we delivered three times as many houses as we did in 2012.
More than half of those completions were from the private sector. The remainder came from councils and development corporations as well as an increasing contribution from housing associations, but this was not an accident. The consistently large supply of homes post-war and until 1968 was a direct result of the largest and most systematic ever release of development land that our country has ever seen. That land release continued to supply up to 200,000 homes a year until as recently as 1990. I am talking about the new towns programme that began with the designation of Stevenage in 1946. The housing statistics over that period show the affordable homes that were built by the new town development corporations but, critically, many of the private completions were also built on new town land due to deliberate policy rightly to create mixed and sustainable communities, so we accomplished scale across all tenures.
It is self-evident to me that the key to increasing supply is systematic, planned release of land. If we are serious about tackling supply, variety of tenure and affordability, we need to revisit the approach that served us so well from the immediate post-war period right up until 1990, when the programme begun in 1946 naturally started to come to an end. If you strip out the new town programme, private completions have always, and steadily, delivered about 130,000 houses a year if you smooth it over the cycle. It is therefore clear from the experience of the past 30 years that the incremental amount of homes that we can add to current stock through what I would call the normal planning regime is around 160,000 a year; this is taking private housebuilders and housing associations together. That adds less than 1% to the existing stock each year, which is plainly not dealing with the issue of supply and affordability, as Kate Barker pointed out a decade ago and we all see, day in, day out.
When Kate Barker proposed that we needed to build 250,000 homes a year, there was immediate opposition to this figure, notwithstanding that we had easily accomplished this almost every year—in fact, for 27 out of the 30 years between 1950 and 1980. However, 10 years after her seminal review, no political consensus has emerged on the way forward, which is a pity as it seems to me that the only way to deal thoroughly with this issue is through long-term planning and a cross-party approach.
Encouragingly, there seems to be recognition of that in recent months. Whether it is the Government’s suggestion of garden cities or the Labour Party’s announcement of a new generation of new towns, it feels as though there is a clearer understanding that if we are to do more than add incrementally to our housing stock and really tackle the issues of price and variety of tenure, we need to significantly release land for planned, thoughtful development.
As I said, we know how to do that. The development of the English new towns was not always perfect—we know that—but we learnt as we went along and the template has subsequently been copied in many other countries. They were also phenomenally successful in terms of public finance. I would point anyone who says that government cannot afford to make the direct investment in high-quality new communities to the return that the Treasury has enjoyed over decades from continual land sales in the new towns; as the last ever chairman of the Commission for the New Towns, I have direct experience of this.
We have created only a few development corporations in the past 20 years, and I had the pleasure of chairing one of them. The Queen Elizabeth Olympic Park is being developed by a mayoral development corporation, but one that recognises that there are existing communities around it and embraces those communities through its planning system and membership of its governing body. It is a modern corporation that accepts the challenges and opportunities that development in an established community naturally brings. We are all realists. We understand that there will be challenges in building new communities, but the Queen Elizabeth Park is a great exemplar and is being immensely successful. Planning consent is in place for almost 10,000 new homes around the park. By the end of this year, only two years after the Games, nearly 3,000 new homes will be occupied—not just starting to be built, but occupied—in the park. The next phase of building, of more than 800 homes, begins in June, and the next two phases are already out to the market, adding a further 1,500 homes. This demonstrates what you can do when you have a planned, thoughtful, systematic release and, critically, you have the community with you.
I have become increasingly convinced that this is how we do it. Whether it is on brownfield land, surplus public land or on greenfield sites, the principles are the same. If we want to convince communities to embrace development, it needs to be of the very highest quality. It needs to be sustainable and affordable. It needs to offer real community benefits and not burden already creaking infrastructure or public services. Experience has shown us that the very best way to do that is through larger-scale, long-term, thoughtful development, appropriately financed.
I ask the Minister tonight whether the Government have any intention of adopting this approach, taking a long-term view and committing the finance to enabling infrastructure that is required to open up large-scale developments. I contend that we know how to do this. The time is right to do it again.
Lord Horam (Con)
My Lords, we are all very grateful to the noble Baroness, Lady Ford, for introducing this debate on what is clearly a very important public subject. I am by no means an expert on housing, but I have a long-standing interest to the extent that, in the 1970s, I was the first chairman of the Circle 33 housing association, which is now part of Circle Anglia. I remember the noble Lord, Lord Best, from those days.
I strongly support what the Minister and her colleagues are doing in government, first in her own department, the Department for Communities and Local Government, where Nick Boles, for example, is doing a great deal to remove some of the distressingly difficult obstacles in the planning area and where my right honourable friend Eric Pickles has been talking about new towns, which I think are part of the solution. The Chancellor, in his help to buy measures, has got building going again. There is no doubt that it is on the up, from all that I hear from around the country, both in London and in the regions. All that is very good and I congratulate my noble friend on what the Government are doing.
I said that I had a long-standing interest in housing. It goes back a very long way. Some people my age and perhaps younger will remember when Harold Macmillan was Minister for Housing. The noble Baroness, Lady Ford, quoted some statistics from before then. The House will recall that Winston Churchill set Harold Macmillan the task of building 300,000 houses a year to cope with the housing crisis in the 1950s, and he achieved that target within three years. Even Emanuel Shinwell, one of the original red Clydesiders, who was then sitting for Easington, had to admit, “This Government does get things done”. In the following election, the Conservatives won 50% of the vote—I do not think that they have achieved that since then—and Harold Macmillan went on to become Prime Minister. I am not suggesting that that exact approach could be replicated today. Things have clearly altered a great deal. Council housing is a fraction of what it was then and housing associations did not exist in the 1970s in the way they do now. It is all very different. But the sort of priority that that Government had in the 1950s, when there was a similar sort of crisis, though different in prices and so forth, should be given to housing today. I agree with the noble Baroness, Lady Ford, that if we get that sort of priority and the long-term thinking implied in that —and, if possible, with cross-party support, so that whatever Government are in power, that level of building is carried on—we have the makings of a solution. Unless you have something like that, we will just patch and mend as best we can from Government to Government and we will have the situation that we have today.
Finally, at local level there is a wonderful opportunity to build more flats and houses in our high streets, many of which are run down as a result of the increase in online shopping. In Orpington, which I represented for many years in the other place, Tesco built a new store in the high street, with many flats above. Where I live now in Fulham, Sainsbury is doing the same thing, both above a superstore and a local store. All that will contribute to the revitalisation of our high streets, as well as providing good, cheap social housing. That is one way forward, along with the long-term measures that the noble Baroness suggested.
Baroness Andrews (Lab)
My Lords, I am very grateful for the opportunity to contribute to this debate. No one could have introduced it in a more authoritative or measured way than my noble friend, who has been so instrumental in showing us the way forward. As she spoke, the facts of the present Government’s housing policy appear only starker in my eyes. Consensus is that they are facing the wrong direction. I am sure that the Minister will tell us of the raft of initiatives on the demand side that the Government are putting in place, but she is sensible enough to know that that will not do anything to address affordability, accessibility or housing market failure.
The fact is that, if the Government are serious about housing supply—it is very good to have the reference to the Barker report, which set the foundations a decade ago for very clear thinking—they have to be serious about an investment strategy based, first, on proper assessments of housing need across the country, linked to labour markets and local economies across boundaries, and having a planning system that enables that. As one example of what has been lost in recent years under this Government, the chair of the South West Housing Initiative told the inquiry chaired by the noble Lord, Lord Whitty, that,
“since the abolition of the regional spatial strategy housing target, planned new housing in this most stressed of regions”—
that is, the south-west—
“has been cut by 81,000”.
I do not know what it takes by way of evidence to convince the Government that they cannot rely on private housebuilders to supply the 240,000 homes that are needed. Clearly, the housebuilders themselves do not have the conviction that they can do that. They know that they do not have the scope, the competitive conditions or the incentives to step up to the scale of what is needed. Perhaps the noble Lord, Lord Best, will tell us about the challenges facing the housing associations following the welfare changes.
To compound all that, there is evidence that the local planning system is being increasingly driven not by local plans but by the high emotions of national policy and the appeals system. The Government complain that the planning system is not delivering when, in fact, 400,000 planning permissions have been granted for houses which are waiting to be built out. However, more insidious at the moment is how the local planning system is being undermined in two directions. A quarter of local authorities cannot show a five-year supply of land and, therefore, their local plans are out of date and they are in thrall to the development priorities of the National Planning Policy Framework. At the same time, even where there is a local plan in place, there is increasing evidence that the Planning Inspectorate is overturning local decisions because they are not delivering enough development. Endless appeals, constant uncertainty and longer delays mean fewer houses which are agreed by the local community. I should be very grateful to the noble Baroness if she could tell me how many local decisions have been overturned by PINS in the past five years, so that we can get some notion of trend here.
The tragedy is that the local authorities are the answer, but in order to become the answer the Government have to respond to some common-sense appeals—from the housebuilders as well as everybody else—not to limit but to remove the housing borrowing cap. Local authorities can then build 60,000 houses a year. We should get rid of the archaic arrangement whereby the HRA is still on the public books.
As regards what my noble friend said about new towns and land supply, my goodness I do not want to pile agony on the Liberal Democrats this week but what confusion there is. Who wants new towns? The Prime Minister wanted them at one time. Now he appears not to want them. The Deputy Prime Minister is desperate for them, but a report has been produced which has been hidden. The Communities Secretary says that he would like a couple of garden cities and that he does not know where the report is. He thinks that it is in another department. Will the noble Baroness please clarify the confusion that surrounds this policy? We would all be very grateful for that.
Lord Shipley (LD)
My Lords, I am very grateful to the noble Baroness, Lady Ford, for initiating the debate. I declare my interest as a vice-president of the Local Government Association.
As we know, affordable housing is the sum of affordable rent, social rent, intermediate rent and affordable home ownership. It is provided to eligible households whose needs are not met by the market, and that eligibility may reflect local authority allocation policies, local incomes and local house prices. However, for someone seeking housing, the question is a different one. It is: can I afford what is said to be affordable?
We have debated social housing on several occasions. We know that we have a waiting list of 1.8 million families. We know that house prices are rising, particularly in London, with a consequential rise in rents. We know that we need to build more and we know that large numbers of people can never aspire to home ownership and need to rent. This problem is compounded by reduced council tax support and the underoccupancy charge, together with the benefit cap, particularly in London, all of which are causing serious strain in the finances of many households. For them, their rents can become unaffordable when they used to be affordable.
What should be done? Many good ideas have been put forward—and we will hear some tonight—for the short to medium term, but I want to suggest a number of possible actions the Government could take quite quickly. First, it should be an absolute requirement that when one council home is sold it is replaced by another. This “one for one” is government policy but councils, unsurprisingly, can have great difficulty delivering it since they may not get enough money to meet the cost of the replacement home. They need help in that regard.
Secondly, will the Minister examine the realities of the underoccupancy tax? There are tenants who want to move to something smaller, and therefore something that is more affordable, but who cannot move because there is nowhere suitable to move to. Will the Government increase support to encourage more providers to modify more properties to create more units quickly to which people can downsize?
Thirdly, as regards the housing borrowing cap, in the autumn Statement the Government announced that borrowing limits for housing revenue accounts would be raised by £150 million a year in 2015-16 and 2016-17. This was very good news and something that many in this House have been urging the Government to do. If the cap did not exist, up to 60,000 new homes could be built over the next five years. The risk is minimal because the markets would set the cap, as the prudential borrowing required would be secured by the rental income. Removing the cap would of course bring local authorities into line with housing associations. So I hope that the recent announcement, which is welcome, could be followed by a further rise in the borrowing cap.
I recognise the measures the Government have taken since 2010 to try to drive up housing starts and affordable homes. The trouble is that the impact has been limited and further intervention is clearly needed if the supply is to be increased and the cost to individual households is to be made reasonably affordable.
Lord Best (CB)
My Lords, I thank the noble Baroness, Lady Ford, very much for initiating this debate and I pay tribute to her sterling work for regeneration and housing over many years.
I have two interests to declare and two bullet points to make. First, I am president of the Local Government Association and, in that capacity, I strongly support the LGA’s efforts to remove the current cap on council borrowing for housing purposes. Secondly, I chair the Hanover Housing Association. My second bullet point comes close, I think, to being a silver bullet in the quest for an increase in the availability of homes that the next generation can afford to occupy.
The Hanover@50 website displays the input from nine national think tanks on questions of housing and care for older people. In summarising these contributions to the debate that Hanover organised to mark its 50th anniversary, I contributed a 10th chapter, called, “Accommodating our extended middle age”. This addresses two of the most significant problems facing the UK: first, the escalating health and social care requirements for those in later life and, secondly, the acute shortages of homes for younger households. The proposed solution to both problems is to build attractive, well designed homes for those in their extended middle age—55 to 75 years-old—and create a sea change in attitudes in the UK to downsizing or “right sizing”.
If even a modest proportion of the rapidly growing number of older, single people and couples living in family homes could be enticed—by spacious, light, energy-efficient new homes—to downsize, there would be huge gains for them and for the nation: improved health and well-being for movers; liberation from looking after bigger homes and gardens; reduced accidents in the home or illnesses linked to cold or damp; and pre-empting, postponing and preventing loss of independence and enforced moves into expensive residential care in later life.
Downsizing retirees can access wealth by releasing equity, and this can pay for care, assist the next generation or simply fund happier retirement. Standards of living can be dramatically improved, and the setting of “sociable housing” for those in extended middle age can reduce the likelihood of loneliness and isolation, which are the chief causes of misery and mental health problems for older people.
However, these gains are equally for younger households. A shift in culture, whereby we downsize at a younger age, instead of waiting for a crisis when we hit our 80s, brings much-needed family housing, often with gardens, on to the market—usually for relatively low-cost sale. It frees up existing social housing for families at social rents, which means lower housing benefit costs that are hard to achieve when building new affordable housing. It even provides for those aged between 55 and 62 who need to move to avoid the dreaded bedroom tax.
I commend to the Minister and her colleagues the recommendations that flow from the Hanover@50 debate: building homes that attract us in our extended middle age can head off problems for our old age while enabling tens of thousands of younger people to move into family homes that they can afford.
The Lord Bishop of Ripon and Leeds
My Lords, I, too, am deeply grateful to the noble Baroness, Lady Ford, for enabling us to tackle again the issue of the serious lack of affordable housing. I want particularly to concentrate on rural housing. The statistics abound—from a need for 11,000 new rural houses a year to the provision of just over 1,000 such houses by registered providers in 2011-12. The one thing on which there seems to be agreement is that there need to be far more than are currently being built.
I welcome the way in which the noble Baroness has stressed actual supply rather than wishful thinking. We need rural housing delivery strategies even more than housing needs strategies. We may be talking about small absolute numbers in terms of rural housing but they are key to the life of our rural communities in this country.
Faith in Affordable Housing is a churches’ project designed to help to release church land and property for affordable housing. It has worked particularly with the diocese of Gloucester to provide, for example, flats for young homeless people on a derelict vicarage site. It has had modest success but is having difficulty in finding partners for more challenging developments. Some of the earlier, very positive uses of church buildings and properties appear to be impossible for registered providers to contemplate today, and this seems an immense waste.
Churches are not the only organisations with underutilised land and property which could be released for affordable housing. However, in the case of churches, such developments can also provide new meeting places, worship areas and places which can be developed for community use and needs. Faith in Affordable Housing is seeking to raise the vision of churches to make such provision, but time and again it appears to be too complex for local authorities and registered providers to become partners and supporters in this enterprise.
Can the Government tell us how they will support rural communities, including churches, in imaginative plans to increase the supply of rural affordable housing through greater encouragement and through a more equitable financial provision?
Lord Borwick (Con)
My Lords, first, I declare my interests, as shown in the register, in land and property development companies, developing houses and building social houses.
Private houses are so unaffordable in the south-east that we have to supply affordable houses or many people would be forced to move out of the area. Very, very few of the residents in many areas can afford to buy the houses that they live in. Their children become part of the demand side of this supply and demand problem. In addition, the rising levels of divorce will reduce the optimum size of a household. A couple with two children become, with divorce and shared custody, two households with three people each. All these family and demographic changes happen far faster than we can plan for them. The market can cope but only if it is freed from regulation.
What have we got wrong? As ever, it will be taxation and regulation. Home owners end up paying all the costs piled on to developers when homes are built. Property taxes, at 4% of GDP, are more than double the OECD average of 1.8%, yet certain other parties want to increase them still further. Added to that, regulation makes everything oh so slow. Supply is quite simply not meeting demand.
I am chairman of a property development business building a total of 2,500 houses on the outskirts of Bicester, including 700 social houses, but it will take 20 years from start to completion, despite having four housebuilders working simultaneously on the project. It took seven years just to get full planning permission on this uncontroversial site, and it was supported by the council. The Government should be applauded for the new planning guidance, led by my noble friend Lord Taylor of Goss Moor. That should certainly speed things up through magnificent simplification. However, the system is still rigid, with far too many officials involved.
I asked a social housing association whether it was going to change its proportion of four-bedroom houses to two-bedroom houses because of a change in demand as a result of the abolition of the spare room subsidy. It laughed, because the cost of changing the planning permission is so enormous.
I can buy an Apple iPad and get it made in China to my exact whimsical specification with my name printed on the back cover and get it delivered to me in London in less than a week. I can get a brand new Jaguar in any colour and specification I desire in less than eight weeks. Supply quickly meets demand. Why cannot the same be true for planning permission amendments? Surely this, along with numerous and burdensome taxes, is the real reason that we cannot build the homes we need to.
Lord Whitty (Lab)
My Lords, I declare an interest both as the chair of Housing Voice and as a vice-president of the LGA. I thank my noble friend Lady Ford for starting us out by looking for a new strategy in this area.
I have a few points to make. First, on terminology, as the noble Lord, Lord Shipley, said, affordability applies in all sectors of the housing market; it should not be regarded as synonymous with social housing. Moreover, a good bit of social housing is clearly not affordable for those who occupy it at its current level of rents, otherwise we would not have seen the huge increase in housing benefit which, in terms of government resources going into housing, is clearly a misallocation compared with actually increasing the supply of housing.
Secondly, I can hardly complain that the Government have been negligent in coming forward with new initiatives, apart from their very early cut in the affordable and social housing budget, which was plainly disastrous. They have come up with numerous schemes, from the New Homes Bonus, which admittedly the Select Committee down below said has not worked, to First Buy, Help to Buy, the NewBuy Guarantee scheme, mortgage guarantee, Right to Buy and so forth. There have been a whole lot of schemes but they have been piecemeal, inadequate and, in many respects, misdirected by emphasising demand, not supply. In terms of geographical balance, they have helped more to overheat the market in the south-east than to spread into the regions and rural areas.
I am not here to proclaim that the Labour Government did it any better. Frankly, we have all failed so let us have a political consensus that that failure should be driving us to seek a new approach and a new strategy. We also need to recognise the sheer size of the problem. I was looking at some of the statistics on household growth. The growth of households has slowed down a bit. Compared to the reference by the noble Lord, Lord Borwick, to divorce and split families, kids staying at home because of the economic recession has increased the size of families, so that it has slowed down a bit. Even on those figures, it is clear from the Cambridge study that we need 240,000 new homes to meet the new households being created—almost twice what we are building. We need to create a million new homes in the next five years, and that process needs to go on until 2031—a 20-year programme. That is a major strategic commitment and we do not have the mechanism to deliver it. We do not have the vehicles for delivering it and need to reinvent those vehicles.
One of those is the role of local authorities. I am simply repeating what the noble Lords, Lord Shipley and Lord Best, said. The most immediate role is for local authorities to be able to borrow and engage in developments on their own, with housing associations and the private sector, in different ranges of housing. Unless the cap is raised—we welcome £150 million, but it does not go very far—local authorities which are the most obvious ones to deliver at least part of this massive total will not be able to do so. Almost everybody in the housing world agrees with that except Her Majesty’s Treasury. Unless we raise that figure, we will not be able to deliver the beginning. We may need to do a lot of other things as well, but at least let us start with that.
Lord Taylor of Goss Moor (LD)
My Lords, first, I declare my interests both as chairman of the National Housing Federation and in various projects and businesses trying to deliver the housing needed. As has also been referred to, I am involved with a government project to supply planning guidance.
I very much welcome what the noble Baroness, Lady Ford, said. There was nothing with which I disagreed. In fact, there were things that I strongly champion. I just want to highlight three points in very little time. First, there is a myth among some that the demographic data showing the need for housing are somehow a finger in the wind. A local authority planning officer once said that to me.
However, with 20-year plans, we are not talking about housing for people who are not yet born but for the people who are born—not only the people of the baby boom of the 1990s and beyond who will be coming through soon, but the 3.3 million adults between 20 and 34 who, as the Financial Times highlighted today, are living with their parents. That is an increase of 669,000 since 1996 without any increase in that population age group. These people are living at home because they cannot afford to move out—even their own parents say that, when asked—and, as a father of three young children, it worries the heck out of me.
Secondly, there is a capacity issue in delivering the numbers we need. The large housebuilders have a grip on developable land through land options but, on their business model, they do not have the capacity to increase delivery, however much they and we might want it, because their business model will not allow such a growth in numbers. We have seen that historically. It is simply a fact.
I passionately believe that our country’s most successful social enterprise sector—the housing associations—has that capacity. It has it through the housing it already has and through its experience of delivering a not-for-profit, social purpose model. The housing association sector believes that some 2 million more homes will be needed between now and the early 2030s. This includes a mix of affordable homes to rent and homes for sale. That capacity can be unlocked by liberating the sector and giving it greater flexibility. We must allow that to happen, otherwise we will be unable to deliver the homes.
Most of all, we will be unable to deliver the homes without the land being made available. As long as we try to push denser and denser, smaller and smaller, and less and less attractive houses around our attractive historic communities on to the land on which people want to walk their dogs and to look at out of their window, the more and more unpopular it will be and the harder and harder politically.
That is why I passionately believe in freeing land for new communities, recreating the deal that said you can have green belt around existing communities to protect them but, in return, you must create new communities for those who so desperately need a home.
Lord Sawyer (Lab)
My Lords, I also pay tribute to my noble friend for bringing this debate to the House today and for her work in this field. The last time she initiated such a debate in this House we had a brief word afterwards about the importance of looking at the big picture, and I am pleased that she has returned to that issue as the main part of her contribution today.
I have also been looking for signs that the Government might understand and appreciate the importance of the strategy outlined by my noble friend Lady Ford. In March last year, I was pleased to read that the Prime Minister had called for a consultation on the appropriateness of the principles of garden cities with high potential for growth. This consultation may have floundered a little from a lack of support in certain sections of the Conservative Party—I do not know; perhaps we will hear more about that today—but, more recently, the Deputy Prime Minister has signalled his support, although using different language and with the emphasis on alternative locations. The Mayor of London, in admitting the failure of housing policy over the years, has called for a kind of new town, or new towns, contribution around the perimeter of London which might house some 80,000 to 100,000 people per conurbation.
We expect the Wolfson report this year to give guidance on the development of new towns and, most importantly for me, the Labour Party’s Lyons review of housing will, we hope, form the basis of a sound policy for the next Labour Administration.
On the longer, wider view, housebuilding and affordable homes can be achieved only by looking seriously at the new town and garden city approach, with populations of about 100,000 people. There is no other way possible to meet the needs of the future. In broad terms, we should look at the post-war model of development corporations, with the compulsory purchase of land at agricultural prices and with the planning uplift being passed on to the people. That was a fantastic model which worked really well after the war. Thirty-two new towns were created in this period. Imagine what Britain would be like today without those new towns if that generation had not made the right decision then.
In the period ahead in the 21st century, we can adapt the principles that were taken forward at that time, taking advantage of the large number of new possibilities in terms of design, materials, transport, communities and democratic involvement that people at the end of the war did not have the opportunity to benefit from. There is a great opportunity for us to bring this idea forward. We can bring an end to the current piecemeal approach of a developers’ free-for-all, planning as an afterthought or a great difficulty, and identical houses plonked miles from amenities of public transport—all the kind of things that we have seen in the past 10 to 20 years and the antithesis of what we really want, which is affordable and sustainable housing on a long-term basis.
Lord McKenzie of Luton (Lab)
My Lords, along with other noble Lords, I thank my noble friend Lady Ford for the opportunity of returning, however briefly, to the vital issue of the increase in the supply of housing, particularly affordable housing, provided for households whose needs are simply not met by the market.
That we have a housing crisis is beyond dispute, with home ownership falling and out of the reach of many, rents at record levels and rising faster than wages, 5 million in the queue for social housing, homelessness rising every year since this Government came to power, families in bed and breakfast accommodation at a 10-year high and rough sleeping up by a third. We should probably acknowledge the plethora of measures that the Government have initiated, but these cannot mask the paucity of delivery and lack of progress. Just 42,380 affordable homes were provided in 2012-13—a decrease of 26% on the previous year. In the social rented sector, just 24,550 were provided—a decrease of 36%. Overall, there were only 135,000 total completions, in comparison to the 219,000 delivered in 2006-07. Even that, of course, was substantially below the more than 350,000 achieved in the mid-1960s, when Harold Wilson was trumping Harold Macmillan.
Our briefing pack includes TCPA estimates of housing need and demand through to 2031, which extend the official projections. Whatever challenge might be made to these figures, they must surely show the broad order of magnitude of what is needed: just fewer than 5 million newly arising households in England, of which 1.5 million are estimated to be in the social sector, with a concentration in London, the south-east and the east. It will be interesting to see whether HS2 will reorientate some of that, let alone the prospect of an airport in the Thames estuary. This amounts to an annual increase in the order of 243,000, including 78,000 in the social sector—a huge challenge to any Government.
What would we do? For a start, we would be looking to build at least 200,000 homes a year by 2020. We continue to support the IMF in urging the bringing forward of £10 billion of infrastructure spending this year and next. A housing commission chaired by Sir Michael Lyons is drawing up a road map to help delivery of our ambition by looking to: reform the housing revenue account to produce a more flexible system that enables councils to build; give local authorities that want to expand a right to grow, with access to a fast-track process to resolve disputes with neighbours, something which is frustrating housing development; give councils proper compulsory purchase powers to tackle land hoarding; and ensure that when public land is given over to housebuilding, a proportion goes to smaller firms and custom builders. We also plan to offer a package of incentives to support a new generation of new towns and garden cities. That is perhaps where we can build the cross-party consensus that my noble friend Lady Ford rightly promotes. Whether there is a consensus or not, we would certainly abolish the wretched bedroom tax. Under the previous Labour Government, nearly 2 million more homes were built in England, including 500,000 affordable homes. More needs to be done next time.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Stowell of Beeston) (Con)
My Lords, I am grateful to the noble Baroness, Lady Ford, for securing this debate. As she says, the question of how best to meet our housing needs is one of the most significant facing the nation today. I am very conscious, through listening to the contributions today, just how great the expertise and experience is among noble Lords. I am grateful to the noble Baroness, Lady Ford, and the noble Lord, Lord Whitty, for acknowledging that as a country we have failed to build enough homes for decades.
This is not a new issue but it was made worse by the financial crisis of 2008, with housebuilding collapsing to the lowest peacetime levels since the 1920s by the time the previous Government left office. It is important to stress that the collapse in building led to the construction industry suffering greatly in the aftermath of the crash. It is not surprising that it has taken time for the smaller construction companies in particular to respond to the return to growth and for us to get back a position where the industry has both the capacity and the confidence to respond. Housebuilding is now back to 2007 levels but that has not happened by accident. The Government have taken the necessary steps to tackle the situation and turn things around.
Before I go into greater detail on affordable housing, I will talk more generally about overall housing supply. I acknowledge the points made by the noble Baroness, Lady Andrews, and my noble friend Lord Borwick. We have reformed the planning system: we have simplified it and handed responsibility to local authorities to set their own housing requirements. The framework is clear that local authorities should plan to meet their full housing needs for both market and affordable housing. My noble friend Lord Borwick made quite a detailed point about greater flexibility; he was kind enough to give me advance notice of that and I will continue that dialogue with him outside the Chamber.
We are also providing significant finance for projects that cannot proceed without it and we are helping buyers who can afford mortgage payments but cannot afford the sorts of sums now necessary for a deposit. We are making progress but of course we still have a way to go. At this point I will respond to the topic—different noble Lords describe it in different ways: some people call them garden cities, some call them new towns—raised by the noble Baronesses, Lady Ford and Lady Andrews, my noble friends Lord Horam and Lord Taylor, and the noble Lord, Lord Sawyer.
The previous Government pledged what they described as 10 “eco-towns” but of course none of those was built. This Government are clear about our approach, which is to support locally led development through the large sites programme, which aims to unblock barriers to delivery of such sites through partnership working, provision of capacity funding to local authorities and access to capital funding through the £474 million local infrastructure fund. Under this programme, some success to date has led to 69,000 new homes already being “unlocked” in places such as Cranbrook, Sherford and Wokingham. In the Autumn Statement we committed a further £1 billion to the local infrastructure fund to support communities in delivering their housing aspirations over the next six years, and we will be publishing a prospectus inviting local areas to come forward with bids this spring.
To be clear, we most definitely support increasing the supply of homes but this must be locally led. In response to the noble Baroness, Lady Andrews, we have no plans to impose new developments on communities and, contrary to recent reports in the press, we have not been working on secret plans to build new towns in Yalding, Gerrards Cross or any other areas. I noted what the noble Baroness, Lady Ford, said about the Olympic Park. That has clearly been a great success but it is very different in its concept because it was built to serve the Olympics and its national importance justifies the greater involvement through the major infrastructure regime in a way that we do not believe the residential development does.
Let me turn specifically to affordable housing. We need more affordable housing. It is worth pointing out, particularly in response to the points made by the noble Lord, Lord McKenzie, that more council housing has been built in the first three years of this Government than in the 13 years of the previous Labour Government. But council housing is only a small part of the overall picture. Almost £20 billion of public and private funding is being invested in the Affordable Homes Programme over the four years to 2015. This will deliver 170,000 homes, nearly 100,000 of which have already been completed. These homes are being provided where they are most needed and in a range of areas. I say in response to the right reverend Prelate the Bishop of Ripon and Leeds that around half the affordable homes provided in 2011-12 were in rural communities. He is right to identify that need and we are responding to it.
From 2015, another £23 billion will be invested to deliver 165,000 more affordable homes by 2018. The Homes & Communities Agency will publish the prospectus for this latest programme shortly, inviting bids for funding to deliver that affordable housing outside London. As a result of all this work, we will achieve the fastest rate of affordable housebuilding for at least 20 years. Not only did the previous Government build very little but they oversaw the shrinking of the stock of social housing by 420,000 homes. My noble friend Lord Shipley mentioned Right to Buy and the one for one programme. I understand the point that he makes, but it is worth emphasising that that policy of replacing homes sold under Right to Buy is something that no other Government have done.
However, increasing supply in time of difficult economic conditions means that we have to look at different ways to attract investment. Our affordable housing guarantees programme lets housing associations use a government guarantee to secure private investment at more competitive rates. As part of this, we recently agreed a new deal with the European Investment Bank which will release £500 million to deliver up to 4,300 homes. We also announced the first eight housing associations to receive funding through the guarantee programme.
We believe that councils also have a role to play in building homes and have announced an independent review of councils’ role in housing supply. As has been acknowledged by noble Lords today, we have already increased the amount which councils can borrow to build homes in collaboration with housing associations.
Important points on this were raised by the noble Lord, Lord Whitty, both today and in a debate that we had last week on the local government finance settlement, and by my noble friend Lord Shipley. The noble Lord, Lord Whitty, spoke last week about ensuring that councils are able to take advantage of some of those housing guarantees so that they are part of the route to increasing supply—the right reverend Prelate also referred to this today. The noble Lord felt that local authorities were barred from being able to take advantage of some of these joint ventures and the source of funding. That is not true. Some councils are already doing just that, and are working with partners, housing associations and developers in joint ventures on housing for sale, private rentals and sub-market rentals. In the new scheme announced at the Autumn Statement to which I have just referred, we expect to see partnership working with housing associations through those joint ventures.
On the increase in the borrowing level, it is important that we do not underestimate the dramatic effect of the Government’s self-financing reforms. The point is not just this recent increase in the amount of borrowing but the way we have now made it possible for 165 council landlords to do this, with new freedom to plan their housing businesses for the benefit of their tenants and local communities. They now have that £2.8 billion borrowing headroom and the possibility of planning longer term than they were ever able to in the past.
Clearly, this is about not just supply but also making best use of existing stock. Social housing is one of our most precious resources. That is why we have introduced much greater flexibility into the system so that social landlords can make the best use of their holdings. Councils now offer shorter fixed-term tenancies as well as the traditional lifetime offer, meaning that they can better respond to families’ changing circumstances. Councils also now have much greater freedom to decide who qualifies for social housing.
The noble Lord, Lord Best, referred to the Hanover@50 report. I am not familiar with it but will make myself so in light of his raising it today.
Increasing supply is, as we have all acknowledged, the most important way to maintain affordable rates of rent. Our affordable housing programmes provide hundreds of thousands of homes at sub-market rents. There is much to do to tackle the national shortage of affordable housing. Not only do this Government have a comprehensive plan to turn this situation around but our plan is working. Working together with housing associations, councils and housebuilders, we are overcoming the problems we inherited and are set to deliver the homes the nation needs to house everyone properly in future.