Housing and Planning Bill
16:16 - Division on Motion B1 - Ayes: 272 / Noes: 212 - Motion B1 agreed.
17:11 - Division on Motion D1 - Ayes: 275 / Noes: 219 - Motion D1 agreed.
18:04 - Division on Motion J1 - Ayes: 248 / Noes: 214 - Motion J1 agreed.
18:31 - Division on Motion K1 - Ayes: 237 / Noes: 203 - Motion K1 agreed.
19:00 - Division on Motion M1 - Ayes: 223 / Noes: 199 - Motion M1 agreed.
Baroness Williams of Trafford
Moved by
That this House do not insist on its Amendment 1 and do agree with the Commons in their Amendments 1A, 1B and 1C in lieu.
“( ) is subject to a restriction requiring repayment of the 20% discount, reduced by 1/20th for each year of occupation by the purchaser, for a period of 20 years,”
“Power to require payments or discounts on resale (subject to tapering) etc
(1) The restrictions on sale that may be specified by regulations under section 2(1)(e) in relation to a dwelling that has been sold to a qualifying first-time buyer include, in particular, restrictions —
(a) requiring a person who sells the dwelling within a specified period to make a payment to a specified person in respect of the starter homes discount, or
(b) prohibiting a person from selling the dwelling within a specified period unless the dwelling is sold to a qualifying first-time buyer at a discount.
(2) Regulations made by virtue of subsection (1) must—
(a) set out how the amount of the payment or discount is to be determined, and
(b) provide for reductions in the amount of the payment or discount according to the length of time since the dwelling was first sold to a qualifying first-time buyer.
(3) The person specified in regulations under subsection (1)(a) may be the Secretary of State, a local planning authority in England or any other person.
(4) Regulations under section 2(1)(e) may impose restrictions that require a person selling the dwelling to sell it subject to any restrictions to which he or she is subject.
(5) Regulations under section 2(1)(e) may include provision about the legal mechanism by which any requirement is to be imposed.
(6) The Secretary of State may by regulations make provision about the use of sums that are paid to a person in accordance with a requirement imposed by regulations made by virtue of subsection (1)(a) (including provision permitting or requiring the payment of sums into the Consolidated Fund).
(7) In subsection (1)(a) “starter homes discount” means the discount mentioned in section 2(1)(c) or subsection (1)(b) above.”
“( ) regulations under section (Power to require payments or discounts on resale (subject to tapering) etc)(6);”
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Williams of Trafford) (Con)
My Lords, I shall speak to Amendments 1A, 1B and 1C, which provide a power to implement a tapered approach to the resale of a starter home, in lieu of Amendment 1, the approach which was accepted in this House. The amendments provide that the Secretary of State can make regulations on the length of the taper period and on the details of how the taper will operate. These amendments were agreed by the other place without a vote, demonstrating a clear mandate. The Government have listened to the concerns of this House and have responded. We want to ensure that starter homes are sold to those who are genuinely committed to living in an area, and not to those who simply want to secure financial uplift by selling on quickly—something that has been much debated in your Lordships’ House—but we also want to support mobility, so a balance needs to be struck. I therefore ask that the House do not insist on its Amendment 1.
The Government are committed to introducing a tapered approach so that the longer the individual lives in the property, the more value they gain. Our amendment sets out two possible models for the operation of a taper. First, when a starter home is sold within a restricted period, the owner must pay a proportion of the discount to a specified body. This is the broad approach that was proposed by this House at Report and, with this amendment, could now be implemented. We are keen to continue our dialogue with developers, lenders and local authorities to reach agreement on the best mechanism for achieving our aims, and I am very happy to discuss how the model might work with interested Peers over the next few weeks. The detail will be set out in affirmative regulations for both Houses to consider. I am confident that this is the best way for us to ensure that we deliver a workable taper, supported by those working with it.
Turning now to Amendment 10A, which would reinstate the nationally set starter homes requirement on housing sites but allow councils to have local discretion on rural exception sites, I made a commitment, following discussions during the passage of the Bill on Report, to recognise that rural exception sites may require additional discretion on starter homes. I have listened to concerns that a compulsory requirement could disrupt the supply of rural exception sites coming forward. This amendment has been accepted by the other place with a clear majority of 115 and an even higher majority, of 121, of votes cast by Members for constituencies in England.
I recognise the strength of feeling behind the amendments to have a locally set requirement, which this House accepted. However, they would totally undermine our manifesto commitment to build 200,000 starter homes by 2020. We made this commitment to address the real and urgent problem of declining home ownership among the under-40s. The electorate has every right to expect the Government to deliver, and the other place has been clear in its support to deliver our starter homes commitment and deliver the number we promised quickly. Many honourable Members commented on the popularity of starter homes within their constituencies and their importance for sustainable communities.
It is a ground-breaking move to require that starter homes will be built on all reasonably sized and viable sites, but it is necessary and justified to ensure that these homes are delivered, and delivered soon. We cannot wait for each of the 336 planning authorities to undertake local needs and viability assessments before action on starter homes is taken; given that 30% of councils have not adopted a post-2004 plan, the risks to delivery are simply too high. The amendments would hit hardest the very people whom we are trying to help, and first-time buyers would yet again see their chance of home ownership undermined. We are consulting so that we get the percentage requirement right, including on exemptions from the requirement for certain types of development, and Parliament will be able to scrutinise the resulting affirmative regulations. The amendment in lieu is needed to help a generation into home ownership. I therefore ask that the House considers the manifesto commitment for starter homes and do not insist on its Amendments 9 and 10 but accept Amendment 10A in lieu.
Lord Best (CB)
My Lords, I shall speak to Motion A. First, I thank the Minister for the series of concessions that relate to rural areas, some of which are subject to further negotiations, always knowing that there is an affirmative resolution required, giving this House a chance to do some more work if we do not reach agreement in the discussions that will follow. I am very grateful for a number of concessions that relate to starter homes and rural areas.
I moved the amendment about repayment of discounts for starter homes, which was agreed by a very large majority on Report and has subsequently been rejected by the other place. My concern was that, to cover the cost of discounts for those purchasing starter homes, funding was to be taken from the housing programmes for those on lower incomes for whom affordable renting was the only option. The Government estimate that starter homes 20% discounts will cost on average around £43,000 each. They want to see 200,000 of these homes sold by the end of this Parliament, so the total cost of the discounts will be some £8.6 billion. Since starter homes represent a manifesto commitment, the Lords amendment did not attempt to undermine the Government’s policy but instead to require a proportion of the 20% discount, on a diminishing taper, to be repaid when the lucky buyer sells their starter home. The amendment passed by your Lordships would require a simple repayment of the discount, reduced by one-20th for each year of occupation. So if a first-time buyer stayed there for 20 years, the discount—£43,000 on average—would be retained in full, but if they left after 10 years they would repay half the discount, or £21,500 on average. If they moved after five years, as might be quite typical, they would repay a sum equivalent to three-quarters of the discount—£32,000. My point was that, after giving the first-time buyer a leg up when they sold, a worth-while proportion of the cash would be repaid and available for recycling into genuinely affordable housing.
The Government’s original proposal was an all-or-nothing arrangement whereby the buyer had to repay 100% of the discount if they left within five years but could keep 100% of it if they sold after five years. This could represent a significant windfall for the buyer. In London, for example, discounts could be worth as much as £110,000, contributed by the taxpayer in respect of the buyer’s means. Ministers have been persuaded that this cliff-edge would not work. It would probably mean that the vast majority of buyers would stay for five years and then sell to maximise their gains, creating big distortions in the market. So the principle was accepted during the Lords stages of the Bill that a taper should be introduced to spread the benefits of the discount more gradually over a number of years.
Under the Government’s original scheme, the next buyer would then acquire the home with a tapered discount, which the Government’s consultation paper suggested would be over eight years. So the first-time buyer who left after eight years would keep all the discount, but if they sold after four years the next buyer would get half the discount—that is, they would purchase with a 10% discount. If they left after six years, the discount for the next buyer would be 5%, and so on. A bureaucratic process would have to be put in place to value the property at each subsequent sale and ensure that it was at the correct reduced discount, to ensure that the new purchaser was another first-time buyer under the age of 40, and so on. All this seemed very cumbersome and meant that money from the original discount would never be repaid or returned.
I am grateful to the Minister in the other place, Brandon Lewis, for listening patiently to the arguments against these arrangements and accepting the merits of the alternative concepts embodied in our earlier amendment. He has proved willing to place the taper approach in the Bill and to commit to a system for repayment of the discount so that the funds—hard cash—can be recycled for new affordable housing. Whether the tapering runs in equal instalments over eight years or over a longer period—perhaps even over 20 years, as in the earlier amendment agreed by your Lordships—remains for further negotiation, but the principles here seem to be agreed.
With a taper, and with funds going back into the affordable housing pot, either via the local authority or through the Homes and Communities Agency and the Greater London Authority, there should be a recycling of a serious proportion of the £8.6 billion to be spent on starter homes discounts. If first-time buyers tend to move after an average of five years, and if Ministers are agreeable to the taper being for 10 years, then half the money should come back into affordable housing provision under the new deal. That means restoring £4.3 billion to the affordable housing project. So with appreciation to the Ministers concerned, I for one am very willing to accept the amendments in lieu of the Lords amendment. I look forward to working with Ministers on the details in the negotiations, and I believe that we have much improved the process.
Lord Kerslake (CB)
My Lords, I shall speak to Motion B1. In doing so, I declare my interests as chair of Peabody and president of the Local Government Association.
I welcome the Government’s movement on the taper, which I believe to be an entirely sensible way to reframe the starter homes product. However, there remains an outstanding issue that needs to be addressed, and I hope the Government will listen again and make changes. The amendment before us does not seek to insist on Amendments 9 and 10, which have previously been considered, but instead adds an additional clause to the Government’s own Amendment 10A. This gives the local authority the opportunity, if it can demonstrate a need, to meet part or all of the so-called starter homes requirement through alternative forms of affordable home ownership. It will do so within the general duty set out in the Bill to promote starter homes as part of its planning functions. This does not go as far as my previous amendment, which gave complete flexibility to local authorities across both affordable home ownership and affordable rents in making their planning decisions. In a genuinely localist world, this remains the right approach. However, in keeping with the spirit that this House does not simply seek to reverse the decisions of the other place at this stage of the Bill, I have proposed an alternative, more restricted amendment, and I shall briefly outline my reasons for doing so.
First, the Bill gives the Secretary of State quite unprecedented power: namely, to prevent a local authority granting permission on an individual planning permission unless that planning application contains a specified proportion of a particular type of housing—starter homes. This is a degree of centralist imposition that has never before been contemplated and its consequences are completely unknown. Moreover, we are imposing a product that is entirely new and indeed, as we have just heard, is still being designed. Not one starter home has yet been sold. It has gone from being an interesting and positive prototype to the main type of provision of sub-market housing without going through any of the essential stages of product development in between. Allowing alternative types of affordable home ownership products, such as shared ownership and rent to buy, within the starter homes requirement would provide vital local flexibility while we learn how the starter homes product works.
My second reason is that, as a result of the starter homes requirement, other forms of affordable housing will be squeezed out of Section 106 planning agreements. There will be far less opportunity to include social or affordable rented housing as part of the planning approval. This will, in turn, reduce the supply of such properties at a time when they are desperately needed, especially as affordable housing grant will largely cease from 2018. To be clear, the issue with starter homes has never been about providing a new offer to young first-time buyers; it has been that we should not do so at the expense of those on lower incomes who are in even greater need. We do not know precisely what the impact of the Government’s proposals will be. However, the draft regulations, which have just been referred to, propose a figure of 20% starter homes in each application.
On the Government’s own assessment, the average cash value of affordable housing in planning agreements is 22%. It does not take a great mathematician to see that, even if the average cost of starter homes is less than that for other types of affordable housing, there will be little or no remaining flexibility left for local authorities. The starter homes requirement will consume almost all the available value. I have no doubt that starter homes will work well in some parts of the country; I am equally clear that in other areas they may not. In London, we know that Shelter has calculated that it will be possible to buy a starter home only with an income of £77,000 and a deposit of £97,000. At best, this applies to no more than 20% of those in London who currently rent. In other higher-value areas, such as the south-east, Shelter has calculated that more than half of those currently renting will be unable to take advantage without parental help. This disparity is why many local authorities are saying to me—and, I suspect, to the Government—that they must have the flexibility to do local deals and develop the low-cost home ownership products that meet their local needs. One size does not fit all, yet this is what the Government are seeking to impose. The amendment would provide local authorities with a greater ability to get the mix right in their area.
My third and final reason is that giving greater local flexibility will work better to deliver what should be our overriding ambition—to build more housing of all types and tenures. It will give a much greater incentive to local authorities to approve planning applications quickly if they can secure the type of affordable housing that they believe will generally meet the needs of their local area. There would be less dependency on straight market sale and more scope to adjust the mix if market conditions should change.
Baroness Royall of Blaisdon (Lab)
My Lords, I rise to speak to Motion L. I am disappointed that the Government rejected my Amendment 109. Government Amendment 109B is but half of my amendment and will be a great disappointment to those working in the rural housing sector, who best understand the need for affordable housing in rural communities. My amendment was designed to ensure that the majority of new affordable housing in those communities which are in developments of 10 units or less and which were developed thanks to Section 106 agreements would be safeguarded. I regret that the amendment before us today simply does not provide that reassurance, but I am glad that the Minister recognises that the particular issues faced by rural areas other than national parks and areas of outstanding natural beauty still have to be addressed.
Yesterday, the noble Lords, Lord Best and Lord Cameron of Dillington, and I were in discussion with the Minister and her officials. Apart from a drafting inconsistency, which could have been amended, the main reason for not putting the wider reference to rural areas in the Bill was that there was no agreement on the definition of “rural areas” and a consultation is necessary. This means that until the consultation has been concluded, and regulations drafted and agreed, developments of 10 units or fewer in settlements with a population of fewer than 3,000 people could be agreed with no affordable housing. This would be truly detrimental to small communities, and I trust that the Government will do everything possible to ensure that this does not happen.
At Second Reading on 26 January, I said I hoped that,
“we will be able to agree on a definition of a rural community which can be supported by the majority of stakeholders and used for housing and other purposes”.—[Official Report, 26/1/16; col. 1198.]
If the Government had acted then by launching a consultation, affordable housing in small Section 106 developments could have been safeguarded by inclusion in the Bill. I regret that that did not happen, but I also regret that I did not diligently pursue the Minister to ensure that it did. But regrets do not bring positive results, so I will move on to the very positive speech by the Minister, which I warmly welcome. I am grateful for her recognition that rural areas have unique housing needs and I look forward to working with her to craft the important consultation on the definition of a rural community and then on the regulations. However, although I do not for one moment doubt the integrity of the Minister, I do not have absolute confidence in the Government to deliver what is needed. I therefore give notice that, if the regulations when they are laid before this House do not meet the needs of rural areas in relation to the provision of affordable housing on Section 106 developments of 10 units or fewer, I will not hesitate in tabling a fatal Motion.
I do not wish to end on an antagonistic note, so I again thank the noble Baroness, Lady Williams, for all that she has done on this issue. The two of us, together with the noble Lords, Lord Best and Lord Cameron, are in complete agreement about what needs to be done. As ever, it is the machinery of government that gets in the way. However, as a woman whose glass is always half full, I am pleased to support the government amendment that gives us half of what is needed, and I will, on this occasion, diligently pursue the remainder of our objectives.
Baroness Bakewell of Hardington Mandeville (LD)
My Lords, I rise to speak in support of Motion B1 in this group and remind the House of my interests as a vice-president of the LGA and a South Somerset district councillor. I note that Amendments 1A, 1B and 1C give a commitment to a taper and that the affirmative procedure will be used, as is only right and proper.
I shall be brief, as all arguments have been fully made previously. However, I have one query and ask the Minister to clarify what the Minister of State in the other place meant yesterday when he said in response to one of his honourable friends:
“As the discount is proportional, the difference in values will be dealt with by the way in which the percentages will work”.—[Official Report, Commons, 03/5/16; col. 63.]
On Motion B1, these Benches support the noble Lord, Lord Kerslake, in his wish to ensure that types of home ownership other than the Government’s starter homes programme are available to residents. We fully support the Government in their wish to see an increase in the supply of housing across the country—it is much needed—but we are concerned that there should be a true mix of alternative forms of affordable home ownership. This amendment would go some way towards meeting that requirement.
Finally, I thank the Minister, the noble Lords, Lord Best and Lord Cameron, and the noble Baroness, Lady Royall, for securing Amendments 10A and 109B on rural exception sites. These are to be welcomed and give some reassurance on the future of rural communities across the country, including national parks and AONBs.
I note that consultation is continuing on what constitutes “rural”; I hope it will be short and productive. Given the discussion we had in this House about the meaning of “rogue” in the context of rogue landlords, I hope we will not go down rabbit holes in defining what is meant by “rural” community.
Baroness Warwick of Undercliffe (Lab)
My Lords, I speak in support of government Amendment 10A, which safeguards the provision of affordable homes on rural exception sites, as well as Amendment 10B in the name of the noble Lord, Lord Kerslake, which would add to it. I declare an interest as chair of the National Housing Federation, which represents England’s 1,000 housing associations. As many noble Lords will be aware, housing associations work with local authorities across the country to deliver the homes and services needed by each local community.
The Government have a manifesto commitment to deliver 200,000 starter homes by 2020, which will help many people on to the housing ladder. They have also shown a welcome commitment to shared ownership. However, as the Bill allows developers to deliver starter homes as part of their Section 106 obligations, this puts the supply of all other forms of affordable homes at risk. I welcome the Government’s Amendment 10A, as it allows local authorities to protect rural exception sites, making sure that the housing delivered will be affordable in perpetuity for the local community. It recognises the value that rural exception sites bring to our rural villages.
Unfortunately, however, the rejection of Lords Amendment 9 by the other place puts the much needed delivery of all forms of sub-market rent at risk by undermining local authorities’ power to plan to meet objectively assessed local housing need, as they are required to do by the National Planning Policy Framework. Local authorities should have the freedom to plan for the different tenures that people living in their area might need. In many cases, these will include starter homes, but local people may also need affordable or social rented homes, or homes for shared ownership.
I understand that the Government are not willing to grant this flexibility given their focus on delivering starter homes. Although I stand by my position that local authorities should retain the freedom to plan for all local housing need, I voice my support for Amendment 10B in the name of the noble Lord, Lord Kerslake, which would enable starter homes to be built while giving local authorities flexibility to deliver other forms of low-cost home ownership products to meet the needs in their area. This would include shared ownership —an affordable way for those on low incomes to own their own home which was originally pioneered by housing associations.
Local authorities know best the housing needs of the people in their areas. They are in the best position to determine the right mix of homes in their areas. This amendment is an elegant way to enable the Government to meet their manifesto commitment to boost home ownership, while giving local authorities some flexibility to serve their communities by planning sensibly for the homes that meet those communities’ needs.
Lord Kennedy of Southwark (Lab)
My Lords, as this is my first contribution today to consideration of the Commons reasons and amendments to the Housing and Planning Bill, I draw noble Lords’ attention to my declaration of interests and further declare that I am an elected councillor in the London Borough of Lewisham. Generally, it is disappointing that we are back here today following the rejection by the other place yesterday of a number of amendments proposed by your Lordships’ House. There has been some movement in the Government’s position on the taper but they have not gone as far as we would have liked, and I think the noble Lord, Lord Best, got this one right. Nevertheless, we are pleased that there has been some movement. Recycling a proportion of the discount through a taper if the property is sold is a much better way of delivering this policy and I am pleased that the Government have accepted that.
On Motions B and B1, proposed by the noble Baroness, Lady Williams of Trafford, and the noble Lord, Lord Kerslake, respectively, the latter amendment gives local authorities the ability to demonstrate the case for delivering other forms of low-cost home ownership to the Secretary of State along with their general duty to deliver starter homes. That is all the amendment does: it gives the local authority the ability to demonstrate the case. If that is not done to the Secretary of State’s satisfaction, approval will not be given. I cannot see why the Government want to resist that. Again, it is disappointing that the other place has not accepted Amendment 109 proposed by my noble friend Lady Royall of Blaisdon, but there has been some movement, which is to be welcomed. Like my noble friend, I will be looking carefully at what emerges from future discussions, and we will press the Government further in that regard.
Baroness Williams of Trafford
My Lords, I thank all noble Lords who have spoken to this group of amendments. I welcome the debate on the starter homes amendments and rural issues; I hope it has been productive. I am trying telepathically to understand what the Minister in the other place meant last night by “proportionate” discount. As I understand it, as the discount is a percentage rather than a cash sum, it is proportionate to the total cost rather than fixed, which is probably fairer. That is my understanding of what he meant.
On Amendment 10B, proposed by the noble Lord, Lord Kerslake, I understand why it seems attractive to allow local authorities to meet their starter homes requirement with other products. However, in reality, the requirement for starter homes would become something entirely different. This change to the requirement would again undermine the Government’s ability to meet our manifesto commitment to 200,000 starter homes. We have been very clear on why we want a requirement for starter homes. This is a new product, designed to address a specific gap in the market for young, first-time buyers, as we have discussed on many occasions during the passage of the Bill. Starter homes will give young people the chance of full home ownership, allowing them to move onwards and upwards over time. We have a clear manifesto mandate to deliver this product, and that is why we are legislating for starter homes alone.
The starter home requirement will be straightforward and developers will understand it from the outset. It does not remove councils’ ability to deliver other affordable housing and home ownership products alongside starter homes, and we fully expect them to do so. Nor does it remove their local plan policy. The Government believe that shared ownership and other affordable home ownership products have an important role to play as part of a diverse and thriving housing market. They will help those who aspire to home ownership but cannot afford outright discounted purchase.
The spending review has committed £8 billion to deliver a further 400,000 new affordable housing starts. We have published a prospectus that invites housing associations and other providers such as developers to bid for £4.1 billion to deliver 135,000 shared ownership homes and £200 million to deliver 10,000 rent-to-buy homes. However, our legislation focuses on starter homes to ensure that it has the necessary attention to secure delivery.
I have listened carefully to the debate, and I hope that the amendments I have set out mean that there is no need to divide your Lordships’ House. With these reassurances, I ask that the amendment to the Motion be withdrawn.
Baroness Williams of Trafford
Moved by
That this House do not insist on its Amendments 9 and 10 and do agree with the Commons in their Amendment 10A.
“( ) An English planning authority may only grant planning permission for a residential development having had regard to the provision of starter homes based on its own assessment of local housing need and viability.”
“( ) Where the Secretary of State makes regulations under this section, the regulations must give an English planning authority power to dispense with the condition requiring the starter homes requirement to be met where—
(a) an application is made for planning permission in respect of a rural exception site, and
(b) the application falls to be determined wholly or partly on the basis of a policy contained in a development plan for the provision of housing on rural exception sites.”
Lord Kerslake
Moved by
At end insert “, and do propose Amendment 10B as an amendment to Amendment 10A—
Lord Kerslake
My Lords, I have listened carefully to the debate and I am grateful for the contributions this afternoon. I believe that this amendment does not in any sense challenge the Government’s manifesto commitment but provides the necessary local flexibility for alternative low-cost home ownership. In many ways it will help with the delivery of the Government’s agenda. In these circumstances, regretfully, I will test the opinion of the House.
Baroness Williams of Trafford
That this House do not insist on its Amendment 37, to which the Commons have disagreed for their Reason 37A.
Commons Reason
37A Because it would alter the financial arrangements made by the Commons, and the Commons do not offer any further Reason, trusting that this Reason may be deemed sufficient.
Baroness Williams of Trafford
My Lords, we now turn to vacant higher-value local authority housing. The manifesto was clear:
“We will fund the replacement of properties sold under the extended Right to Buy by requiring local authorities to manage their housing assets more efficiently, with the most expensive properties sold off and replaced as they fall vacant.”
That is what the Bill will deliver. It will increase housing supply through the delivery of affordable homes and will extend home ownership by funding the discounts for the ground-breaking voluntary right-to-buy agreement.
Following your Lordships’ scrutiny, there have been improvements to the way that the policy will be implemented. For example, building one new home for each higher-value dwelling we expect to be sold is now in the Bill, as is making the regulations in respect of the definition of higher value subject to affirmative resolution and excluding housing in national parks and AONBs when calculating the payments. However, the other place has voted emphatically, by 288 to 172, to disagree with other changes made in your Lordships’ House. It cited financial privilege, recognising that it is a manifesto commitment. I understand that point and I have to say that I agree.
Amendments 37 and 184, originally proposed by the noble Lords, Lord Lisvane, Lord Kerslake and Lord Beecham, would have put the determination of payments into regulations. This would have led to considerable delay in receiving payments from local authorities in respect of their higher-value vacant housing, and would have delayed the delivery of our manifesto commitments.
I agree with the other place that a determination is the most appropriate way of setting out the information about the payment that a local authority will be expected to make. The nature and amount of information to be contained in the determination means that it is appropriate to use a determination rather than a statutory instrument.
I am pleased that the other place has recognised the case made by noble Lords, and has proposed in Amendment 184A that the definition of higher value should be subject to the affirmative procedure. Recognising the will of the other place, I urge noble Lords to accept Commons reasons at 37A, and to agree Amendment 184A.
The other place has also considered Amendment 47, proposed by the noble Lord, Lord Kerslake, and has again cited financial privilege. This amendment would have been extremely restrictive, taking discretion from the Government to ensure that new housing will be delivered through agreement.
The noble Lord, Lord Kerslake, has tabled Amendments 47B and 47C, which are very similar, and therefore I will save the rest of my remarks for my response to our debate. However, as we discussed at Third Reading, Amendment 47 would not be suitable and therefore, recognising the will of the other place, I urge noble Lords not to insist on these amendments. I beg to move.
Lord Lisvane (CB)
My Lords, your Lordships’ Amendments 37 and 184 taken together would make the Secretary of State’s determination in respect of vacant high-value housing be introduced by regulations that are subject to the affirmative procedure for matters of principle and the negative procedure for matters relating to a single authority. I do not accept the Minister’s argument that a determination has to be, as it were, a single operation. I believe that it is technically possible to separate the issues and apply a different procedure to each one. Without these amendments, Ministers would have absolute freedom to make decisions in this area subject only to judicial review, as my noble and learned friend Lord Hope of Craighead pointed out on Report.
This is an issue of the level of parliamentary control. Your Lordships wish to see that level raised. It appears that the House of Commons did not. However, I welcome Amendment 184A, which would make the definition of higher-value housing subject to affirmative regulations although, as I said on Report, this is slightly less than half the loaf. I was for a while slightly puzzled by the fact that Amendment 37, relating to the level of parliamentary control, should be designated as one attracting financial privilege. I thought, on reflection, that the judgment must have been made that a delay in achieving the end would mean a delay in receipts and so I accept that judgment. Not least because we have been given the privilege reason, I do not think that on Amendments 37 and 184A there is a case for asking the Commons to think again twice.
Lord Kerslake
My Lords, I rise to speak in favour of Motion D1, in my name. These amendments take on board the debate that we had about the perceived restrictive nature of the previous amendments and are changed in some important and significant ways. The first part of the Motion, Amendment 47B, is new and simply confirms that, where a local authority enters into an agreement with the Secretary of State on the one-for-one replacement of a vacant council property that has been sold off, it will be able to retain the funding needed to build a new affordable home. An affordable home would, under the Government’s definition, encompass social rented, affordable rented, shared ownership and, indeed, starter homes. It would be for the local authority to decide whether it wished to enter into an agreement with the Secretary of State and, under this amendment, for the Secretary of State to agree whether they wish to do this—no restriction on either side. If it does so, the local authority will be required to replace one property sold with one new one, which was a welcome addition during the debate on the Bill. However, it will also be for the local authority to consider whether the new affordable property is for rent or for sale, based on the assessment of local needs. The amendment puts beyond doubt in the Bill that the local authority will be able to retain the funding required to deliver this replacement. As such, it is entirely consistent with the Government’s manifesto and I hope, therefore, that the Minister can readily accept it.
Amendment 47C builds on this issue and seeks to put beyond doubt that, where a local authority can make the case—this is in addition to the Secretary of State—on the basis of its particular needs, it will specifically be able to fund the provision of the new dwelling as social housing on a like-for-like basis. Again, the choice is there for the local authority to make its case to the Secretary of State and it is for the Secretary of State to take a view on that case. If they both conclude that there is already sufficient social rented housing in the area, the local authority can choose to build affordable housing for sale or affordable rented housing at a higher level of rent. However, if they conclude that they want to replace with a social rented property, the local authority can make the case on the grounds of its particular need and this amendment will give it the opportunity to do so.
Why is this amendment needed? First, because the other routes to deliver social rented and affordable rented housing will be severely curtailed by other actions that the Government propose taking, both under this Bill and outside it. The new starter homes requirement that we have just discussed will squeeze new social rented housing out of Section 106 planning agreements. Grant funding for new affordable rented properties by the Homes and Communities Agency will almost entirely cease after the current affordable housing programme ends in 2018. The reduction of rents by 1% per annum over the next four years will make it much harder for housing associations and local authorities to deliver viable schemes with social rented housing in them. Taken together, these changes present a formidable challenge to the continued delivery of affordable and social rented housing. Therefore, the ability to replace the forced sale of vacant council houses represents one of the few routes that will be available to secure new social rented supply.
My second reason for these amendments is to provide some protection for local government against the huge unresolved issues in this policy. Since Third Reading, the Public Accounts Committee has published its report on the extension of right to buy. It makes for sobering reading, to say the least. I will quote a small part of it:
“Despite the implications and complexity of this policy, the Department has not published a detailed impact assessment to inform Parliament’s consideration of its legislative proposals. Many key policy details have not been clarified, with the Department offering only vague assurances as to how this policy will be funded, without producing any figures to demonstrate that additional funding from central or local government will not be required”.
It is worth noting in this context that Shelter has issued research today which suggests that local authorities will need to sell off some 23,500 properties a year— 30% of their vacant stock—if they are to deliver the level of receipts set out in the Conservative Party manifesto. Given the potential scale of the impact and the verdict of the Public Accounts Committee, it is not unreasonable to look to provide some protection for local authorities in the Bill. The risk otherwise is that proper replacement will be the first thing to go.
My third and final reason for these amendments is the desperate need for more housing for those on low incomes. In some low-demand areas, social rents are little different from market rents, but in other areas, particularly London and the south-east, the problems are acute. Average market rents in London are now some £1,400 per month, or £16,800 per year, making it pretty tough for the median earner in London on a salary of £30,000. They are completely beyond the range of those on lower incomes. Rents for social housing are typically one-third of that level, making it accessible to ordinary people. But we are simply not building enough new social rented housing, and just one consequence of that is that some 3,400 families with children in London are living in temporary accommodation. This is a scandal and something that all political parties are committed to ending. The forced sale of higher-value properties—typically bigger family properties—in the highest demand areas without proper like-for-like replacement will make these problems even greater.
I have gone through these issues at length to emphasise just how much is at stake and why these amendments are so important. They confirm the funding of one-for-one replacement and provide the opportunity to deliver new like-for-like social housing where a local authority wishes and where it can make a persuasive case to the Secretary of State on grounds of need. These are not restrictive amendments, they are enabling amendments to address a very serious issue. I hope the Government will recognise this issue and that noble Lords will support Motion D1 when we come to vote on it.
Lord Porter of Spalding (Con)
My Lords, I rise to speak against Motion D1. Again, that is very difficult to do given that the sentiment that is supposed to be behind it is something I am trying to support, but it is written in a way that I cannot. I refer noble Lords to my interests in the register, which have not changed since I last referred to them.
I seek the Minister’s confirmation that the Government intend to stick to their manifesto commitment. To avoid any doubts about what the manifesto commitment was, this time I am going to read it, because nobody else has referred to it, just to make sure that we are all talking about the same thing. The intention behind it was that we would retain sufficient high-value asset sale receipts to replace the units sold. That was confirmed by the Prime Minister, who said:
“As the most expensive council properties fall vacant, we are going to require councils to sell them off ”,
which is fine as stock management,
“and we’ll replace them with new affordable housing in the same area”.
That should deal with it being affordable, which just leaves us with the argument about what “affordable” is.
Lord Mackay of Clashfern (Con)
My Lords, the form of Motion C is slightly puzzling as compared with the previous Motion put to the House, where it was suggested that:
“If a local authority so wishes, and can demonstrate a need for other kinds of low cost … ownership”,
and so on. There was no reference to anybody having to be satisfied or to whom the demonstration was to be made, whereas the second amendment proposed on this occasion would require that demonstration to be to “the Secretary of State”. It does not say to what extent or with what satisfaction, or anything like that. I do not know what difference there is between this Motion and the words used in Motion B1, which has just been accepted.
The main point I want to make is that the House of Commons has rejected the proposal from here for interfering with the financial arrangements that it has made. We are all aware of the fact that it is the House of Commons which is responsible for the financial arrangements. Those of your Lordships who have been here a little time will know that I have suffered somewhat strongly from this form of answer to an amendment which was passed here with a large majority some years ago, so this is not something which I am particularly keen on having. On the other hand it is some restriction on the powers of this House, which we must respect and understand.
The House of Commons has the right to make these financial arrangements. It is responsible and elected. If its financial arrangements are not satisfactory to people, then in due course they may have a chance to voice that at the polling booth. In the mean time, in my submission to your Lordships, it would be quite wrong for us to seek to overturn the financial arrangements made by the House of Commons. No doubt the House of Commons has considered this matter and I have no reason to suppose that it would be altered on a return there. The situation seems to be that if this Motion were passed, we would be seeking to defy the financial control of the House of Commons.
Lord Kerslake
My Lords, perhaps I may just say a few words on that point. The amendment before you today differs in some significant aspects, which I believe do not cut across the financial prerogative of the House of Commons. In the first instance, it makes it clear that any agreement has to have the agreement of the Secretary of State. That is the additional point that the noble Lord, Lord Porter, objected to, but it makes it quite clear that both parties have to agree to this before money can be retained.
In the second leg of my amendment to the Motion, there has to be a “particular need” and it has to be demonstrated to the Secretary of State. Again, the Secretary of State has the ability—
Lord Trefgarne (Con)
My Lords, I apologise for interrupting the noble Lord, but the rules of Report apply at this moment and I think the noble Lord is going a little far.
Lord Kerslake
My apologies. I was simply trying to explain why I do not believe that this amendment cuts across the financial prerogative.
Lord Lansley (Con)
My Lords, I will just briefly add to what my noble friends have said. In the first instance, it is always important to remember that when the Commons sends us its reasons for disagreeing with your Lordships on an amendment, and financial privilege is invoked, as I understand it they are obliged not to add any other reason. That does not mean there is no other reason; it just means they are obliged only to state financial privilege. In truth, I think there were other reasons. Not only is financial privilege involved; there is a strong sense that the original amendment which was sent to the Commons, Amendment 47, considerably fettered the Secretary of State’s discretion in relation to the nature of the agreement that the Secretary of State would enter into with local authorities in terms of reducing the payment to support the replacement of the high-value housing sold with new affordable homes.
What I find very strange now is that what is being suggested to your Lordships in the first limb—that there must be “a new affordable home”—seems to add absolutely nothing new to what was sent to the other place from this House and has already been accepted in Amendment 44. Your Lordships will recall what Amendment 44 said about the agreement with the Secretary of State:
“Where the agreement is with a local housing authority outside Greater London, it must include terms and conditions requiring the authority to ensure that at least one new affordable home is provided for each old dwelling”.
That is therefore already accepted and established, so it seems to me that the first limb of the amendment to the Motion—Amendment 47B—is redundant, as its provisions are already incorporated.
This is really about Amendment 47C, which goes back to the point of fettering the Secretary of State’s discretion and requiring closely linked, like-for-like replacement as opposed to arrangements being made between the Secretary of State and the local authority. This stuff about demonstrating to the Secretary of State does not really change that—if it means anything, it means the Secretary of State may enter into an agreement and may not. That power is in the Bill already, so why would we need to change the Bill to make that happen?
I will also just add to what my noble and learned friend was just saying. This matter relates exclusively to England, and in the other place they voted to reject Amendment 47—this point itself—by 279 to 158, which is a very substantial majority indeed.
Lord Shipley (LD)
My Lords, first, I remind the House of my vice-presidency of the Local Government Association. I have listened very carefully to what has been said, but I think there is still a problem and want to support amendments proposed by the noble Lord, Lord Kerslake—Amendments 47B and 47C. I have read very carefully what the Government have said and noted their views, but the fact of the matter is that, as a consequence of the Bill, there will be a loss of around 180,000 social homes for rent. In addition, the Institute for Fiscal Studies has previously pointed out that the cut of 1% annually in rents for the next four years will lead to a failure to build some 14,000 social homes that otherwise could have been built and occupied.
The Bill should be addressing not just owner-occupation but how we house people who cannot afford to buy and who cannot afford market rents. That is why these amendments proposed by the noble Lord, Lord Kerslake, matter so much. As he explained, Amendment 47B enables a local housing authority, by agreement with the Secretary of State, to retain enough money to fund a new affordable home. The replacement one for one has already been agreed—two for one in London, but one for one outside—but the money has to be there to build the new affordable home.
I listened carefully to what the noble Lord, Lord Porter, said on the matter. He read out parts of the Conservative Party’s manifesto from the previous election, but the manifesto and the particular expression which accompanied it was extremely vague on the issue of replacement. It uses the terminology that there will be a replacement with “a normal affordable home” without ever defining what a normal affordable home is. As we know, in the Bill, the definition of an affordable home has been altered to include a starter home for sale, so in practice, government targets for building affordable homes can be delivered by owner-occupation through the starter home route, as opposed to building for social rent.
I am very keen to hear from the Minister what the Conservative Party meant at the previous election by a normal affordable home. Will she confirm that, in agreeing a one-for-one replacement outside London and two for one inside London, there will actually be the money for the local housing authority to fund that additional home?
That was Amendment 47B; there is also Amendment 47C, which enables a local housing authority, where it identifies a need for new social housing, to have the funding to build a new dwelling to let on terms similar to those on which the existing dwelling was let—in other words, like for like, not just one for one.
These are reasonable amendments. The housing crisis is getting worse, not better. Given that social housing can make a profit after about 20 years, more social homes could be built, thus reducing social inequality, child poverty and homelessness. For the Bill to address only owner-occupation remains a serious failing. It excludes so many people who may aspire to owner-occupation but can never achieve it. It will lead to a reduction in the social housing stock, to the detriment of all those on low incomes who will depend on social housing for rent for their homes.
Lord Beecham (Lab)
My Lords, I strongly endorse the sentiments of the noble Lord, Lord Shipley, and refer to my local government interests. He is quite right to point to the issue of tenure, which has, frankly, been avoided by the Minister and the Government as a whole in discussion of this aspect of their policies.
In speaking to his amendments, the noble Lord, Lord Kerslake, referred to the Shelter report. I do not know whether the Minister has studied it, but it raises a good many questions. As the noble Lord said, the report indicates that to reach the Government’s assumed target, which is estimated at £4.6 billion, to be raised by this process, 23,000 houses a year would have to be sold. Shelter calculates on that basis that the average cost to every council would be £26 million a year. That is an extraordinarily high amount to be raised. It ranges from a figure for Birmingham of just under £145 million, which would involve the sale of just under 1,200 houses a year, down to that for Hartlepool, at the bottom of the list, which would have to sell off only two houses a year, raising something under £200,000.
There is an interesting pair of authorities in the middle of the list, one of which is Newcastle—in which, as Members will be aware, I have an interest—where some 400 houses would have to be sold every year, raising just under £53 million. Immediately below it is Kensington and Chelsea, which would raise virtually the same amount of money from 41 houses. So there is a clear issue here about the expectations of how many houses will be sold and what will be raised—but there is also an issue about what will happen to the proceeds. In addition to the overriding requirement, which we understood to be the funding of the right to buy in the housing association sector, there will be some replacement of whatever kind of tenure emerges. What estimate have the Government made of the amount that will be available for their apparent primary objective of funding the right to buy? Presumably they have an estimate, but I do not think that we have ever had the benefit of hearing what it might be. It would be helpful to do so.
Baroness Williams of Trafford
My Lords, I begin by thanking my noble friend Lord Lansley for explaining the process of financial privilege; he has the privilege of coming from the other place and explained to us that no other reason needs to be given other than financial privilege, although there may be others.
Let me be clear: this Government will get our social housing working as efficiently and as effectively as it can, not only so that more people own their own home but to increase the affordable housing supply. A guarantee of one affordable home to replace one sold, and two affordable homes in London, is what our higher-value vacant housing provisions will deliver.
Amendments 47B and 47C have been proposed by the noble Lord, Lord Kerslake, in lieu of Amendment 47, which the other place emphatically voted against, as my noble friend Lord Lansley pointed out. These amendments mean that, when a local authority can demonstrate a need for social housing, it will be able to retain the receipts that it needs to fully fund the provision of that housing. They prevent government from considering whether local authorities can deliver the housing required, and they could significantly reduce the funding available for the voluntary right to buy, preventing the Government from fulfilling their manifesto commitment—a manifesto that they fully intend to implement, as my noble friend Lord Porter says. By focusing solely on social housing, they prevent the agreement process from recognising that flexibility will be needed to respond to diverse housing needs in the country. They also fail to recognise that other different types of housing may better meet local housing need. This feels restrictive and like a top-down approach. Instead, I believe that a localist approach to the agreement process would be better for everyone. Local authorities with particular housing needs in their area should be given the opportunity to reach bespoke agreements about the delivery of different types of new homes in their areas. If local authorities can demonstrate, for example, a clear need for new affordable homes, we should aim to make an agreement with them, subject, of course, to value-for-money considerations and evidence of a strong track record on housing delivery.
The noble Lord, Lord Kerslake, talked about the Secretary of State having all the power in the new agreement proposal. The principle that local authorities have the right to come to an agreement with the Secretary of State is not a new concept. The key word here is agreement, with discussion between local areas and the Secretary of State with a national mandate to deliver the voluntary right to buy and new affordable homes.
The noble Lord, Lord Beecham, asked how much money we expect to raise from the policy. Receipts will depend on a number of factors and decisions. The Bill sets out a framework with further detail to be provided through secondary legislation. It has flexibility through the formula approach which enables us to continue working the detail through with the sector. Once we understand what the data tell us, we will be able to consider what the detail will be and subsequently how this will fund the two aims of the policy: right-to-buy discounts for housing association tenants and funding the building of new homes.
Lord Beecham
Do I understand the Minister to be saying that the Government do not have an estimate of the amount that is to be raised? What do they say about the Shelter estimate of £4.6 billion?
Baroness Williams of Trafford
I will come to that question in a few seconds.
The noble Lord, Lord Shipley, talked about this resulting in fewer socially rented homes. We need more homes, full stop, across all tenures and across the country. At the heart of the policy is the building of more homes, funded in part by receipts from the sale of vacant high-value council housing.
Before I move on to the question asked by the noble Lords, Lord Kerslake and Lord Beecham, about the Shelter report, the noble Lord, Lord Kerslake, talked about the PAC saying that there are key questions that need answering. It is regrettable that the PAC has chosen to publish its latest report part-way through the parliamentary process. We have always said that further detail regarding the sale of higher-value council housing will be developed and shared. The regulations defining “higher value” will be subject to the affirmative procedure. Parliament will have the opportunity to scrutinise this in more detail.
The noble Lords, Lord Kerslake and Lord Beecham, referred to the Shelter report that HVAs would raise £4.5 billion each year. We are in that process. I know that noble Lords will be sighing with exasperation, but we are in the process of analysing more than 16 million pieces of information about the housing stock of local authorities in England. We have collected these data as we want to ensure that the policy is informed by current information, and it would not be prudent for the Government to pre-empt what the data will tell us.
The noble Lord, Lord Kerslake, talked about the increased pressure on council housing and the increase in homelessness. We are committed to supporting the most vulnerable in society to have a decent place to live. Since 2010, we have invested more than half a billion pounds to help local authorities to prevent more than 935,000 households becoming homeless. Time spent in temporary accommodation ensures that no family is without a roof over their heads. Households leaving temporary accommodation now spend on average less time in it than they did in 2010. We need new homes to be built in this country and Amendments 47B and 47C would limit the ability of central and local government to ensure that the right mix of housing is delivered as quickly and efficiently as possible. I therefore urge noble Lords to respect the will of the other House, and I urge the noble Lord, Lord Kerslake, not to press his amendments.
Motion C agreed.
Motion D
Baroness Williams of Trafford
That this House do not insist on its Amendment 47, to which the Commons have disagreed for their Reason 47A.
“( ) If a local housing authority so wishes, and that authority can demonstrate, whether by reference to its local housing plan or otherwise, that there is a need in its area for social housing of the kind that it proposes to build, the Secretary of State shall enter into an agreement with that authority whereby it shall retain such part of the payment as may be required to fund the provision of a new dwelling to be let as social housing on terms (as to tenure, rent or otherwise) which are similar to those on which the old dwelling was let.”
Lord Kerslake
At end insert “, and do propose Amendments 47B and 47C in lieu—
“( ) If a local housing authority so wishes, and the Secretary of State agrees, the Secretary of State shall enter into an agreement with that authority whereby it shall retain such part of the payment referred to in section 67(1) as may be required to fund the provision of a new affordable home.”
“( ) If a local housing authority can demonstrate to the Secretary of State, whether by reference to its local housing plan or otherwise, that there is a particular need in its area for social housing, the authority shall retain such part of the payment referred to in section 67(1) as may be required to fund the provision of a new dwelling to be let as social housing on terms (as to tenure, rent or otherwise) which are similar to those on which the old dwelling was let.””
Lord Kerslake
My Lords, I am grateful for all the contributions to this debate. I shall keep my comments short.
The first point to be clear on is that the amendment would in no way restrict either the Government or local government. It is foursquare with bespoke agreements that meet local need, and that is absolutely clear within the text. It is also clear that the Secretary of State would not need to reach agreement with a local authority if he was not persuaded by the arguments.
The amendment would do two crucial things. First, it would make clear that, where an agreement was reached, funding could be retained from the receipt. That is something on which the provisions are silent within the overall Bill at the moment but, given the uncertainties about funding, it seems to be a crucial point. Secondly, it would give a local authority not the right but the opportunity to make its case for social rent replacement. In no sense is that restrictive. In the end, the Secretary of State could decide whether to reach an agreement and whether he concurred with the view of the local authority on social rent. It is hard to see how that would cut across financial privilege or restrict the choices for a Minister, or indeed for a local authority.
I have listened very carefully to the arguments, but I believe that this is such an important issue for local government that, with regret, I wish to test the opinion of the House on this issue.
Baroness Williams of Trafford
That this House do not insist on its Amendment 54, to which the Commons have disagreed for their Reason 54A.
Baroness Williams of Trafford
My Lords, we return again to the issue of the Government’s policy for high-income social tenants. I realise that this is an area where there are strong feelings on both sides of the House and I hope today to be able to provide some further reassurances so that the Government can move forward with their commitment to establish a fairer position on rents between the social and the private rented sector.
As noble Lords will know by now, we committed in the 2015 Budget to introduce a policy whereby social tenants who are able to pay more for their rent should be expected to do so. Social housing should be for those who are the most in need. This position was reinforced during the debates yesterday, and the other place declared its position, loud and clear, with a considerable margin of victory in resisting amendments put forward by this House. I was struck by some of the arguments my colleagues put forward on this aspect during the debate in the Commons yesterday. It is simply not right that social tenants who are no longer in housing need should take up valuable social housing when there are families in much greater need on waiting lists. If these higher-earning tenants wish to remain in their property, which is their choice, then it is right that they contribute more.
I remind the House about the significant opportunities that the Government are offering tenants on higher-than-average incomes. If they do not wish to pay a fairer rent, many tenants will be able to explore the opportunity to buy their home under the extended right-to-buy scheme, or they may be able to take up shared ownership offers.
We have brought forward a package of amendments which significantly improves the operation of the policy by protecting work incentives and vulnerable tenants. I am very grateful to your Lordships’ House for recognising this and accepting the government amendment to enable the creation of exceptions for high-income social tenants. This power will be used to make an exception for any tenant in receipt of housing benefit or universal credit, which is clearly its most sensible use.
Lords Amendment 54, which would make the policy voluntary for local authorities, simply cannot be supported. It was rejected by the other place yesterday. Local authorities have been able to put in place a voluntary policy for some time, but have not done so, as far as we are aware. I recognise the point made in the Commons yesterday about the interest from Westminster Council and want to take a moment to respond to that. Its concern is that the cost of operating the policy may exceed the money collected. We have accepted that local authorities should be reimbursed a reasonable amount of the administrative costs, and we do not expect those to exceed the money received. However, we recognise that rents vary and are working with local authorities to look carefully at the approach in areas where market rents may be close to social rents. We will bring forward further detail in the affirmative regulations.
Remaining on the issue of a voluntary approach, I have concerns about what this would mean for tenants. We want a consistent approach for all, and it does not seem right or fair to have certain tenants subject to the policy while others are not.
Lords Amendments 55 and 55B concern the operation of the proposed taper. The Government have been clear that our preferred approach is to have a taper set at 20%, which balances fairness with work incentives. We cannot accept a rate of 10% as proposed by Amendment 55, as it is simply too low. The other place has overwhelmingly rejected this and I support its reasons for doing so.
Amendment 55B would limit this rate to the first £10,000 above the income threshold. While I recognise the intention here, there are wider considerations about the impact on local authorities of operating a two-stage taper, which I am concerned will only add to the burden and complexity for them. Instead, I propose a standard taper rate of 15%, which would apply to all incomes above the threshold. This meets noble Lords half way on this issue and I hope that we can agree to it today without the need for a vote. It will mean that tenants will contribute 15p in rent for every pound they earn above the income thresholds. It is a fair rate that protects work incentives while ensuring that higher-earning tenants make a fairer contribution.
Lords Amendment 57 sought to raise the income thresholds to £40,000 outside London and to £50,000 in London. Again, this was rejected by the other place. The Government maintain that the thresholds of £31,000 and £40,000 are the right starting point for social tenants to contribute a little more in rent. We are not saying that these household incomes make people wealthy, but it is right that people on these incomes start to contribute a little more if they wish to remain in much-in-demand social housing. The operation of the taper, set at 15% as I have offered, would mean that a household earning above these thresholds would contribute a few pounds extra in rent each week. It is worth reinforcing that point again, as we must dispel the myth that all social tenants would see their rents raised straight to market rate.
Lord Best
My Lords, I rise to speak to Motion F1. I was grateful indeed to noble Lords throughout the House who secured a majority of over 100 votes for the pay-to-stay amendment now rejected by the other place. Our amendment would have reduced by half the penalty incurred by council tenants with household incomes of more than £31,000 per annum, or more than £40,000 in London, as a surcharge on their council rent. This levy—this rental hike—for two adults each earning £20,000 in, say, Brighton, would have been set at 20p in the pound for every pound over the £31,000 threshold. It would have meant an extra £2,000 per annum or £40 extra per week for a couple who are not terribly well paid.
The amendment that we passed would have halved this rental surcharge so that the family in Brighton, who barely get the national living wage, would pay an extra £20 per week not £40 per week. This is still a mighty increase, but it is half as much as the Government seemed determined to extract from people who, by definition, are hard working. We might all agree that those like Bob Crow, who earn way over £100,000 per year, could contribute significantly more for a council home. But I really wonder what we would be achieving by seriously penalising those on a third of his income.
The Chancellor has explained that the extra rent raised by councils will go not to the local authority, not towards meeting housing needs, but to the Exchequer, exclusively to reduce the deficit. By my rough calculations, it would take over 100 years for the receipts from the rental surcharge to reduce the nation’s deficit by 0.1%. It does not seem worth upsetting the lives of some 350,000 council tenants to make an infinitesimally modest reduction in the deficit. Of course, extensive administrative costs will be involved in assessing tens of thousands of tenants’ incomes and then collecting the rental surcharge. These costs will absorb a major part of the funds raised from the tenants.
We are where we are: the Government did not accept your Lordships amendment to reduce by half the extra burden on these hard-working council tenants, who, frankly, deserve our respect, not a financial penalty. As a compromise I have tabled in lieu the amendment before us, which proposes retaining the halving of the penalty—10p in the pound, not 20p—but just for those in the band of £10,000 above the threshold: that is, those earning from £31,000 up to £40,000, or in London from £40,000 up to £50,000. However, as of this afternoon the Secretary of State has proved willing to change the arrangements, as the Minister has explained. This is a helpful intervention. At this stage of the Bill, in the middle of ping-pong and with a substantial government majority in the other place voting against our amendments last night, I am realistic enough to know that if the Government offer any concessions, they should be accepted. They have offered a double-headed compromise of a rental surcharge of 15p in the pound for everyone with household earnings over the threshold, with no limit, and an annual uprating of the £31,000 threshold—£41,000 in London—that is in line with the appropriate index, CPI. Therefore, we have a levy of 15p in the pound, which is not as helpful as 10p but better than 20p, plus helpful indexation of the threshold. Of course, this pay-to-stay rental surcharge remains an entirely unwelcome imposition on hard-working council tenants, and I do not like it one bit. However, we have come a long way from the original proposal whereby any household over the threshold would immediately have had to pay a full market rent, meaning a ridiculously penal increase of £100 a week, sometimes £200. We are in a better place today.
On the basis of the progress that has been made, for which I am indeed grateful to Ministers, I shall not move this amendment.
Lord Kerslake
My Lords, I will speak briefly. I welcome the movement by the Minister on this issue, and there has been significant movement during the Bill’s passage through this House, which is entirely to be accepted gratefully. However, I remain fundamentally concerned about the pay-to-stay policy, which is effectively a form of tax collection but done by people who are not tax collectors. The income comes back to the Chancellor and is not reinvested in housing.
It is important to be clear that that the people in question are not on high incomes. Given where the thresholds are, we are talking, in London, about people such as teaching assistants and caretakers, and household incomes, not individual incomes. We will catch a lot of ordinary people on fairly ordinary incomes through this change. That is why I moved the amendment—to get the threshold up—and why I would have supported the amendment to keep the taper at 10p in the pound for those at the lower rate. It is important to be aware that the bulk of the people who will be caught by pay to stay are in the £10,000 bracket. Those who earn over £60,000 number fewer than 40,000.
Therefore, through this measure we are effectively taxing households on slightly higher incomes. I believe strongly that it will be very difficult to implement and that it will cost more than it raises in income in many places. That said, I want to finish on a positive note: there has been movement, so I entirely support my noble friend Lord Best’s decision not to move his amendment.
Baroness Bakewell of Hardington Mandeville
My Lords, I was going to speak passionately in favour of Motions F1 and H1. There is now no need to do so and I am delighted about that. I very much welcome the taper of 15%, which my colleague and I discussed yesterday with the Minister, but at that stage she was unable to commit to it. I am really pleased that there has been some movement on that. I also very much welcome the move towards accepting that the income limits will be raised in line with the consumer prices index. That is only right, given that everything else in life increases, such as pensions and the minimum and living wages. Therefore this should also increase.
However, I am still somewhat concerned about the costs of administering the so-called pay-to-stay policy. There are costs involved in assessing when tenants have reached the threshold, in assessing how much the tenant should pay in additional rent as they move towards the full market rent, and in collecting this rent. During our discussions with the Minister and her officials this week on the amendment on carbon-compliant homes there was much reference on their part to the cost-effectiveness of carbon compliance and the cost-benefit of such a policy. So we are somewhat surprised to find that there has been no such cost-benefit analysis of the implementation of the high-income tenant policy. There is some concern that the amount collected by the increased rents is likely to be outweighed by the costs involved in implementing the policy. I believe that this House should be concerned about this. Having said that, I welcome the movement by the Minister and the Government on these amendments.
Lord McKenzie of Luton (Lab)
My Lords, like other noble Lords, I welcome the movement that has been made in this policy area, although, also like other noble Lords, I believe that it has all the hallmarks of an administrative nightmare. I ask the Minister to clarify one thing. In introducing these items she referred to the fact that people on housing benefit would be outwith the policy. I ask again a point I raised on Third Reading. I can see that somebody currently on housing benefit before the application of the policy is easy to spot and would not be assessed, but what is the position with somebody who is brought into the housing benefit regime because of the higher rents that could flow from this policy? Will they be out as well? That would be incredibly convoluted to deal with.
Lord Beecham
The noble Baroness must be so pleased to be getting towards the end of this. I do not blame her at all for trying to push matters forward.
We are hearing a good deal today about financial privilege as the Government are deploying a tactic of pleading it as a reason to reject amendments passed in this House. The words must sound ironic to couples on the national minimum wage, who are deemed to be “financially privileged” if their household income exceeds £31,000 outside London or £40,000 in it, and therefore face, as we have heard, increases in their non-subsidised rent. They will no doubt contrast their position with the financial privilege extended to starter home buyers, who stand to benefit from discounts of more than £80,000 in London on the more expensive houses and tax-free capital gains when they eventually sell.
Nevertheless, I welcome the Government’s modest concession on the amendment in the name of the noble Lord, Lord Best, again establishing that the best is the enemy of the ludicrous when it comes to legislation, and their acceptance at the last gasp, it must be said, of my amendment seeking to ensure updating of the thresholds on a regular basis—although I wish that they had listened to the noble Lord, Lord Lansley, who had a better idea than mine, which was to tie the formula to RPI. It may be, given that they have a discretion, that they will take that stance. If they did, I would applaud them even more. In the circumstances, I am very happy to support the amendments that the Minister indicated and I will not press Motion H1.
Lord Beecham
Sorry, I have received a prompt from my noble friend Lady Hollis, to ask what the estimate is—I am sorry, I have even forgotten what the prompt was. Perhaps my noble friend can say.
Baroness Hollis of Heigham (Lab)
I am grateful to the Minister. I was going to ask my noble friend to ask the Minister to make it clear that the proceeds will still go to the Exchequer. Various contributors, including my noble friends, have said that they now doubt whether the money collected will exceed the costs incurred. I would like the Minister to tell us, in the light of today’s amendment on 15p, what now is the current estimate of the annual net gains that will flow to the Exchequer from next year onwards, when this policy is embedded. One year will do—2019-20, if she likes, three years down the line. How much money, net, will go to the Exchequer from this policy after taking into account fiscal drag, now capped by CPI, the cost of the taper, now reduced by 15p, as well as the behavioural impact on tenants and the cost of administration? May we please have that figure?
Baroness Williams of Trafford
I hope the noble Baroness will indulge me, because the Government have come to this policy position within the past 12 to 24 hours. I do not know whether she is worried that too little may go to the Exchequer—I doubt that—but I expect that those figures will be worked out in due course and I am sure they will be shared with your Lordships’ House.
The noble Lord, Lord McKenzie, talked about people who have not been hit by the policy and suddenly might be hit, in terms of housing benefit. In the scenario to which he referred, the tenant would be taken out of this policy. Whenever housing benefit comes in, the tenant is taken out, as the result of the policy would otherwise be perverse.
I hope I have addressed the few points that were made. I thank noble Lords who have worked with me, with the Secretary of State and with the Housing Minister in the other place, and I ask that the amendments not be pressed.
Baroness Williams of Trafford
That this House do not insist on its Amendment 55, to which the Commons have disagreed for their Reason 55A.
“( ) The regulations must specify that the rent shall not equate to more than 10 pence for each pound of a tenant’s income above the minimum income threshold.”—
Baroness Williams of Trafford
That this House do not insist on its Amendment 57, to which the Commons have disagreed for their Reason 57A.
Baroness Williams of Trafford
That this House do not insist on its Amendment 58, to which the Commons have disagreed for their Reason 58A.
“( ) make provision for the level of household income, for the purposes of defining “high income”, to be increased every three years to reflect any increase in the consumer price index.”
Baroness Evans of Bowes Park
That this House do not insist on its Amendment 97 and do agree with the Commons in their Amendment 97A in lieu.
“Neighbourhood right of appeal
(1) After section 78 of the Town and Country Planning Act 1990 (“the 1990 Act”) insert—
“78ZA Neighbourhood right of appeal
(1) Where—
(a) a planning authority grants an application for planning permission,
(b) the application does not accord with policies in an emerging or made neighbourhood plan in which the land to which the application relates is situated, and
(c) the neighbourhood plan under paragraph (b) contains proposals for the provision of housing development, certain persons as specified in subsection (2) may by notice appeal to the Secretary of State.
(2) Persons who may by notice appeal to the Secretary of State against the approval of planning permission in the circumstances specified in subsection (1) are any parish council or neighbourhood forum, as defined in section 61F of the 1990 Act (authorisation to act in relation to neighbourhood areas), whose made or emerging neighbourhood plan includes all or part of the area of land to which the application relates, by two-thirds majority voting.
(3) In this section an “emerging” neighbourhood plan means a neighbourhood plan that—
(a) has been examined,
(b) is being examined, or
(c) is due to be examined, having met the public consultation requirements necessary to proceed to this stage.”
(2) Section 79 of the 1990 Act is amended as follows—
(a) in subsection (2), omit “either”, and after “planning authority” insert “or the applicant (where different from the appellant)”;
(b) in subsection (6), after “the determination” insert “(except for appeals as defined in section 78ZA (as inserted by section (Neighbourhood right of appeal) of the Housing and Planning Act 2016) and where the appellant is as defined in subsection (2) of that section)”.”
“Local planning authorities: information about neighbourhood development plans
After section 75ZA of the Town and Country Planning Act 1990 (inserted by section 140 above) insert—
“75ZB Reports to contain information about neighbourhood development plans
(1) This section applies where—
(a) a report of the kind mentioned in section 75ZA(1) recommends the grant of planning permission or permission in principle, and
(b) the proposed development is in an area for which a neighbourhood development plan (made under section 38A of the Planning and Compulsory Purchase Act 2004) is in force.
(2) The report must—
(a) set out how the plan was taken into account in making the recommendation, and
(b) identify any points of conflict between the plan and the recommendation.””
Baroness Evans of Bowes Park (Con)
My Lords, I recognise the clear support in this House for a neighbourhood right of appeal and the strong desire of noble Lords to ensure that the hard work of communities which have produced a neighbourhood plan is respected. However, the Government do not support the principle of a third-party right of appeal against a grant of planning permission in a system that is carefully geared towards delivering sustainable development. Last night, the other place supported the Government’s position by unanimously agreeing to remove Lords Amendment 97 from the Bill. Your Lordships’ House will have seen government Amendment 97A, again unanimously supported by the other place, which I hope will receive support from this House.
However, before I discuss Amendment 97A, let me once again reiterate that we absolutely understand the huge commitment it takes for communities to produce a neighbourhood plan. There is no stronger position for a community to hold than to have an up-to-date neighbourhood plan in place. In law, the starting point for deciding planning applications is the statutory development plan, which will include any made neighbourhood plan. Local planning authorities will also need to take account of a wide range of views and any other material considerations. If the elected members of the planning committee have found that the development is sustainable and appropriate, and they have clearly taken the plan into account alongside other considerations, we do not believe that there is benefit from repeated consideration of the issues raised. Indeed, if communities believe that the neighbourhood plan has not been respected, they can already ask the Secretary of State to intervene and call in the application for his determination. The Government believe that this provides ample opportunity for a local community to raise their concerns.
I also question whether a neighbourhood right of appeal would routinely change the outcome of locally made decisions. This is because the decision-taker on an appeal is faced with exactly the same plan and exactly the same considerations, and these ultimately push for sustainable development. We believe that a further appeal stage would add complexity and unpredictability to the system, undermining investor confidence and running against our manifesto commitment to speed up and simplify the planning system. It would significantly impact on the speed and cost of housing delivery. We cannot support an amendment that would see unnecessary additional bureaucracy slowing down much-needed housing development.
However, we have listened to the concerns of your Lordships’ House and believe that local planning authorities could and should do more to demonstrate to communities how their neighbourhood plan has been taken fully into account. Amendment 97A prescribes in the Bill a requirement for a planning authority to set out in any report to a planning committee that recommends granting planning permission how any neighbourhood plan has been considered. It will also be required to identify in the report any conflict between its recommendation and the neighbourhood plan. This will ensure that the planning committee—the elected representatives for the area—cannot fail to appreciate how the development accords with the neighbourhood plan. Reports are published in advance of committees, allowing local people the opportunity to raise any further concerns directly with their local councillors or to attend and request to speak at the planning committee. This added level of transparency and explanation will ensure that local planning authorities are absolutely clear how they have balanced the neighbourhood plan against other material considerations that they are required to take into account.
This Government were elected to speed up and simplify the planning system. The many people who are in need of homes do not want added delays. While I can appreciate the spirit of the noble Baroness’s amendment, the Government cannot support an amendment that would restrict our ability to deliver our wider commitments. I beg to move.
Motion J1 (as an amendment to Motion J)
Baroness Parminter
Leave out from “97” to end and insert “, do disagree with the Commons in their Amendment 97A, and do propose Amendment 97B in lieu—
“Neighbourhood right of appeal
(1) After section 78 of the Town and Country Planning Act 1990 (“the 1990 Act”) insert—
“78ZA Neighbourhood right of appeal
(1) Where—
(a) a planning authority grants an application for planning permission,
(b) the application does not accord with policies in a made neighbourhood plan in which the land to which the application relates is situated, and
(c) the neighbourhood plan under paragraph (b) contains proposals for the provision of housing development,
certain persons as specified in subsection (2) may by notice appeal to the Secretary of State.
(2) Persons who may by notice appeal to the Secretary of State against the approval of planning permission in the circumstances specified in subsection (1) are any parish council or neighbourhood forum, as defined in section 61F of the 1990 Act (authorisation to act in relation to neighbourhood areas), whose made neighbourhood plan includes all or part of the area of land to which the application relates, by two-thirds majority voting.
(2) Section 79 of the 1990 Act is amended as follows—
(a) in subsection (2), omit “either”, and after “planning authority”
insert “or the applicant (where different from the appellant)”;
(b) in subsection (6), after “the determination” insert “(except for appeals as defined in section 78ZA (as inserted by section (Neighbourhood right of appeal) of the Housing and Planning Act 2016) and where the appellant is as defined in subsection (2) of that section)”.”
Baroness Parminter (LD)
My Lords, we all believe that neighbourhood plans deliver more homes. However, it is not just a belief; it is also the evidence that the Government accept. We heard them accept it in both Committee and on Report. Therefore, we wish to do all we can to encourage more neighbourhood plans to be produced in order to deliver the housing that we all know we need.
Our central contention is that we do not believe that local communities will go to the trouble of putting forward neighbourhood plans if they know that a local planning authority can drive a coach and horses through everything they have submitted by reaching a decision that conflicts with what is in the neighbourhood plan. The appeal that we propose in this amendment is extremely limited and would apply only to parish councils and neighbourhood forums. It addresses the issues that Members have rightly raised on this and previous Bills about the scope for a limited right of appeal to allow vexatious complainants to come forward. As I say, this measure is purely for parish councils and neighbourhood forums.
We have listened to what noble Lords said on Report. Eagle-eyed noble Lords will have noticed that this is an even more limited appeal than that for which we argued on Report. At that stage, we argued that it should be open to local councils and parish councils which were concerned about a policy in an emerging plan as well as a made plan. This amendment addresses purely a proposal which is contrary to a neighbourhood plan.
The government amendment does nothing more than what good planning officers should be doing anyway. Noble Lords who are local councillors will know that planning officers are already doing this. The measure does not address one of our fundamental concerns—namely, if a local planning authority opposes, and turns down, an application which is contrary to a neighbourhood plan, it cannot be called in. The Minister said that a call-in process applies, but it does not apply if a local council accepts a proposal which is contrary to a neighbourhood plan, so, effectively, under the government amendment, councils can just ignore it anyway.
As I say, we are proposing an extremely limited appeal. It had the support of the House of Lords Select Committee on the built environment and civic society groups. In addition, a considerable number of Conservative Members supported it last night in the other place. One went so far as to ask the Minister in the Commons to give further weight to neighbourhood plans. That is what this limited right of appeal would do. I beg to move.
Lord Kennedy of Southwark
My Lords, it is remiss of the Government not to accept the amendment agreed by your Lordships’ House in respect of a neighbourhood right of appeal. The noble Baroness, Lady Parminter, has tabled a revised amendment which would restrict the right of appeal in certain circumstances only in those areas where there is an approved neighbourhood plan. As she said, this is a much narrower right of appeal than that originally proposed. If she wishes to test the opinion of the House, noble Lords on these Benches will support her. I support neighbourhood planning. This amendment would give a limited right of appeal, as has been outlined.
As I have told your Lordships’ House before, the ward I represent in Lewisham—Crofton Park—is in the process of drawing up a neighbourhood plan. We have not yet obtained full approval for it, so this amendment would not apply to us. However, it would give impetus to our efforts to carry on consulting local people and getting the local community plan approved. Then we can help local people.
The noble Baroness’s amendment would enable communities to be involved locally. The Government should support it. The Government have adopted a rather hokey-cokey approach to localism during the Bill’s passage. When they agree with measures, they trumpet the fact that they are in favour of localism and letting local authorities decide things. However, when they do not like something, they say that local councils cannot obstruct the will of central government, which needs to decide these matters. The Government have no consistency—it is in; it is out; it is in; it is out. That shows no respect for localism, local people or local communities and is no way to formulate policy. It makes a mockery of the Government’s own Localism Act, which was passed only a few years ago.
We heard the myth from the noble Baroness, Lady Evans, about local planning authorities holding up housebuilding. I tabled a Parliamentary Question on this. On 4 April, I was told by the noble Baroness, Lady Williams of Trafford, that there were permissions for 658,000 homes to be built in England that had been either not started or not completed. These are approved homes. Therefore, I do not think that local planning authorities are holding these things up. We need to get these homes built; the permissions are there.
Lord Rooker (Lab)
I intend the following as a purely positive question because I have not read anything about this. However, I noted something the noble Baroness said when she moved the amendment. It is a technical question. Is this a precedent for third party rights of appeal? I am not clear whether third party rights of appeal in planning exist. I seductively proposed them when I was a Minister but subsequently had to oppose them at the Dispatch Box because I was yet to be convinced about them. In other words, is this a thin end of the wedge for third party rights of appeal or do they already exist in other parts of the planning system? It is a perfectly reasonable question; I am just looking for the information.
Lord Kennedy of Southwark
As I understand it, this gives a right to the local parish council or neighbourhood forum to be involved in these things.
Lord Rooker
The point I was making is that it is a third party right of appeal. It is a fairly fundamental principle that I do not think exists—but it may do, I may be wrong. That is why I am asking.
Baroness Evans of Bowes Park
I think that the noble Lord is right but I might get clarification and come back to that before I sit down. I thank the noble Lord, Lord Kennedy, and the noble Baroness, Lady Parminter, for this further short debate. I think that we all want communities to be better engaged with the planning system and we all want communities to have more of a say about the future of their areas. That is why we all support neighbourhood planning.
We know that the quality of local planning decisions remains high. In 2015, only 1% of applications where development was refused were overturned on appeal. Our planning system is geared to delivering sustainable development, not development at any cost. We trust that elected councillors will deliver sustainable and appropriate development. The government proposal before your Lordships requires a local planning authority to set out in any report to a planning committee that recommends granting planning permission any conflict with the neighbourhood plan and how the neighbourhood plan has been considered.
The noble Baroness, Lady Parminter, said that this would not change anything but it will. It will improve the clarity and transparency of committee reports to ensure that planning decisions are made in full knowledge of any conflict with a neighbourhood plan. This may be covered presently, but our amendment will make it a requirement. It will require them to demonstrate that they have considered the neighbourhood plan and that they have identified any conflict between the recommendation and the plan. The amendment complements the existing right that communities have to request that the Secretary of State call in applications for his own decision. All requests to call-in are considered carefully, and the Secretary of State does not hesitate to intervene where necessary. For example, over the past 12 months, seven cases involving a neighbourhood plan have been called in. With the existing right to request call-in, the new requirement on planning reports to ensure neighbourhood plans are properly considered and respected, and the Government’s £22.5 million support programme to help communities through every stage of the neighbourhood planning process, I am confident that neighbourhood planning will continue to go from strength to strength.
In response to the question by the noble Lord, Lord Rooker, this is a precedent for third party rights of appeal; it does not exist elsewhere in the planning system. I hope that what I have set out will reassure the noble Baroness, Lady Parminter, and I ask her to withdraw her amendment.
Lord Kennedy of Southwark
Before the noble Baroness sits down, she originally implied that local authorities and planning committees were holding up all the development. The Parliamentary Answer of 4 April stated that hundreds of thousands of planning permissions have already been agreed and approved but the houses are not being built. That is the problem. It is not local authorities or planning committees which are doing this.
Baroness Parminter
My Lords, I stand by my assertion that the Government’s amendment offers nothing beyond that which good local planning authorities are already doing. It does not address the issue; even if they are doing it, councillors can then go on to make a decision that overturns the policy of a neighbourhood plan or forum and that the call-in cannot be used by that local group, because there cannot be a call-in if a local council approves a policy that is contrary to a local plan. Equally—this is really important for rural areas—call-ins do not apply for housing developments of less than 10 homes. Given that so many neighbourhood groups and parish councils are putting together their neighbourhood plans in rural areas, we need something that gives them a sense of certainty over their plans.
I accept what the noble Baroness, Lady Evans, said—this could be interpreted as a limited third party right of appeal. But it is not for individuals; it is only for neighbourhood councils and parish councils, which have to go through a process of getting their plan to go through a public referendum and then be approved by a council before they can have their plans approved. Secondly, the limited right is only if they then get a two-thirds majority of the parish council or neighbourhood forum to agree to proceed with an appeal. It is a very limited right that I have asked for. We have moved some way; I am sorry to say that I do not think the Government have moved far enough and I wish to test the opinion of the House.
Viscount Younger of Leckie
That this House do not insist on its Amendment 108, to which the Commons have disagreed for their Reason 108A.
“Carbon compliance standard for new homes
(1) The Secretary of State must within one year of the passing of this Act make regulations under section 1(1) of the Building Act 1984 (power to make building regulations) for the purpose of ensuring that all new homes in England built from 1 April 2018 achieve the carbon compliance standard.
(2) For the purpose of subsection (1), “carbon compliance standard” means an improvement on the target carbon dioxide emission rate, as set out in the Building Regulations 2006, of—
(a) 60% in the case of detached houses;
(b) 56% in the case of attached houses; and
(c) 44% in the case of flats.”
Viscount Younger of Leckie (Con)
My Lords, it should be noted that there was very strong support in the other place to reject Amendment 108, with a vote of 286 in favour of rejection, compared to 163 against.
Amendment 108 raises an important issue about the energy performance of new homes but I repeat what we have said previously in the House on this matter: new homes built to the current standards are already very energy efficient. The standards were strengthened by 30% over the last Parliament and it is recognised that these changes have pushed the fabric energy performance of homes to the point where further increases may result in only marginal energy-efficiency returns.
However, the Government do not want to rest on their laurels. We recognise that costs and industry’s understanding of energy measures improve over time. The Government recognise the feeling of this House that the energy standards for new homes should be improved where this is feasible and cost effective. The cost effectiveness of any changes is integral to this debate and to the electorate, who agreed with our manifesto commitment to meet our climate change commitments,
“as cost-effectively as possible”.
We need to understand what is cost effective and feasible for a minimum mandatory standard that will apply to all new homes in England, no matter how viable an area is for development, and to all sizes of homebuilder. We need evidence to do this.
The Government have said throughout the passage of the Bill that we will be reviewing the energy-performance standards for new homes in the coming months. Some noble Lords have said that a review is not needed because the work has already been done on the standard on which this House voted. But the carbon compliance levels proposed in the Lords amendment date back to work undertaken by the Zero Carbon Hub in 2010-11. Things have moved on in the industry since then. It is right that we look again at what makes sense for the industry.
Although the industry was involved in the work done in 2010-11, the coalition Government did not adopt the standard formally and there was no formal consultation, no draft legislation and no impact assessment produced on the standard, as your Lordships would rightly expect when new building regulations are brought forward. Furthermore, the Zero Carbon Hub’s work did not cover all types of development, particularly high-rise flats. If noble Lords look across the river they will note how much of new housing development is in high-rise blocks. The Zero Carbon Hub recognised that more work was needed to develop levels appropriate for this kind of development.
Consider the impact of prescribing a standard without up-to-date analysis or consultation with those who have to implement it. If we get it wrong, potentially we bring new development to a stop. That is a heavy burden of responsibility on this House. I beg to move.
Motion K1 (as an amendment to Motion K)
Baroness Parminter
Leave out from “House” to end and insert “do insist on its Amendment 108”.
Baroness Parminter
My Lords, the new homes we wish to be built must, at the same time, meet our greenhouse gas targets and contribute to lowering fuel bills. It is right that we help to ensure that those homes are financially viable for the people who are going to build them. As the Government have accepted, the on-cost for building homes to this standard is £3,000 for a three-bedroom semi. That figure, as the Government again have accepted, comes from a report in 2014, since when costs have come down dramatically. But we also need to ensure that we help the poorest in our communities to save on their energy bills. It is accepted that introducing these standards would result in a saving of £330 per annum for households, compared to houses built to existing building regulations. Equally, it would save those households any retrofit costs in the future, given that the Government have not ruled out raising building standards.
The Government have said that this is a regulatory burden on the small developer, although I remind noble Lords that these standards were agreed by the industry before they were withdrawn by the Chancellor. This was not the evidence given to the House of Lords Select Committee on National Policy for the Built Environment, where it was made clear that small housebuilders were saying that access to finance and the price of land were the major constraints on housebuilding. Let us be clear: regulations are not always to be seen as a burden. Regulations deliver a level playing field across the housing industry and drive innovation. It is regulations that will cut the fuel bills for the poorest in our community and help us to meet the greenhouse gas targets that this Government committed to so strongly and so welcomely in Paris. It is the job of this House to ensure that the Bills that leave here contain good regulation. That is what this amendment would do. I beg to move.
Lord Krebs (CB)
My Lords, I support the amendment of the noble Baroness, Lady Parminter. As she has said, it is meant to be helpful in the context of our legally binding commitment to reduce our greenhouse gas emissions. The important thing to remember is that the new houses which are to be built now will be around for a long time—probably 100 years or more. It is inevitable that over time, we will need to tighten our greenhouse gas emission standards and move towards a zero-carbon homes standard. If, in building them, we do not meeting that standard today, they will have to be retrofitted in future. It is all very well to say, as the noble Viscount did, that we will undertake a review, but in the time it takes to carry out that review, many homes will be built. We will be storing up trouble with the homes we build while carrying out yet another review.
In the other place, it was noted that this requirement would “slow down or prevent” the building of new homes. Let us look at the counterfactual: let us say that we do not implement this amendment and go ahead rapidly with building new homes, but that those new homes are not fit for purpose in the future. Surely, that cannot be a good principle. If we are to build new homes now, we should think about their long-term implications for both greenhouse gas emissions and, as the noble Baroness, Lady Parminter, said, the energy bills of those who will live in them. Finally, we have the chance now to legislate to make greenhouse gas savings through this measure, and if we do not, the country will have to make them elsewhere. In the debates in Committee or Report, nobody has said, “Okay, we’re not going to make the savings here—but here’s where we are going to offer up savings elsewhere in the country”.
Lord Kennedy of Southwark
My Lords, Motion K1, in the name of the noble Baroness, Lady Parminter, is very welcome and if she wishes to test the opinion of the House, noble Lords on these Benches will support her. The issues raised in this amendment were of course debated in Committee and on Report. As we have heard many times, we are in the midst of a housing crisis. Not to build homes to a high standard that meets the challenges of which we are all aware, when that could be done at a minimal cost, just seems wrong. I do not understand the Government’s position at all. Theirs is a short-sighted policy through which they are cutting corners where they can.
The zero-carbon homes standard is important in delivering on our climate change commitments. As we heard in the previous debate, the cost of the building standards to achieve this and drive down energy bills could be £1,900 or even less. I do not understand why the Government do not want to move on this. All that will do is to leave people with higher fuel bills and the costs of retrofitting properties. That should not be necessary, and not taking action today would be wrong.
The Government’s “step too far” defence is just not compelling. They have not made a convincing case as to why this is not the desirable thing to do. It is puzzling that the Government do not want to build homes that are as energy-efficient as possible. As I have said before, on matters of public policy the Government should be striving to get the best possible outcome. If we do not agree to this amendment, in practice, people will pay a greater proportion of their income when moving to a new home than they need to. That would affect those on the lowest incomes—the poorest people—and nor would it be possible for the Government to reduce our carbon emissions.
Viscount Younger of Leckie
My Lords, this House can rightly press the Government to strengthen energy standards where it is possible and cost-effective to do so. I note the well-intentioned comments of the noble Baroness, Lady Parminter, and the noble Lords, Lord Kennedy and Lord Krebs, but it is right that we first do a full and comprehensive review of the evidence. That is our firm intention. Simply imposing standards without such a review risks making homes unviable in some parts of the country and raising construction costs to a point where they may simply be unaffordable for small homebuilders. The Federation of Master Builders, which represents 13,000 small and medium-sized builders, said last week in response to Amendment 108 that the Lords is showing,
“a reckless lack of realism and concern for consequences of heavy-handed regulation”.
Let us show the Federation of Master Builders that this House is not reckless and that any future changes to standards will be based on a full review of evidence and be cost-effective.
I would like to pick up on a point made by the noble Baroness, Lady Parminter, about the cumulative cost—that is, the £3,000 figure per household. The cost of meeting the level proposed for a semi-detached home is around £3,000, as has been said, but if that is scaled up for all home types over a year—flats are less costly but detached homes cost more—it would result in a cumulative cost of around £200 million per annum to the homebuilding industry. That reinforces our argument for a full review and with that in mind, I hope that the noble Baroness will withdraw her Motion.
Lord Kennedy of Southwark
The noble Viscount has relied on the Federation of Master Builders now for every debate on this issue. Before he sits down, could he remind us, as I cannot remember, of the number of organisations that, to the contrary, think these measures are very welcome?
Viscount Younger of Leckie
I deliberately use the Federation of Master Builders because it is prominent in the industry. I could quote other organisations and would be very happy to provide the noble Lord with a list of them. There is certainly a mood to ensure that there is not this chilling effect, particularly on small builders. We need to build more houses.
Lord Kennedy of Southwark
I would be interested to see a list of those other organisations. Up to now, all I have heard from such organisations is that they support these measures. The noble Viscount has relied from day one on the Federation of Master Builders and nothing else.
Viscount Younger of Leckie
As I say, I am very happy indeed to write to the noble Lord with a full and further list.
Baroness Parminter
I thank noble Lords who have participated in this debate and echo the comments of the noble Lord, Lord Kennedy, who summed it up incredibly well by saying that the Government’s arguments were not compelling. We have debated this at length in the Chamber, and I am not going to go through the arguments again today, but I just want to raise two points.
First, the Federation of Master Builders was one of witnesses before the House of Lords National Policy for the Built Environment Committee. The federation said that it considered regulation a lesser issue in building new homes; the issue was access to finance and the cost of land. Although I hear that Mr Berry wishes to describe this House as being full of people who are “reckless” and show a “lack of realism”, that was not the evidence that he gave to a House of Lords Select Committee in October last year.
Secondly, we do not have to listen just to housebuilders. Of course we have to do that, which is why we sought to show at length in Committee that our amendment would not affect the viability of the houses we desperately need; but we have to listen also to the voices of home owners who will save money on their energy bills through this amendment, and to future generations, who need us now to start getting serious about tackling our greenhouse gas emissions. On that basis, I most assuredly wish to test the opinion of the House.
Viscount Younger of Leckie
That this House do not insist on its Amendment 109, to which the Commons have disagreed for their Reason 109A, and do propose Amendment 109B in lieu—
“Affordable housing contributions in small scale development
(1) Local planning authorities may require sites falling within subsection (2) to make an affordable housing contribution, in cash or kind, determined by the requirements of the housing market of that area.
(2) Authorities may require contributions from—
(a) developments of 10 units or less, and developments which have a maximum combined gross floorspace of no more than 1000sqm (gross internal area), and
(b) developments in a rural area or an area where—
(i) planning permission for the site was granted wholly or partly on the basis of a policy for the provision of housing on rural exception sites;
(ii) the site is in a national park or an area with equal protection to that of a national park; or
(iii) the site is in an area designated under section 82 of the Countryside and Rights of Way Act 2000 (designation of areas) as an area of outstanding natural beauty.
(3) In subsection (2) a rural area is defined as—
(a) any settlement with a population of fewer than 3,000 people at the most recent national census, or
(b) any settlement with a population of between 3,000 and 10,000 people at the most recent national census, and designated as a rural area by the Secretary of State following representations from the relevant local authority.”
“( ) This section does not apply in relation to a planning obligation if—
(a) planning permission for the development was granted wholly or partly on the basis of a policy for the provision of housing on rural exception sites, or
(b) the obligation relates to development in a National Park or in an area designated under section 82 of the Countryside and Rights of Way Act 2000 as an area of outstanding natural beauty.”
Viscount Younger of Leckie
That this House do not insist on its Amendment 110, to which the Commons have disagreed for their Reason 110A.
“Sustainable drainage systems
(1) The Water Industry Act 1991 is amended as follows.
(2) After section 106(1B) (right to communicate with public sewers) insert— “
(1C) The right under subsection (1) is subject to section 106AB.”
(3) After section 106A insert—
“106AB Sustainable drainage systems
(1) A person may only exercise the right under section 106(1) in respect of surface water if the relevant drainage system is designed and constructed according to—
(a) the non-statutory technical standards for sustainable drainage systems or any replacement standards as may be published by the Minister from time to time; and
(b) the planning permission or development consent order for the development drained by the drainage system in question.
(2) In this section “drainage system” has the same meaning as in paragraph 1 of Schedule 3 to the Flood and Water Management Act 2010.””
Viscount Younger of Leckie
My Lords, the Commons has insisted that this amendment be rejected with a strong majority. It is unworkable and would lead to uncertainty and delay in delivering our manifesto commitment to build more homes.
Flood risk is a very important issue, and I understand the strength of feeling on this matter in the House. Following the devastation of last winter’s floods, we are all keen to ensure that development is safe from flooding and does not increase flood risk. Just one year ago, the Government demonstrated our commitment to ensuring that development is safe from flooding when we strengthened planning policy on sustainable drainage. We have made clear our intention to review the impact of this policy once it has had time to bed in.
Although I understand the good intentions behind the proposed new clause, it does not recognise that there are cases when a development may not provide sustainable drainage for very good reasons. This may be because it is not practical for some forms of development, including mineral sites or where site constraints mean that a suitable sustainable drainage system cannot be provided. Sustainable drainage simply may not be appropriate on a small site with high groundwater or contaminated soil.
I am also concerned that, by making the right to connect conditional on planning permission, we will need to introduce more bureaucracy, complexity and cost into the process to allow for situations where connections are in fact needed or where there is currently no requirement for planning permission to be obtained. This may include situations where water and sewerage companies are exercising their statutory obligations effectively to drain an area.
Another critical defect of the clause is that it does not provide for a process to enable a developer to demonstrate that conditions have been met. This detail needs to be carefully thought through to ensure that the measure is workable and has the intended impact.
Finally, this will be important to many who are looking to government to support industry to provide the homes that communities need. There are no transitional arrangements. What happens to those developments that have planning permission but no right to connect? The measure has the potential to stall development, including in those areas that are not in fact at risk of flooding at all.
As the amendment expands current policy to small developments, which are not currently covered by this policy, small builders, who are only now starting to recover from the economic crash, are likely to be especially hard hit. These are the same small builders on whom we are relying to deliver above and beyond what the larger housebuilders can deliver. I beg to move.
Motion M1 (as an amendment to Motion M)
Baroness Parminter
Leave out from “House” to end and insert “do insist on its Amendment 110”.
Baroness Parminter (LD)
My Lords, the purpose of the amendment is to ensure that the new homes that we want are built with sustainable drainage, protecting home owners against flooding and delivering wider environmental benefits to the community—and, indeed, for biodiversity.
At Report, the Government’s response was that we should wait to see how the presumption in planning works, given that it has been in place for only a year, but the evidence that we had in Committee, at Report and since is that it is not working. Since Report, Hampshire County Council, Essex County Council and South Tyneside Council have joined every water company and the National Flood Forum, which has links with local councils all around the country, to say that the problem needs sorting, and sorting now.
The amendment, which we proposed at Report, is a simplified version of an amendment that we moved in Committee. I humbly disagree with the Minister: the amendment does not increase bureaucracy but gives local authorities more powers in discussions about planning permissions to deliver the increase in SUDS we need. It gives them the power to talk to developers at the earliest opportunity about sustainable urban drainage solutions. That is what the amendment, which removes the automatic right of connection, would do: make sure that housebuilders consider urban drainage at the beginning of the process, not at the end.
There has been overwhelming support from a variety of organisations, which we cited at Report and which I will not, for brevity’s sake, repeat this evening. The House of Lords Select Committee on National Policy for the Built Environment supported such an amendment. Again, we must think of home owners. Yes of course we must think of home builders but, as I said, this is not extra bureaucracy; it is a reasonable amendment. The Government’s very welcome Flood Re initiative, which came into effect last year and will give low-cost insurance for home owners, excludes homes built after 2009. By introducing the amendment, we will be increasing the amount of sustainable urban drainage and providing what the Government accept is a low-cost route to the protection that householders need and which we need for our environment.
Given that Ministers have been quoting other industry sources, I end by quoting the Construction Industry Council, which states that, “Maintaining the automatic right provides a get-out for developers by not requiring them to think about how they manage surface water”. It is time to end that automatic right. I beg to move.
Lord Krebs
My Lords, I shall be very brief in speaking in support of this amendment, because we have heard the arguments in Committee and on Report. As chairman of the adaptation sub-committee of the Committee on Climate Change, I simply make the point, which I made before, that this is about looking not just now but into the future, when we understand from the climate models that flash surface-water flooding will become more of a problem. It is already a major problem and one of the major sources of flooding in this country and it is going to get worse. So it is rather like the zero-carbon homes amendment that we discussed a few minutes ago. Why on earth would we want to build new developments now that are going to present the residents of those developments with problems with flash flooding in future, when we know that there are straightforward solutions? There is the solution of sustainable urban drainage, not removing the right to connect to the drains altogether but making a presumption—because that right is not automatic—that developers will use sustainable urban drainage where possible.
If, as the Minister said in the introduction, this amendment is both unnecessary and unworkable—and he gave various reasons—I ask myself why so many professional bodies and why the water industry itself, as the noble Baroness, Lady Parminter, said, support it. Those are the people who really understand, and who are real experts, and it is clear that they think that that is workable and desirable and will achieve greater sustainability for the new developments that will be built in the coming years as a result of the initiatives in this Bill. So I hope that noble Lords will listen to the argument that the noble Baroness made and will recall the arguments heard in Committee and on Report and will support the amendment.
The Earl of Lytton (CB)
My Lords, I have not spoken in this part of these deliberations. I draw your Lordships’ attention to my interests as a practising chartered surveyor and a vice-president of the Local Government Association. More particularly, in the course of my professional work, I have had to deal with the design and application of such things as sustainable drainage systems, whether that might be full sustainability—full SUDS—or whether it be an attenuation, which I might call SUDS-lite. Let us not make too much of that particular distinction.
I recall that, not too long ago, I had reason to pay a visit to the Building Research Establishment at Watford. One thing that came out of that visit was a discussion on sustainable urban drainage systems—and one of the remarkable things about it is how little land is actually needed to achieve an acceptable system. So it does not seem to me to be quite as the Minister said. He raised the objection that this was heavy-handed and would in some way prejudice smaller sites, where things were more constrained. But I refer your Lordships to the non-statutory technical standards, as may be published by the Minister from time to time. It seems to me that that gives the Minister the tools to make different rules for different circumstances, as the situation may arise. With the greatest respect to him, I am not sure that I follow his line of argument.
We need to remove the issue of surcharging water that has to be dealt with by the statutory undertaker. Whether that be surface water that is channelling down some pipe because of a cloudburst or whether it be a combined system, whereby surface water is getting into foul water, which then has to be dealt with in dilute but vast quantities at a sewage treatment works, it is part and parcel of the same problem of volume and disposal. We need to be aware that it is not always in the interests of the sewage undertakers to delimit what goes into their pipes, because of course that gives rise to the justification for large capital works to increase and expand it. I do not think that we should be following that; there are grounds for attenuating these things on or near a site to deal with surface water run-off. Quite apart from the issue of localised flooding and run-off, the whole process of attenuation should and could have been part of standard building regulation practice for at least the last 20 years, and I am really surprised that there is substantial resistance to it. If the noble Baroness decides to divide the House, I am afraid that I shall be voting with her.
Lord Kennedy of Southwark
My Lords, as we have heard, the amendment would ensure that new homes are built with sustainable drainage systems, helping to protect home owners against flooding, helping communities and delivering wider environmental benefits. This issue has been discussed as we have gone through the Bill both in Committee and on Report, and it is disappointing that the Government are again rejecting the amendment. There is no problem with monitoring where were are with SUDS—whether they are included and why they are not included, the issue around developing a site and why costs might mean that you cannot do it. We need a lot more information here, and I do not understand why the Government do not want to do this. The measures are low cost and would deliver flood-resilient homes, which is something that we all want to support. We have all seen the heart-breaking scenes of people’s homes being flooded. Why would you want to build homes that are at risk of flooding? It is really very strange.
The Minister talked about cost and bureaucracy and said, “Let’s wait and see”. I am afraid that that does not stack up. As the noble Baroness, Lady Parminter, said, all the water companies have supported this, but there are also other bodies. Essex County Council is fully in support of it, and I think that that is a Tory-controlled authority—it is certainly not Labour controlled. Hampshire County Council is fully in support of it, and it is certainly not Labour controlled; I think it is Conservative controlled. There are many other bodies; everyone is saying that this is something that we should do, so I do not understand why the Government are still resisting it. I hope the Minister will look at this more favourably and change his mind.
Viscount Younger of Leckie
My Lords, this has been a very interesting and short debate, and I shall be brief. I hope that noble Lords will accept that, while we join them in supporting the use of sustainable drainage, there are flaws that make the proposed new clause simply unworkable, and a potentially serious impediment to the delivery of new homes. As the noble Lord, Lord Krebs, said, we have heard the arguments at some length during the Bill, and I can only reiterate our position that we will review the impacts of the current planning policy on sustainable drainage. That is a definite reassurance.
On the point that the noble Lord, Lord Krebs, raised on why by building now we might be storing up problems for later, when determining planning applications, local planning authorities are expected to ensure that flood risk is not increased elsewhere. In areas at risk of flooding, they should ensure that priority is given to the use of sustainable drainage systems. There is also an expectation that sustainable drainage systems will be provided in all new major developments, unless demonstrated to be inappropriate. A site-specific flood risk assessment is required for planning applications for a development likely to be affected by local sources of flooding, and should look at all forms of flood risk, including from surface water. The developer is responsible for providing effective drainage already to serve the development and agreeing it with the local planning authority. I hope that, with the continuing reassurance about looking very closely at the issue in our review, noble Lords will reject the amendment.
Baroness Parminter
My Lords, I thank the noble Lord, Lord Kennedy, the noble Earl, Lord Lytton, and the noble Lord, Lord Krebs, for joining me in support of the amendment. I have not heard anything from the Minister to counter the weight of evidence in this Chamber and beyond, which says that the present situation with regard to delivering sustainable urban drainage is not working. When the Government introduced the presumption in planning over a year ago, that is what they wanted to do—encourage sustainable urban drainage. They had that intention, but it is not working, and that is the evidence. I remind the House that small developments are currently excluded from the provisions. Our amendment states that all developments should be subject to them. In rural areas, small developments often affect people in terms of flooding.
We have moved a long way on this amendment. This is not the first amendment that those of us who feel strongly about sustainable urban drainage have brought to this House. We have narrowed our amendment as a sign of good will to the Government. We want the same thing. We want more homes, but we need them to be flood resilient and to deliver amenity benefits to communities. On that basis, I wish to test the opinion of the House.
Baroness Williams of Trafford
That this House do agree with the Commons in their Amendment 111A.
“(1) The Secretary of State may by regulations provide for temporary 3 arrangements in particular areas to test the practicality and desirability of competition in the processing (but not determining) of applications to do with planning.
(1A) The regulations may make provision—
(a) for an application for planning permission that falls to be determined by a specified local planning authority in England to be processed, if the applicant so chooses, not by that authority but by a designated person;
(b) for any connected application also to be processed by a designated person and not by that authority.
(2) The regulations must specify a period after which any such provision ceases to apply.
That period (whether as originally specified or as subsequently extended) must end no later than five years after the first regulations under this section come into force.”
Baroness Williams of Trafford
My Lords, Amendment 111 implemented a number of the DPRRC’s recommendations. It also took steps to ensure that our pilots would test the benefits of introducing competition to planning application processing on a level playing field, and make clear that the planning decision would always be made by the local planning authority. The other place has accepted Amendment 111 but has proposed a minor amendment, Amendment 111A, to clarify that regulations can provide only for temporary arrangements in England. I beg to move.
Lord Beecham
My Lords, tempted though I am to indulge in a forensic examination of this complex and crucial amendment, I think I will spare the House.
Baroness Williams of Trafford
That this House do agree with the Commons in their Amendment 184A.
“( ) regulations under section 67(1) that contain more than one determination or a determination that relates to more than one local housing authority,
( ) regulations under section 67(8),”