(7 years, 1 month ago)
Lords ChamberRead Hansard Text Read Debate Ministerial Extracts
Lord Smith of Leigh
That this House takes note of the impact of Her Majesty’s Government’s policies on the availability and affordability of housing.
Lord Smith of Leigh (Lab)
My Lords, this is a timely debate for this House and I am grateful for the number of noble Lords who have expressed an interest in participating. I am sure that we will have a lively and interesting debate, and I see that we have a Minister who has considerable experience of housing in the past. I need to start by declaring my personal interests: I am leader of Wigan Council and also a vice-president of the LGA.
Both the Prime Minister and the Secretary of State for Communities, speaking at the Conservative conference last week, told us that the housing market is broken—we can all agree with that statement, I think. But there are many views on the way forward to fix it. The Government are really just tinkering around with the problem, not looking at the fundamental issues that will lead us to improving that market. Whatever way we want to look at housing, the market is in crisis. This country is failing to deliver the number of houses we require by a substantial margin. It is suggested that we need a minimum of 250,000 houses a year—300,000 is probably nearer the mark and was the number in the Conservative manifesto for the last election, so let us see what comes from that. The latest figures show that we are well over 100,000 short of that figure. The contribution of council houses was a mere 1,600—and there are 1.2 million people on council house waiting lists.
We can see the impact of the shortfall on both houses prices and rents in the private sector. In 2000, house prices were about four times average income; they are now about eight times average income. One in seven of those renting is spending more than half their income on rent. This increase in housing costs has the biggest effect on those who are trying to get into the housing market in their 20s and 30s and on those who have the lowest incomes. Too many families are trapped in poor-quality housing. It affects their health, their children’s education and their whole life experience. We are failing to give these families their right to decent housing.
In advance of the Prime Minister’s contribution to the Conservative conference, it was trailed that we would see a return to the era of Harold Macmillan. When he was a rather reluctant—I understand—housing minister in the Churchill Government of 1951, he managed to achieve an amazing 300,000 houses a year, of which 250,000 were council houses—an amazing proportion. The Prime Minister’s statement promised a figure that seemed generous but when it was unspun meant the delivery of an additional 5,000 properties for social rent per annum. That is nowhere near the figures that Macmillan achieved and obviously not the figure we need.
However, I welcome the Government’s recognition of the role of council houses. It is about time that we recognised that local authorities have a role in providing them, but we do not need these little initiatives which will not stimulate the sector. The Government need to change fundamentally the restrictions on council housing to ensure that local authorities have the freedom to borrow for housing. Why can they not do this? They borrow for other things: why not housing? It is incredible.
The right to buy is controversial, but why should local authorities not keep all the moneys from the right to buy, as that would enable them to build more new properties and give them greater flexibility to use the assets of housing as security against borrowing? Councils need not more money but freedom and flexibility to enable them to get on with the task of building more properties.
Local authorities clearly also have a role through housing planning. The Government seem to think that in the last few years a blockage has arisen in the planning system and that local authorities are not approving houses in sufficient numbers, so they have reduced the ability of local authorities to refuse planning permission. However, at the end of the day over 90% of applications to local authorities have been approved. The problem was that not all those approvals led to real building. Sometimes developers held on to land, hoping that its value would rise even more before they would commit to building.
The Government have previously stated that they prefer development on brownfield sites, which is a principle that I think we can all share. However, although the principle is fine, the practice is not quite what it seems, because Defra has reduced the subsidy for remediation of brownfield sites. In many areas such as my own, former industrial sites need to be cleaned up before new developments can be built on them. The Government reduced the grant for that and now it has gone away totally. That affects the balance of costs between building on greenfield sites and building on brownfield sites. The balance is moving more towards building on green-belt, undeveloped land.
The Prime Minister said in Parliament in February that the Government were very clear that the green belt must be protected. However, that commitment is not what it appears, given the pressure to meet housing targets. The Prime Minister ought to have been aware of that as her area, the Royal Borough of Windsor and Maidenhead, has a housing plan which includes putting 6,000 additional properties on green-belt land. I am not saying that is the wrong strategy for the royal borough, but it adds to the pressure on green-belt land.
In my own authority a proposal to build an estate on green-belt land was submitted in an area which already had quite a lot of housing. The proposal was vigorously opposed by the local community and the local council. After we turned it down, the developer appealed, so it went to the government-appointed planning inspector. The government appointee chose to overturn the local authority’s view, permitting development on a green-belt site. The justification was that although we were expected to have a target of around 1,000 new properties a year and the council had given planning permission for them, because the developers had not actually built those houses there was a shortfall of housing and this justified development on the green-belt site. That is my example, but it is not the only one I could give because I know that neighbouring authorities have had similar experiences. So what is the real strategy for green-belt sites? Are the Government being flexible or have they changed their policy? If they have not, why do they tell their inspectors to carry out what is actually government policy instead of doing their own thing?
The most extreme example of the failure of the housing market is obviously homelessness. In big cities and in smaller communities, we can see with our own eyes that the number of people who are rough sleeping has increased dramatically over the past few years. It is a disgrace for us as a society to see that happening. However, people who are rough sleeping are just the tip of the iceberg. I have some figures from Manchester City Council, which has a number of people to accommodate, and it says that it probably has to deal with 75 to 100 rough sleepers. That is bad enough, but on the back of that are 500 families living in temporary accommodation and 500 single people in inappropriate accommodation—but it has housed them—along with a further 900 people in supported accommodation. In other words, the number of people who do not have homes is much greater than the number of people who are sleeping on the streets.
In Manchester the biggest cause of people becoming homeless is eviction by private landlords; the second is domestic violence. Eviction by private landlords is not normally associated with not paying rent; it is simply to do with changes in the strategy of the landlord and moving on and so on. I think we all recognise that. However, we need to admit that the causes of people becoming homeless are many and varied. If we are going to reduce homelessness properly, we need to provide not only appropriate additional accommodation but a range of supporting services to help those who for various reasons have chaotic lifestyles. They often do not have access to health services, particularly mental health services. Many in the north are ex-servicemen who come out of the Army and cannot adjust back into society. They have played their part but they are not given the support they need. As I say, it is not just a problem of getting more accommodation; it is a question of providing support for these people.
I understand that the Prime Minister is visiting Greater Manchester today and will be making announcements on both housing and homelessness. I am not claiming any credit for the fact that the Prime Minister is going to my home patch and making these announcements, but it is likely that your Lordships will recognise that our debates may have an influence on national affairs. I do not want to seem to be ungrateful. If the Prime Minister is giving some more money to Manchester, I will accept and thank her for it, but for me it is just an example of more tinkering at the edges and not looking at the fundamental causes of the housing crisis in this country. If the Government could only develop a strategic plan to get more houses built nationwide, that would provide support not only for Greater Manchester but for the whole country. This House would be behind such a strategy.
The housing crisis of course is not just about bricks and mortar; more importantly, it is about people whose lives are being blighted because of its impact. Housebuilding should be regarded as an investment in both the physical and social fabric of our nation. Let us commit ourselves to that investment, and I am sure that in the long term we will reap the benefits.
Baroness Neville-Rolfe (Con)
My Lords, I congratulate the noble Lord, Lord Smith of Leigh, on securing this debate. It was a subject I wanted to debate myself so I was almost the first to sign up. Then fashion and the Conservative Party conference caught up, and there are many more of us here today.
I have two perspectives on housing. The first is social. Lack of adequate housing growth, alongside population growth, is undermining society in this country. In 1991, 67% of 25 to 34 year-olds owned a home. By 2014, this had fallen to 36%. According to PwC, Generation Rent—those aged 20 to 39—would have to save for 19 years to buy a home, and more in London. At the other end of the life cycle there are more and more elderly people, and more and more of them are living alone, often in a state of fragility. We seem to have lost that social glue which had generations helping each other. The noble Lord also mentioned the problem of homelessness.
My second preoccupation is productivity, although it can be a slightly disheartening issue to focus on given the flatlining since 2010. I think I achieved a lot more productivity-wise when I worked at Tesco, when we were conscious that £1 in every £7 was spent in our stores and we took pride in good management of people, in discipline and in improvement in processes. That included building techniques and cleaning up brownfield sites, which are relevant today; driving small-scale innovation and investing in ICT and skills. It is the combination of capital, skills and management that makes a difference. Housing could be a critical driver of greater productivity, as well as helping mend the country’s social fabric. I should confess that I am no expert, although we did build some houses when I was at Tesco as part of mixed-use schemes. I should also declare an interest as the landlord of a cottage close to our Wiltshire home which is rented to a local couple.
Reading the papers for this debate, I was struck by the sheer complexity of the subject and the plethora of policies and regulatory changes. It was not surprising that February’s White Paper was called Fixing Our Broken Housing Market. I am a big fan of the Secretary of State, Sajid Javid, but he should be allowed to be more radical. Housing is in crisis, as the noble Lord, Lord Smith, has already said.
I am not going to distinguish between housing in general and affordable housing, as I am of the view that the way to lower prices is to increase the overall supply. We are in a bad place: during the last three and half decades, the number of housing units completed per 10,000 inhabitants has declined and is exceptionally low by international standards. Housing is also in the wrong place, as the centres of economic activity have shifted south. The authorities have failed to predict that, or to predict the level of immigration and the needs of the ageing population, and have, I think, been too ready to believe that planning restrictions redirect housing development rather than restricting it. Elements of the development industry and incumbents like prices to stay high. Nimbyism is also one of the strongest forces in the British countryside.
I have six proposals, mainly to increase supply. First, and most important, the best way to do this is to change the planning system. My own view is that the green belt should be relaxed. Small and undistinguished sections of the green belt could, as I understand it, make a space for as many as a million homes in areas around London, Bristol, Oxford and Cambridge, helping us to support growth and productivity in these areas, which contribute so much to our economy. We should also look creatively at height restrictions, not everywhere of course, but where slightly taller buildings could provide more homes without environmental damage. We should also free up public land for housing, alongside public buildings, rail tracks and motorways, with double glazing and noise reduction transforming what is possible. I appreciate that the politics of this are very difficult but we are in a crisis, and a commission of wise people might be needed to establish what should be done as a matter of national urgency.
Secondly, the private sector should lead the way in housebuilding, but we should encourage small builders as well as the larger developers who can produce at scale. It might be worth considering a tax break for them for this purpose. Local authorities are being given a bigger role but, as far as this happens, the focus should be on areas unlikely to attract private investment, such as public land, and it should not be confined to areas governed by the particular local authority. It would be more cost effective for councils where land is expensive, such as in central London, to fund building elsewhere in cheaper areas.
My third point concerns building standards. I am free market in my attitudes but I am a keen supporter of modern building standards. These have helped to reduce noise, prevent fires and encourage a step change in energy efficiency. However, there are weaknesses. New tower blocks, rightly, require sprinklers, but how could anyone have agreed that this standard did not apply to blocks being expensively renovated?
My fourth point is joined-up infrastructure and housing development. One problem that we have is that housing, infrastructure and other development are looked at in different boxes. That is one reason why, in the autumn spending statement last year, we announced what I call the “roundabout fund”—the money for which local authorities can bid for local road and roundabout improvements. These ease congestion and can free up land for housing or business parks.
Fifthly, with regard to incentives, we need a market that can work so that people can buy and sell their houses and move around in pursuit of work. They need to upsize and downsize according to need. Council house sales have been a major driver of physical and indeed social mobility, and we should encourage more of that. The huge increases in stamp duty above the lowest levels have, to my mind, been a mistake, discouraging mobility.
Finally, good regulation and simple administration are needed to encourage building and planning. In the interests of time, I will cite just one graphic example concerning a former civil servant. His housing associations were being merged, and that required two “referenda” of the housing association membership within the space of a couple of months, with all manner of documentation, consultations and financial assurances—weightier, as he said, than the Brexit decision process.
Lord Greaves (LD)
My Lords, that was an interesting speech and an interesting view of the future but not one that we share. However, I agreed with a substantial amount of what the noble Lord, Lord Smith of Leigh, said, and I thank him for introducing this debate. I remind the House of my local government interest as a member of a housing authority.
Year after year the Government say that they want to build more houses. However, they do not succeed; indeed, in recent years the situation has got worse. The philosophy is wrong, the analysis is wrong and the solutions are wrong. They continue to be wrong and things are not going to improve on the basis of present policy.
One real problem common to all Governments is that they are addicted to the idea of one policy fitting all—top-down rules, top-down planning and top-down restrictions. They do not allow local authorities and local people to get on with doing things appropriately in their areas, and it does not work. Then they always blame the planning system. I keep saying in your Lordships’ House that the plan-making part of the planning system is bust, but that is very largely due to the ever-growing plethora of top-down restrictions, top-down instructions and top-down attempted control by central government—something that we are now seeing again. By and large, the blame does not, in my view, lie with the development control system. Local authorities give planning permission for new housing and that new housing simply is not taken up. It is estimated that nearly 700,000 planning permissions have not been carried through.
Then we have council housing. We have a continuing central prejudice against local authorities buying and owning houses. The noble Lord, Lord Smith, referred to Harold Macmillan. Harold Wilson, who followed some time later as Prime Minister, used to refer to the 13 wasted Tory years in the 1950s and early 1960s, but those were the years when huge numbers of council houses were built. Building all those council houses was one of the greatest improvements made in the last century to the lives of ordinary people in this country. Yet we cannot do it anymore. We might refer to the 13 wasted Labour years we had before 2010, when the building of council houses dried up.
Why is this? Why is there such a prejudice against local authorities centrally? It is accepted that local authorities are the most efficient part of the public sector, and certainly the most democratic part. There is the problem, because democracy results in diversity: people do different things in different areas and solve problems in different ways. The civil servants and their ministerial colleagues at the centre simply do not like that, because it is out of their control.
A consultation is ongoing on Planning for the Right Homes in the Right Places. I keep reading and trying to understand this 60-page document in which the Government are offering to impose new housing numbers on local authorities. These local authorities have all established or are developing local plans and have worked out their housing numbers, and now they are all to be changed. Some will go up and some will go down. These are the numbers that the Government say will have to apply in each local authority, and yet they will not apply until there is a review of established local plans. That is nonsense. There will be a figure in the local plan, which everybody is using, and another figure handed down by the Government. In some places, such as my own authority in Pendle, the Government’s figures will be considerably lower than those in the local plan. In many other places, they will be higher.
Imagine the chaos that this will cause at planning inquiries when people appeal against the refusal of planning permission. Imagine the anger when local authorities say that they have to give planning permission for extra houses in the local plan, even though the Government are saying that the number might be half or two-thirds of what the plan states. There will be complete chaos. This is total madness.
How these numbers have been worked out is a mystery. The consultation document talks about a proposed approach to calculating the local housing need and to viability assessment; proposed numbers for housing growth, which can change radically from year to year; and something called the “median affordability ratio”. I do not know whether the Minister understands the median affordability ratio; I have tried to and I do not. I cannot imagine people walking down the street saying, “Have you heard the latest about the median affordability ratio? It’s a disgrace. What are we going to do about it?”. This is the kind of thing that brings government and local authorities into disrepute.
I say trust the locals. There is growing evidence around the development of neighbourhood plans that if you give local people the power to work out the future housing numbers and where they should be, they will suggest building more houses than the local plans say. Give local people and local authorities the power to work out what is needed in their area, in the light of the plans for those areas and what the people think is right, and they will provide the houses. All this detailed, top-down technical planning that changes year after year causes complete chaos.
The Lord Bishop of Chelmsford
My Lords, I too thank the noble Lord, Lord Smith of Leigh, for securing this debate and the noble Lord, Lord Greaves, for his comments. I would like to make a slightly different point about housing as a spiritual issue. It is not just about meeting physical needs but about providing the stability and security without which no one can grow and flourish. I think we all agree, therefore, that there is little doubt that the scarcity of affordable housing is one of the most urgent crises facing our nation, for it affects our cohesion, our well-being and our prosperity, and the growing homelessness on our streets is the outward sign of an inward and debilitating spiritual malaise.
We heard about figures in Manchester. The housing charity, Crisis, estimates that on any one night in Britain at the moment, 8,000 people are sleeping rough. There are 39,000 households living in hostels and 60,000 people surfing from sofa to sofa. That is before we have considered the thousands of people who want to get on the housing ladder but cannot afford it. I am involved with a number of homeless charities in Essex and east London where I serve, and see the sad and exhausting consequences of this day after day.
The cost of a home—and I underline the word “home”—whether bought or rented, is at the mercy of market forces. London is in danger of becoming a city where teachers, nurses, social workers and even Christian ministers can no longer afford to live, and where ordinary and even relatively well-off middle-class families, the young and the disadvantaged are forced out by escalating prices. Yes, we need a strategic plan.
Jesus famously said that:
“In my Father’s house there are many homes”.
Today, we need a progressive and imaginative housing policy that has many types of homes within it—a much greater diversity. We have heard, and I am sure we will continue to hear in the course of this debate, many statistics. I will not read out a load more, but I want to make it clear that while we applaud what has been done and what is being done, more needs to be done, and it needs to be more joined up.
The challenge in rural areas is particularly acute. The effect of the lack of appropriate housing in rural areas is starting to show in terms of the lack of public services. Primary schools that two decades ago had enough pupils to provide high-quality education are now struggling. The recent change in the funding formula for schools will, I fear, see many more close, and it is housing policies that will enable families with children to return to the heart of rural communities. But it is not only schools that suffer. This lack of social diversity, with predominantly older people in villages and hamlets and long-term families priced out of communities where they would have expected to live in the past, means that a wide range of public services—health, social care, transport and so forth—are under threat.
Again, I see this at first hand in rural north Essex and in many Essex council towns. But as well as rural, the diocese where I serve is urban. In Walthamstow, average house prices have risen by nearly a third in the last couple of years. Even small houses in Walthamstow can now cost £500,000. Historically, this was a community for working-class people, but no longer, and we know that this is repeated all over London. Younger people with families who bought shared equity or other forms of starter homes are unable to move into larger properties. But housing developers favour larger houses with larger prices. I therefore find, as I go about, that I hear stories of children of different genders having to share a bedroom long beyond the ideal age—which in other policies such as the bedroom tax the Government have set at 10—and children and parents having to sleep in the sitting room in order create enough sleeping space. We are in danger of creating ghettos where high-income and low-income households live separately. In London and in the countryside that is getting acute. So we not only need more building, but variety and diversity of tenure and in the right place.
In rural areas, it used to be required that the development of smaller plots included social housing. However, that requirement has been removed and it is unclear from recent Parliamentary Answers to Written Questions from the right reverend Prelate the Bishop of St Albans whether any monitoring of this policy’s impact has been made.
Finally, I want to say something about the difference between a house and a home, a housing estate and a community. A house becomes a home, and a housing estate a community, when it provides for not just a physical need but contributes to the diversity of provision for individuals and families through a wider network of the schools, healthcare, other services, recreation—of course, I will also say—churches, mosques, temples and synagogues that make a community work.
The Church, with our roots in every community, is able and willing to help; already we are, in our own small way, pioneering a number of imaginative solutions. In Gloucester, a vicarage redevelopment is providing a new vicarage and a load of other social housing as well. In east London, our diocese is planning to redevelop a number of church sites where the church buildings were either badly built or badly designed. We reckon we can provide 600 affordable housing units, as well as worship space and community facilities.
We need imagination and conviction as well as investment. It is not just about building houses, but building homes; not just about new estates, but flourishing communities; not just about putting a roof over someone’s head, but a foundation beneath their feet.
Baroness Young of Old Scone (Lab)
My Lords, we have already heard how too many people and families are struggling with unaffordable housing and homelessness. More than 1 million families remain on the housing waiting list as we speak. There is a clear need to build more affordable homes in the medium term but that is not as easy as it sounds. In England last year, only 163,000 new homes were completed and only 32,000 of them were classed as affordable. That was the lowest number for 24 years. In many cases, those houses were priced at levels we would not regard as affordable for many families.
I support my noble friend Lord Smith in the points he made about the restoration of the local authority’s role as a builder and provider of housing of all sorts and in all tenures—particularly focusing on affordable homes. I want to draw attention to three issues I think need to be sorted in the short term, making reference to the findings of last year’s ad hoc Select Committee on National Policy for the Built Environment, where all three of those points were highlighted.
First is that wonderful and quaint proposition on planning with which we struggle: a viability test. It is absolutely clear that, in a planning sense, local authority targets to achieve affordable housing are not being met. I believe one of the significant reasons for that is the frequent undermining effect that developers produce by using viability assessments to argue down the numbers of affordable homes they will build, subsequent to the original planning permissions being granted and the original number of affordable homes agreed. It is a David and Goliath contest: developers have sharp-suited lawyers with sharp elbows, but planning authorities are depleted, not only in the number of planners but the skills they have. They are no match, quite frankly, for developers.
I welcome the Government’s consideration of helping planning authorities by allowing them to charge increased fees, but that is moving far too slowly and we need a rapid progression of the commitment to allow councils to increase planning fees by 20%. We also need a commitment to allow every council the flexibility to increase planning fees by up to 40% while a fair and transparent scheme of local fee setting is tested. We simply cannot continue at our current pace, otherwise we will continue to see these unequal struggles on viability between planning authorities and developers.
I was pleased to be part of the Select Committee on National Policy for the Built Environment. Almost every witness we saw raised the current operation of the viability test as an issue, so we need to do something about it. I urge the Government, first, to introduce complete transparency in viability assessments. Currently, they are not public documents. Developers say that they are commercially confidential. That may be the case in the initial stages where land assembly is still taking place, but the reality is that once that has happened there is nothing commercially confidential about them. Yet they are still not in the public domain. The viability process needs to take place in the open so that local communities have at least half a chance of understanding the reasons behind reductions in affordable housing and challenging the calculations that result in developers reneging on their undertakings to provide affordable homes as part of their planning permission.
Secondly, the viability test should become an exception rather than the rule. It is almost the rule now that a developer will go back and argue under the viability test that they can no longer provide the public goods that were agreed. I recognise that the Government are pondering a minimum affordable homes requirement of 10% in all planning applications above a certain size, but that does not say anything about the post hoc reneging and renegotiating which the viability test currently allows.
Building more homes will impact on land take on green fields, green belt and the environment. Local authorities feel deeply under the cosh to meet housing targets. The Government have introduced severe penalties for local authorities which do not provide adequate plans for housing targets or deliver them. That takes away their decision-making rights, it allows developers a free rein on development anywhere and it removes access to special funds. For obvious reasons, local authorities are now considering easy greenfield sites, often with poor infrastructure, poor transport and poor employment access, rather than more difficult, piecemeal, previously developed land and urban infill where there is better access to services. If I had a pound for every “garden village” that makes me want to throw up in my handbag, I would be a very rich woman, because they are neither gardens nor villages; they are lightly disguised new settlements inappropriately plonked in the middle of the English countryside providing individuals with no access to infrastructure, schools and transport. We have to do something about that.
We must not see affordable housing as a dash for the bottom. People need affordable houses, not cheap and nasty houses. We are currently providing the smallest houses in Europe. We need a minimum standard for housing. There is huge dissatisfaction with quality. The Select Committee indicated that there had been a sharp decline in the number of developments that undertook design review. Support and encouragement for design review has been diluted and left to local authorities, which cannot afford it. Affordable housing must not mean a dash to build cheap, mean, little houses in poorly designed neighbourhoods with insufficient access to employment, affordable transport, schools and health facilities. They will rapidly become our future slums. We need to learn from the past.
Lord Stunell (LD)
My Lords, I welcome this debate and thank the noble Lord, Lord Smith, for introducing it. There have been some very good contributions, not least from the noble Baroness, Lady Young, and my noble friend Lord Greaves. I am strongly tempted to follow some of the tracks they set out, but I want to pick out one or two specific points and try to take a more strategic look at some of the questions that we are facing.
First, I want to give credit to the Government. I am sure that they actually believe that we need 1 million homes; I am sure that they want 300,000 homes a year, as their manifesto stated—I have heard spokesmen over the years as diverse as Michael Gove, Grant Shapps, Gavin Barwell and of course the Minister say so repeatedly—but the fact is that it has not happened. I do not think that the Government do not get the problem that we need more homes: rather, they have not spotted the problem with the solutions that they are offering.
The most important problem, which never seems to get a proper airing, is that there is an absolute ceiling on the number of private homes which will be built by developers without subsidy. It has never exceeded 180,000 homes a year since 1945 and it has usually been significantly lower than that: you cannot get builders to build homes that they do not believe they can sell and they will not do it unless you pay them to do so. That has very little to do with planning. There are 600,000 or more planning permissions lying waiting to be built. It is much more to do with economics.
I remember, as a very junior Minister in the Department for Communities and Local Government, how much joy there was when planning permission was given for the Ebbsfleet development in Kent: 20,000 homes. Out went the press releases and the spads went wild in the media—“Another 20,000 homes for our glorious Government”. I was at the back saying, “Hang on a minute—how soon are we due to get these 20,000 homes in Ebbsfleet?” I do not know whether the Minister has the current number; I think we may have got up to 1,000 having been built so far: perhaps he can confirm that. The reason the other 19,000 have not been built despite the planning permission is that if they had been built, 19,000 empty homes would be sitting in Ebbsfleet without people buying them. We need to reflect on the fact that planning is not the bottleneck. Incidentally, I support my noble friend Lord Greaves in saying that if instead of 20,000 homes at Ebbsfleet there had been 200 sites with 100 homes on them we would have had far more homes built by now because we would have had small numbers on 200 sites rather than small numbers on one.
My second point is that affordability is very double-edged. Who actually wants cheaper homes? Do existing owners want cheaper homes? Do builders want cheaper homes? Do developers want cheaper homes? Will any party have a policy objective or a manifesto commitment to halve the value of your home? I do not think so. So the private sector will deliver what the private sector will deliver—and after that, someone else has to pay. If this Government or any Government want more houses, more homes, they have to pay.
The policy issue therefore is surely, what is the cheapest way of buying those extra homes? The Government have tried Help to Buy, which is a very good way of inflating house prices. It is, of course, a demand and not a supply-side issue and it was described quite correctly at the Tory conference as “economically illiterate” by Steve Norris. Help to Buy is not the way to go. Affordable rents have been explored—but, of course, as affordable rents become higher and higher, so the local housing allowance cost balloons as well. We now have a £30 billion LHA budget. The least central government cost looks therefore to be the lowest rent that can be managed—which would lead, of course, to a lower local housing allowance payment.
The Government followed that by putting a cap on housing association rents, which means they can no longer invest in building homes through that route. So some of these things have unintended consequences which totally defeat the purpose of the game and you come to the view very quickly that the way to go is to get local authorities to invest in council housing in the traditional way. It is not ideological; it is value for money. The Tory brand of competence and the efficient management of money may have taken a few knocks recently, but surely this point cannot have escaped them.
I make a further point about this. We talk about the housing pipeline; it is not a pipeline, it is a hosepipe. At the moment we have a model where the Government and successive Housing Ministers stand at the kitchen door like a five year-old, manipulating the tap to the hosepipe, and the construction industry stands at the far end—the business end—of the hosepipe, sometimes trying to direct an empty hose on wilting seedlings and sometimes looking down the pipe to see what is happening and getting a splash of water in its face. The fact is that we need steady, consistent investment in public sector housing in order to reach the targets we need.
Finally, I raise a different and more immediate point. Whether the target is 200,000, 250,000 or any number we care to choose, who exactly is going to build these houses? The biggest demand for homes, the most acute housing pressure, is in London and the south-east. Barratt gave evidence to the all-party group last Session that 54% of its workers in London working on its housing programme were from the EU 27. The RIBA reports that 25% of registered architects in London are from the EU 27. Estimates vary from trade to trade and function to function, but at least 30% of the construction force in London is from the EU 27—so what exactly is going to happen? Delivery of housing and of every other kind of infrastructure depends on that labour force, and I urgently say to the Government that they must give an assurance to those EU 27 workers, and to their successors, that they will be there to build the housing we need. Talk of targets and objectives—
Baroness Chisholm of Owlpen (Con)
My Lords, the noble Lord’s time is up, I am afraid.
Lord Kirkham (Con)
My Lords, my clear views on the vital importance of housing have been shaped by my personal experience, first as a child who grew up in a rented terraced house in a pit village and was happily able to get on to the ladder of home ownership at quite an early age; secondly, as a sofa salesman for more than half a century, who witnessed many thousands of times the sheer joy that people experience on buying new furniture as they anticipate the move into their first real home; and, thirdly, as chair of the Duke of Edinburgh’s Award and deputy patron of the Outward Bound Trust, often working with disadvantaged young people and seeing the importance of a secure and stable home to their mental and physical health, attitudes and prospects.
I do not pretend to be an expert on housebuilding or home-owner finance or to have any pat solutions to offer, but I implore the Government to listen carefully to the best expert advice available, which we are getting in this Chamber today, and take whatever action is needed—action, not more plans—to increase the supply of decent, affordable and secure housing in this country. In my judgment nothing, including Brexit, matters more to our prospects of being a society that offers genuine equality of opportunity across the generations and is fundamentally content and at ease with itself. That is because housing is about so much more than the provision of shelter by putting a roof over someone’s head. For a young individual or family, moving into a first home is on a par with getting married, entering any long-term relationship or having a first child. It is a source of excitement and pride and of security and status. Becoming a householder, whether the property is owned or securely rented, effectively confers membership of society. It is no exaggeration to say that it is the one thing that truly gives any of us a stake in the country. For young people, it is the great life event that genuinely allows them to take responsibility for themselves and their dependants, if they have any, to put down roots and to become an engaged member of the community. The knock-on benefits of housing the young and the not so young have to be huge by any measure, not just in the direct savings to social services but to the NHS too, particularly by mitigating stress and anxiety and generally improving mental health.
We in the Conservative Party have traditionally been the party of home ownership and I truly believe that that remains the gold standard to which we should all aspire, although if tenure is secure, you do not need to own your home, desirable as that might be. Nevertheless I naturally warmly welcome the extension of the Help to Buy scheme to 2021, with the promise that this will help around 130,000 would-be homebuyers, but above all we must secure a more than matching increase in the supply of new homes, so that this additional money does not simply drive property prices up still further. Just look at the yawning gulf that already exists between average wages and house prices in many parts of the country, particularly London and the south-east. I was married at 20 and had a daughter at 21 and for a short time my family was housed in the front room of my parents’ rented house, which had neither a bathroom nor an indoor toilet. Noble Lords can imagine the sheer delight, pride and relief we experienced on moving into the first home of our own, and in the mid-1960s that was a realistic prospect on a furniture salesman’s wages. It would not be possible now, and ultimately that is an issue of supply and demand.
If we continue to fail to increase the supply of housing to meet growing demand, we are going to create a problem for ourselves of monstrous proportions that will ultimately threaten the very stability of the country. Growing numbers of already disillusioned young people are likely to become increasingly angry and ultimately desperate because they cannot find a secure and affordable place to live, which is of course the key to achieving any and every other dream that they may hold for their future. So when the Government commit themselves to deliver 1 million new homes by the end of 2020 and half a million more by 2022, they must actually deliver. My experience of the City as chairman of a plc taught me that the way to investors’ hearts is always to underpromise and overdeliver, and I am sure that is the way to voters’ hearts too. My experience also taught me that the only way of actually delivering is to set out all your plans to overdeliver and then wait for “events, dear boy” to do the rest.
I fully recognise the magnitude of the challenge and I cannot offer any easy answers. I merely wish the Government to acknowledge that this is a vital and pressing issue of national welfare and security. The noble Lord, Lord Smith, used the word “crisis” at the outset of the debate, and I believe it is. I urge the Government to leave no stone unturned in resolving it boldly and with the urgency that it deserves. There is really no place like home, so let us build some.
Lord Cashman (Lab)
My Lords, it is a real pleasure to follow that contribution from the noble Lord, Lord Kirkham. I was born into a council flat. Just as he found, the joy of an inside toilet and bath, which was utilised once a week—the bath, that is—was an incredible luxury. My first home was a housing association flat. Those same options would not be available to people today. That is why I believe the policy has failed to deliver. Figures in report after report confirm this. As other noble Lords have said, the people sleeping in shelters, on our streets, in our parks and open spaces and on our sofas attest to the failure of housing policy and the so-called affordability of social housing.
Public housing policy, public housebuilding, has been castrated, and no amount of trying to pretend otherwise will change that fact. It is not about Governments expressing concern; if only it were. It is about making homes available for people to live in. However, I believe there is no political will in government to do the right thing, which is to build more public, affordable social housing. If central government will not build then it must allow councils, housing associations and others to borrow the money to do so—if necessary, to borrow against current housing stock, as has been referred to by other noble Lords, particularly my noble friend Lord Smith of Leigh, whom I congratulate on initiating this debate. Such investment is called the regeneration of our towns, cities and neighbourhoods and investment in the greatest thing that we have in this country: our people and their future.
Yes, I am angry, but the anger I feel is nothing compared to the deadening anger of despair experienced by hundreds of thousands of people who live with the reality of inadequate homes, sheltered accommodation, emergency accommodation that stretches on for weeks or months, or no home at all. The utter hopelessness and worthlessness that some of these people experience is almost unimaginable, and it shames us all. It shames every single one of us that it occurs in our wealthy economy. It shames us that the basic right to a home is unachievable for hundreds of thousands of people. The right to bring up one’s family in decent accommodation and see one’s children learn and develop within such a home are basic rights that lead to other rights and obligations, but also the obligations of the state.
If people feel that I am overstating the case then I make no apology, because these people’s voices are not being heard. I recognise and applaud the activists and the organisations, but they too are being ignored as the situation worsens. Are we hearing the children in families sharing almost uninhabitable emergency accommodation with others, sleeping in the same bed as or beds adjacent to their parent or parents and siblings, having no environment in which to breathe, grow, learn and develop? The longer there is an absence of housing, the longer we will continue to blight generations yet to come.
We have failed, and there is no sense, no joy and nothing to gain from making party-political points; that serves absolutely no one in need. We must look failure in the face, accept responsibility and bring people together to build the number of homes necessary. We must bring an end to the cap on housing benefit, which traps so many people in desperate situations; we must bring an end to buy to let, which has failed to fill the gap created by a lack of public housing and affordable rents; and we must bring to an end the concept of housing as purely an investment vehicle. The Right to Buy scheme inflicted unimagined damage on public housing stock, and that stock has never been replaced. We must end the rollout of universal credit, too.
From the Government’s own website, we can see that at the end of quarter 2, 2017, there was a total of 78,180 households in temporary accommodation, and the number of children in temporary accommodation at the end of that quarter was 120,170. The total number of children in temporary accommodation has been increasing year on year. There are also specific figures for the number of households with children in bed and breakfasts, and these, too, are shocking. There was a 650% increase in households with children being in B&Bs for more than six weeks from quarter 2, 2010, to quarter 2, 2017.
It is clear that much needs to be done, and we must not forget those who are most vulnerable. In 2014-15, the Albert Kennedy Trust undertook a thorough survey of LGBT youth homelessness. It revealed that LGBT young people are more likely to find themselves homeless than their non-LGBT peers, comprising up to 24% of the youth homeless population.
In closing, I thank Crisis, Shelter, the National Housing Federation, Stonewall, the Albert Kennedy Trust and so many others for their dedication, their action and the information that they make available to us, the policymakers, that gives us the opportunity to deal with the reality of the public housing crisis in this country. In the words of the National Housing Federation:
“We have an urgent obligation—the Government, local government, housing associations and private developers—to act now, and work together to end the housing crisis”.
We cannot say that we have not been warned.
Baroness Jones of Moulsecoomb (GP)
My Lords, it is a little daunting to follow the noble Lord, Lord Cashman, after such a passionate speech, which I wholeheartedly agreed with. I was also born in a council house; I live now in a council flat, albeit privately owned, and I love the sense of community and security that living on a council estate can offer. I also thank the noble Lord, Lord Smith, for bringing this debate to the House. It is a crucial time: the situation is worsening daily and we need dramatic action.
I want to make three specific points on what is obviously a huge topic—I should like to speak for much longer than six minutes. I have three specific questions to which I would appreciate an answer. My first question is about an issue which the noble Lord, Lord Smith, referred to: land banking by developers and builders, which often delays the supply of housing and makes it more expensive when it does come on stream. Have the Government thought about land value taxation, which is a very simple method that will make everything much better? It would remove the incentive for land banking and holding back on building houses.
My second question is about the demolition of estates. It seems to be happening quite a lot—I have seen council estates demolished against the wishes of the residents themselves. It is absolutely wrong to do that, if residents like the place they are living in. What happens is that estates are demolished and less affordable social housing is then brought in—and some of the housing is sold off privately and very expensively. I understand why councils do it; they have been kept short of money by this Government. But if you demolish estates against the will of residents, you are not listening to people who understand how that development works. That is extremely damaging.
My third point is about community housing. It has been said already that more housing could be built, but sometimes nimbys are blocking it—but in fact many communities are stepping up and providing more affordable homes through community-led housing. Such groups have already built 800 homes in recent years, many in areas of outstanding natural beauty, having won support for more homes than the local council thought likely or even possible. In the spring of 2016, the Government announced the community housing fund, designed to help community-led groups build affordable homes. It could help them to build a further 12,000 homes over five years. The first year’s money went directly to councils, but the Government have still not released any funding for this financial year, more than halfway through the year. When I asked the Government in July when the money would be released I was told, “In due course”. The appropriate time would have been in March, after the sector submitted a detailed proposal to the Government. The longer it waits, the more projects get stuck in limbo and the fewer homes acceptable to local communities can be built. A decision from the Government on the community housing fund is long overdue. When will it happen?
As I have a little more time, I shall react to some of the things that I have heard. The noble Baroness, Lady Young, mentioned the garden villages, which are so revolting. I would add Poundbury to that mix—it is a truly vile development, and how he got away with it I have absolutely no idea.
I take the point about undistinguished green belt, but it may be quite valuable for biodiversity. One person sees brambles and another sees habitat for all sorts of birds, insects and mammals. So we have to be very careful. There is even an issue about building on brownfield sites, which can be incredibly biodiverse. Every single site should be assessed properly before anything is built, and green belt should be the last option, simply because it is part of our heritage and incredibly valuable for us to breathe and relax in.
The clean growth plan was released today, which offers all sorts of opportunities for not only reducing our carbon burden but making life better for people on very limited incomes. One issue that I would very much like to see included is energy storage solutions in the home. Greens often talk about things for 10, 15 or even 20 years before they get picked up by the majority of other parties, so I would like to say, “Please put this on your radar”. Home energy storage solutions would be an incredible way in which to reduce people’s expenditure on energy and take pressure off the national grid.
Lord Horam (Con)
My Lords, many noble Lords may recall the name Lord Harmar-Nicholls, now sadly no longer with us. I remember him when we were both Members of Parliament along the corridor, when he was the MP for Peterborough. He famously retained the seat with a majority of 12, on one occasion, and subsequently with a majority of three. He always said that his ambition was to double his majority. I mention him because, as the humble Mr Harmar-Nicholls at the Conservative Party conference in Blackpool in 1950, he raised the cry, “Three hundred thousand houses a year must be built”. The noble Lord, Lord Smith, in his excellent introductory speech referred to this occasion. That cry was taken up from the hall enthusiastically and, as the story goes, Lord Woolton, a famous chairman of the Conservative Party, was listening intently and whispered to the head of the Conservative research department sitting next to him, “Can it be done?”. The word came back, “In theory, yes, it can be done”. Lord Woolton terminated the debate by saying, “This is magnificent; it should be done. It should be Conservative Party policy”. Imagine it: a conference where Conservative Party policy was actually decided at the conference—those were the days. And so it was. It became Conservative Party policy.
In 1951, the Conservative Government were elected and the Prime Minister, Winston Churchill, called on Harold Macmillan to be his Housing Minister. As the noble Lord, Lord Smith, again rightly pointed out, Harold Macmillan had really wanted to be Minister of Defence, but Winston Churchill said to him, “Harold, you’ll be loved in every humble home in this land if you can deliver 300,000 houses a year”. A glint came into Harold’s eye—he was not without ambition, as noble Lords will be aware—he realised the possibilities and got to work. He renamed the department the Department of Housing and Local Government, sacked the Permanent Secretary and brought in Evelyn Sharp, a famous civil servant. He brought in Sir Percy Mills, who had been a prominent industrialist in the Midlands during the Second World War, and appointed Ernie Marples, who had experience in construction, as his dynamic Parliamentary Secretary. He divided the country into 10 regions and got to work. In 1954, 317,000 houses were built. Not all of them were great houses, I have to confess. There a bit of rubbish there as well, but that target was achieved.
I mention all this because, obviously, it has been done. The target has been achieved, and I do not believe that it cannot be achieved again. It also shows the sort of drive that is needed to get something like this achieved. Crucial in all this was the fact that Harold Macmillan got the full-hearted support of not only Winston Churchill, who was then Prime Minister and for whom it became a personal commitment—as it is of our Prime Minister today—but Rab Butler, the Chancellor of the Exchequer. Ironically, in view of future political events, Rab gave him full authority to raise the money to get on with building these houses. I fear that the problem today is the Treasury. Why was there a limit of £2 billion and 5,000 houses a year in the recent statement at conference? It is the Treasury—the dead hand of the Treasury. The fact is the Treasury is limiting this, and the reason it will give is that we have a deficit of 80% of our GDP at the moment and how can we possibly add to that. Well, in Harold Macmillan’s time, the deficit was 250% of GDP and they still did it. They did not worry about that too much then. The reason is the Treasury today is making no distinction between current and capital expenditure. I am all in favour of balancing current expenditure over the economic cycle, making some allowances, and indeed paying off some of our deficit. That is absolutely right and, as a Conservative, I totally support that. But it is madness to include capital expenditure in that.
As the noble Lord, Lord Cashman, pointed out in his speech, we should be borrowing against our assets. We are creating assets, against which the local authorities should be able to borrow. The noble Lord, Lord Cashman, may be interested to know that, in today’s Financial Times, there is an article making this very point: it makes a distinction between current and capital expenditure in the Treasury in New Zealand and, therefore, New Zealand has a long-standing patient infrastructure programme, which we have never had in this country under any Government. So this is a problem for the Treasury, I think. We are also facing the possibility of a recession in 18 months or two years’ time. This would be a counter-cyclical policy, so it is good not only on housing grounds but economic grounds.
The House may remember that there was an excellent book produced by Anthony King and Ivor Crewe, The Blunders of Our Governments. I think I will produce a sequel: “The Mistakes of our Treasury”—unless it gets some sense in all this and behaves like an ordinary private company would. A private company would never get away with one number as the deficit; it would obviously have an account that would take into account the fact that it was spending money on development, research and building up assets. My plea to my noble friend, when he replies, is that he takes the views expressed in this debate today, with the urgency in which they have been made, to the Treasury. The job can be done, but it will not be done unless we get the Treasury right behind it.
Baroness Donaghy (Lab)
My Lords, it is a pleasure to follow the noble Lord, Lord Horam, and I invite him to join these Benches—on this side.
Baroness Donaghy
I am grateful to my noble friend Lord Smith of Leigh for initiating this important debate, and I want to say something about the areas of greatest need, the Government’s potentially conflicting policies and the need for some cross-party work on this giant project, which will take longer than one or two Governments to achieve.
I turn, first, to homelessness, temporary housing and the impact on black families and older people. DCLG’s own figures reveal a 134% increase in rough sleeping between 2010 and 2016. The number of households in temporary accommodation increased by 60% in the same period. Whether this is because of a housing shortage, drastic reductions in local authority budgets, changes in housing benefit or a combination of all three, it is still the responsibility of the Government. What is happening to the weak and vulnerable is shameful. The drop in home ownership has seen black families affected the most. Less than one-third of black households are headed by owner-occupiers, compared with two-thirds of white families and 58% of Asian households. If we had more age-appropriate housing for older people, it would contribute to solving the wider housing crisis and might alleviate some social care and loneliness issues. The chair of the Communities and Local Government Committee, Clive Betts, when he launched the committee’s inquiry into housing and older people, said:
“Many pensioners may be interested in downsizing, but … are restricted from doing so by a lack of suitable options”.
The Government’s target to build 1 million homes by 2020 is commendable and I do not want to sound churlish, but even that target will not solve the affordability problem. By the way, if we do nothing else, can we ban the use of the word “affordable” where it does not belong? I checked the Concise Oxford English Dictionary this morning; it says, “have the means”, or “be rich enough”. It does not say “receive minor subsidy on overinflated full-price option”. As Shelter has pointed out,
“Developers are allowed to use secret ‘financial viability assessments’ to show that they’re not going to make a ‘competitive’ profit”—
my noble friend Lady Young has already covered this very ably—
“A whole industry now exists to provide such assessments, showing that affordable housing isn’t viable any more”.
Savills has forecasted that a further 100,000 homes are needed each year to have any effect on affordability—real affordability. The worrying contraction in the construction industry has not been felt so keenly in the housebuilding sector, although it has slowed down. Another concern is that we import a significant proportion of building materials and the costs have increased this year because of the weak pound.
The Prime Minister has promised to “make it my mission” to solve the housing problem. This is powerful and welcome. However, the extra funding that she announced for councils and housing associations—as the noble Lord, Lord Horam, has already said—will build 5,000 houses a year, bringing the projected total to 32,000 new council and housing association properties per year. This is good news, but a modest start. Mood music can be important, however, and perhaps council housebuilding will become so respectable that they will not have to be sold off afterwards.
I turn to Help to Buy, which presses all the political buttons for the Government. It accounts for a third of private sales of new homes. Like a flock of migratory birds, Help to Buy moves south to warmer climes, favouring areas that are not traditionally Labour heartlands. It is great that 135,000 families have benefited since the launch in 2013, but most of the beneficiaries of taxpayers’ money could have afforded to buy a home without such a scheme and 40% of the lucky households earn more than £50,000 a year. Experts as varied as Shelter and the Adam Smith Institute have said that Help to Buy will do nothing to meet real housing need and pushes up property prices.
I am all in favour of building companies reaping rewards for their work, but the five largest stock market listed builders made £3 billion worth of profit last year. The chief executive of Persimmon is likely to receive a £130 million payout, and half of Persimmon’s house sales are through the Help to Buy scheme. If we are to subsidise building companies—I am not fundamentally opposed to this—it should be done to build properties for people in greatest need. The Adam Smith Institute said of Help to Buy:
“This scheme is being used by investment bankers and doctors. They are certainly not the sort of people who the taxpayer should be subsidising”.
I pay tribute to John Healey, the shadow Housing Minister, for his hard work and clear message. He has built up a formidable knowledge of the housing crisis and what is needed to fix it over a period when six government housing Ministers came and went—if they had been tenants, no landlord would have wanted them. Labour has promised to create a government department for housing and will launch the biggest council housing programme for 30 years. It will make 4,000 new homes available to people with a history of rough sleeping. This would not mean borrowing from current spending but a return to the level of capital investment we had in the last year of the Labour Government. John Healey feels that the public loss of faith in the power of the state is due largely to the Government’s “small state” thinking, and that Governments have an important role in leading the way on housing. He calls for a cross-party consensus on public and private housebuilding, and I wholeheartedly agree with his views.
Lord Stoneham of Droxford (LD)
My Lords, I am pleased to speak in this debate from these Benches. These days I am not able to speak very often in the House but, given my experience of chairing three housing associations over the last 14 years, I would like to contribute to this debate. I declare my register of interests, particularly as chair of Housing and Care 21, a housing association providing retirement housing.
Housing associations are not perfect but I have always appreciated that there is huge potential to improve their performance and make their operations more effective. That is what I have done in that sector over the last 14 years. Housing associations are a force for good. They have huge commitment, the potential to build many more homes and a record of delivery. I asked the chief executive of my housing association what he considered was the single most important proposal that we could put to the Government in this debate. He said that we simply need greater certainty and continuity of appropriate policies.
The problem is that housing does not benefit from the mentality of politicians who are always looking for short-term fixes, prefer policies which provide partisan and party advantage and whose timeframe does not go beyond five years. Over the last seven years, the Government’s partisan advantage and focus has been to get people to buy more homes. The coalition had to work hard to engender any interest in social housing but at least we delivered on what was agreed. The higher rent policy—the so-called affordable rents—provided the mechanism to build so-called affordable homes for rent to reduce the amount of grant paid out. We on these Benches warned at the time that it would be more expensive in the long term to do this and would simply put pressure on the housing benefit bill, which it has. Now, despite commitments from the Government to the contrary, we face a 1% reduction in rents, which has simply led to housing associations reducing their development and investment plans. We also have the unresolved issue of the housing allowance rent caps. Certainty on those two issues going forward is now essential.
What other issues should we be looking at as a sector? First, it has been mentioned already in this debate that it is absolutely ridiculous for the Prime Minister to say that she will take charge of housing. As Michael Heseltine said last weekend, we need a gauleiter for housing at Cabinet level. That person should bring in people from the sector who know how to deliver on housing, exactly as Macmillan told us how to do it in the 1950s.
The second issue we need to resolve is that housing associations should concentrate on their social purpose, which is to build homes for people of modest means. In my view it is hugely worrying that they are being diverted into speculative building as part of a new business model to fund social housing. If this goes on, it will end in disaster and is a distraction from housing associations’ proper focus and what they are good at doing.
Stability and continuity of policy and partnership working are essential. I agree with every single word of the speeches of the noble Lords, Lord Kirkham and Lord Horam. As my noble friend Lord Stunell said, one problem is that private builders will not build more than 150,000 to 180,000 houses per annum. Sadly, their business model depends on rising prices and they will not want greater supply bringing prices down. I say with respect to the noble Baroness, Lady Neville-Rolfe, that this business is not like Tesco. It is a cyclical business full of huge risk. Every time we have a cyclical downturn, capacity in the sector is wiped out. That is why it is very difficult to get productivity up unless we have continuity. I emphasise that the most important thing Macmillan demonstrated was that for the sector to be effective a partnership is required between the public and private sectors. That is needed if we are to increase the supply of homes. That is the lesson from that time and that is what is urgently needed now. Now we also have housing associations to provide a major source of potential for more development. They can also act in a countercyclical way, as the noble Lord, Lord Horam, explained.
I share the scepticism about short-term fixes such as Help to Buy. That scheme may be good politically but it has led to price increases. Somebody described it as a cocaine fix for private developers. We have to recognise that in many respects that policy has put housing out of reach for even more people. There is a huge capacity for improving the supply of housing but it requires leadership, partnership between the private, public and voluntary sectors and a realistic timeframe for achievement.
Viscount Hanworth (Lab)
My Lords, the tenets of a political ideology can endure for a very long time, even when they have become utterly inappropriate to current circumstances. The nostrums of Margaret Thatcher were absorbed by members of the present Conservative Government when they were adolescents or young political aspirants and they have been followed by some of them without a second thought. One of the aims of Margaret Thatcher’s Government was to ensure the growth of a so-called property owning democracy. The idea was a simple one: by giving ownership of their houses to council tenants, a significant number of erstwhile Labour supporters could be converted to property-owning Conservative voters.
Under the Housing Act 1980, which established the right to buy, local authorities, which had hitherto been responsible for as much as a third of the nation’s accommodation, would have their responsibility for housing radically curtailed. Their role would be taken by commercially orientated housing associations and by a building industry no longer entrammelled by the interference of government. Half the proceeds from the sales of council houses were paid to local authorities; but, instead of being allowed to spend the money on building more homes, they were compelled to use it to reduce their debt. It is remarkable that, in spite of this programme, the objective of increasing property ownership is now further from being realised than at any time in recent history. According to official figures, the proportion of home ownership in England has fallen to its lowest level since 1985, while the number of people privately renting is now higher than it was in the early 1960s.
The Government’s reaction to the difficulties of first-time buyers, in the face of the scarcity of accommodation and exorbitant house prices, has been to establish the Help to Buy scheme, in pursuit of the Thatcherite nostrum. In 2013, George Osborne set aside £7 billion for this purpose and, on the eve of the recent Conservative Party conference, a further £10 billion was promised. It is extraordinarily inappropriate to address the scarcity of affordable properties and the problem of inflated house prices by a scheme that can serve only to stimulate demand.
We also need to ask who is being helped to buy. The truth is that many people who can well afford to purchase property from their own resources are being helped with their mortgages. No less an authority than the Daily Mail has recently drawn our attention to this extraordinary misdirection of public funds. The paper has asserted that four in 10 recipients have been earning more than £50,000 per annum and one in 10 has been earning at least £80,000. More than 5,000 purchasers have had six-figure incomes.
It is also reported that the major housebuilding firms have made unprecedented profits as the housing crisis has worsened. Together, the four most powerful companies—Persimmon, Taylor Wimpey, Barratt and the Berkeley Group—made more than £2 billion in pre-tax profits last year. Much of this money has come from Help to Buy. Moreover, these developers have been able to evade their responsibility to provide a modicum of affordable housing by exploiting the provisions of the Growth and Infrastructure Act 2013, which has allowed them to appeal against the requirements of the local authorities.
At a time when housebuilding has been at its lowest level, the private rented sector has ballooned in size. It now accounts for just over 4.5 million households—nearly double the 2.3 million of 2004. The new figure represents 20% of the total, whereas in 2002 it was only 10%. On average, those buying their home in England with a mortgage spent 18% of their household income on mortgage payments, whereas rent payments were 28% of household income for social renters, and swallowed up 35% of the household incomes of those renting privately.
Of course, many properties in the private rented sector are former council houses that were once provided by councils at affordable rents. The inflated costs of renting such properties are being met in part by the payment of housing benefit, which makes a major demand on the Government’s finances. The Office for Budget Responsibility has forecast that spending on housing benefit in 2016-17 will amount to £23 billion.
There is a clear need for a far greater supply of affordable properties. The only effective way of providing this is to give local authorities the remit to oversee a major housebuilding programme. The Government have at last become aware of this necessity. They have plans for a new generation of council and housing association homes and they have set aside £2 billion for the purpose. The inadequacy of this provision is stunning. It should be compared with the far greater sums of money that have been devoted to Help to Buy and it is dwarfed by the size of the annual budget for housing benefit.
It will not be an easy task to revive the housebuilding activities of local authorities. Most of the organisational structures that served the building programmes of the 1930s and 1950s have been lost. The architects’ offices have closed and the direct labour force has evaporated. It will be perilous to rely on the services of the large contractors, which have hitherto profited hugely at the public’s expense. I also observe that the planning regulations, which had been developed and refined over many years, have recently been junked by the Conservative Government in the act of vandalism that established their National Planning Policy Framework. The next Labour Government will face a gargantuan task.
Lord Best (CB)
My Lords, I congratulate the noble Lord, Lord Smith, on initiating this excellent debate, which has demonstrated an incredible consensus across the whole House on a number of the key issues. I am only sorry that I can do justice to only one aspect of the housing availability and affordability debate. However, as a preface, I congratulate the Government on much of the policy thinking in their earlier housing White Paper, and now the announcement by the Prime Minister of a £2 billion grant fund for councils as well as housing associations to deliver 25,000 new homes for so-called social rent. This may be a modest part of the 1.5 million homes to be built by 2022, and obviously is only a start, but the Government’s action signifies a recognition of the need to target those who can afford only a modest rent, demonstrating a significant move away from the higher-rent policies that have been leading even the charitable housing associations to turn away the poorest in society.
The issue of affordability also highlights the crying need for the good intentions of Ministers at the Department for Communities and Local Government not to be continually undermined by the Department for Work and Pensions. The DWP has been disastrously cutting, capping and freezing the support it provides to enable poorer people to afford a proper home. This interdepartmental conflict is currently undermining the provision of supported housing for vulnerable and older people, and it undermines the Homelessness Reduction Act that I had the honour of piloting through your Lordships’ House, because the DWP freeze on the local housing allowance, which caps rent for those who rely on benefits, causes homelessness when landlords inevitably turn out or turn away anyone in receipt of benefits.
The issue I want to address is the nation’s abject dependency on the sector which creates by far the majority of new homes: the private housebuilders. Despite making record profits, this industry, dominated by half a dozen volume housebuilders, is failing us badly. The catalogue of failures includes: poor quality in construction and design; bad customer care; miserable space standards; rip-off leases for houses, with escalating ground rents—on which the Government are acting, and I congratulate them; deteriorating satisfaction of buyers; avoidance of housing for older people, where profits are lower; rejection of brownfield sites and a concentration on the easier greenfield opportunities; little concept of creating properly planned places; sitting on land with planning consent until prices go ever upward; and, perhaps worst of all, reneging on Section 106 agreements and wriggling out of obligations to provide affordable homes for local people, on opaque grounds of “viability” and housebuilders’ “right” to make at least 20% profit on the deal. While the major housebuilders’ shares have risen by 127% in the past four years, compared with 21% for the FTSE All-Share Index, and profits in companies such as Persimmon rose by more than 30% last year, I believe the private housebuilding sector has lost the confidence of the whole nation.
What is to be done? After the last war we nationalised the development of land and in theory what is built is determined by the community, in particular the local planning authority. But we are dependent on a planning system that has been starved of resources and now sorely lacks the capability to enforce quality housebuilding and place making. If planners can stand firm, it is the price paid for the land that meets the cost of including affordable homes and achieving quality. We must restore authority and capacity to the planners, who are our front line against the social and environmental costs that we will otherwise suffer at the hands of overpowerful housebuilding interests. I am pleased to note that discussions are afoot, led by the RIBA president, Ben Derbyshire, on the sharing between councils of good practice in design and place making, strengthening the resolve and raising the profile of the planners upon whom we depend.
I confess to being very surprised by the announcement at the Conservative Party conference, to which other noble Lords have referred, that a further £10 billion was to be provided for the Help to Buy scheme, dwarfing the new investment in social housing. Alastair Stewart, analyst at Stockdale Securities, calculates that purchasers are paying 5% to 7% more for a Help to Buy property in order to take advantage of the government-funded equity loan that does not attract any cost for five years. Help to Buy may well turn out to be a very bad deal for purchasers, who have to start paying escalating fees five years down the road and must pay back the whole of the equity loan when they move, but who seem unlikely to get back what they paid for the property. Although the housebuilders are hooked on this subsidy, I am certainly advising my 30-something year-old son to avoid the temptations of Help to Buy. It is unwise for government to feed the housebuilders’ addiction.
Therefore, there have been important steps forward for availability and affordability of housing. But sadly, with housebuilders apparently too big to displease, there has also been a step back. The Minister’s response would be much appreciated.
Lord Morris of Handsworth (Lab)
My Lords, I welcome the housing needs of the nation being, once again, back on the political agenda. In recent weeks we have heard announcements on housing from the Prime Minister and the leader of the Opposition. In this debate I will resist the temptation to say, “Too little, too late”. Instead, I will say thanks to my noble friend Lord Smith of Leigh for bringing forward this important debate. As a recent past chairperson of Midland Heart housing association, I maintain an interest in the debate on social housing in general.
For many families the current debate on housing is like waiting for a bus. You stand at the bus stop in the pouring rain and keep looking at your watch for what seems like hours, but there is not a bus in sight. Then, without warning, two buses turn up together. Sadly, they are both full and you cannot get on, so the wait continues. That is the hypothetical experience of many families today. I use that analogy because in the current conference season both major parties made bold pledges on how to solve the current housing crisis. I use that term because that is precisely what it is—a crisis. There is more homelessness, more rough sleepers and little hope for the upcoming generation.
During the recent conference season both major political parties pledged to build or make available significant numbers of additional units. The homeless believe that there is hope, but that hope has to be transformed into practical results. Housing is not just about politics; it is about life and reality. The housing shortage underpins a degree of selfishness in our society. We must therefore find a way to resolve the lack of political capital being expended.
If we paid half the attention we pay to Brexit and used half the energy we expend on it on housing instead, I suspect the housing crisis would disappear almost overnight. As we have heard, the Prime Minister has announced an additional investment of £2 billion in affordable housing, which is equivalent to 2,500 homes over two years. However, those with housing needs are not persuaded, and for good reason. It is to be noted that there has been a downward trend in the number of affordable houses being built. The figures are arguable, but it is suggested that around 60,000 were built in 2010 and only around 32,000 in 2015-16. There is therefore a challenge as to how that figure can be increased, because the demands are growing daily.
The Chartered Institute of Housing confirms that the Government’s focus is on affordable homes and not social homes. The social homes requirement is being left behind. There is therefore a debate to be had about equity and justice with regard to public concern about housing. As we speak today, the current rate of housebuilding by government is at its lowest level for generations. It is clear that there is a crisis in the sector. It is widely reported that estate agents have the lowest stock of homes in 40 years, with new instructions falling for the 14th consecutive month, driven by political uncertainty that is underpinned by Brexit fears. It is highly likely that, as the economy tightens, the housing sector will be subjected to further pressures and uncertainty. What is now required to maintain confidence and stability in the housing sector is leadership and support from government.
All of us are therefore required to make a contribution by advocating a recognition that housing is a human need and demand. Today’s debate takes us further towards that reality.
Baroness Grender (LD)
My Lords, I thank the noble Lord, Lord Smith of Leigh, for this debate, although not necessarily for the timing. If I am slightly less coherent today, it will be because last night I slept out for the charity Depaul UK, along with my colleague, my noble friend Lady Suttie. Depaul helps young people across the country who are homeless or at risk of homelessness. I got about two hours’ sleep on a pretty damp and cold paving slab, but as I left to get a bus and return in the morning to my warm home I passed plenty of people along the Strand for whom it is much more than one night. The Depaul Sleepout is a powerful event to change perceptions about people who experience or are at risk of homelessness. It is, as their CEO Mark McGreevy, says,
“a humbling, valuable and memorable experience”.
It has been a challenge to be here today, but it has given me a small insight and I am grateful only that I am addressing your Lordships and not handling heavy machinery right now. Unless we solve the issue in this worthwhile debate and dramatically improve the availability and affordability of housing, more people will end up at the very end of the food chain we have been describing, and too many will face homelessness.
Last March in this Chamber there was a jaw-dropping moment. The noble Lord, Lord Forsyth, set out with some eloquence the need for councils to build more homes and for capital to be released to do that. In the debate on the report entitled Building More Homes from the Economic Affairs Committee on 2 March he shared with us his ideological struggle to reach that conclusion. It was a startling moment for anyone who has campaigned on housing over a sustained period. Surely, if he can be persuaded, the day is won, the economic argument is won, and even the driest monetarist can see the value. Substantial building of council housing will start straightaway. My natural Lib Dem optimism was getting the better of me.
On the morning of the Prime Minister’s speech at her party conference, the headlines of a new era of Macmillan housebuilding gave me another burst of optimism. With Gavin Barwell in No. 10—a former Conservative Housing Minister who understood the bigger picture—council housebuilding in vast quantities was surely about to be realised. No, wrong—again my natural optimism got the better of me. Twenty-five thousand properties were promised over a five-year period—5,000 a year, nothing like the 300,000 council houses in one year alone that Macmillan built. Once more, we are condemning a generation to accept that affordable housing, whether for rent or ownership, is beyond their reach.
The announcement was, as the noble Lord, Lord Best, said, a welcome step, but as the Resolution Foundation said at the time:
“If Theresa May wants to lead the way on facing up to our housing challenge she will need to ensure building happens on a scale we haven’t seen for a generation, with councils backed all the way to do so”.
I ask the Minister to look again at the superb report from the Economic Affairs Committee, about which I have a central question for him today. Does he agree with the main argument that the committee made:
“Local authorities and housing associations must be incentivised and enabled to make a much greater contribution to the overall supply of new housing. Without this contribution it will not be possible to build the number of new homes required”?
In other words, if local authorities can borrow to build swimming pools but not to build houses, we will not find a long-term solution to this problem of affordability. In particular, I would like his view of the one central recommendation on that from the committee. How can we reach a point where local authorities are unfettered and allowed to borrow above the cap, as in Scotland? The committee saw this as the surest and simplest way to increase housing volume. I very much appreciate there is no silver bullet, but it seems to me that that is a good bullet to explore.
In the House of Commons on 14 September, Wera Hobhouse, our spokesperson for this area, asked Sajid Javid about this issue. He said:
“I have been clear that where local authorities believe that the borrowing cap is in the way of their ambitions to build more, they should come and talk to us because we want to do deals with them”.—[Official Report, Commons, 14/9/17; col. 1018.]
Could the Minister update us on that and tell us how many local authorities have approached the Government, how the Government have ensured that local authorities are aware of that option and whether the Government have assessed the impact in Scotland of the lack of restrictions and a cap? My understanding is that this has not had the significant or terrible impact that seems to be suggested down south.
I would also like to ask very quickly about replacements. Since 2015, this Conservative Government have overseen the sell-off of more than 25,000 council homes and replaced fewer than one in three of them. I remember a very significant period of negotiation when David Cameron wished to announce right to buy. We were in the coalition Government and said there had to be a commitment to one-for-one replacement. Does the Minister still believe it is possible to reinforce that one-for-one replacement and does he regret the failure so far to do it?
Where do we end up without sufficient building? Too many families on low income in the private rented sector and 80% of all public investment in housing spent on benefits rather than an asset for the future. The reality of that is 118,960 children in temporary accommodation. Only a dramatic change in government policy can turn this around. I hope we see one soon.
Baroness Warwick of Undercliffe (Lab)
My Lords, I congratulate my noble friend Lord Smith of Leigh on securing this debate on one of the most pressing issues affecting this country. I wholeheartedly endorse both his analysis and his conclusions. I declare an interest as chair of the National Housing Federation, the trade body representing England’s housing associations.
I want to focus on the positive role of housing associations in increasing the availability and accessibility of housing. At times, unfortunately, that has been in spite of government policies. I hope that is changing. Last week, the Prime Minister announced £2 billion of additional funding for affordable homes, including those for social rent. After years of distrust and misunderstanding of the social housing sector, the Government have finally grasped the nettle of the housing crisis in this country. This could in itself be a watershed moment for housing.
It is not enough to talk about the aspiration for home ownership. As a nation, we have neglected housing for the most vulnerable. The debate slipped away from where need was greatest, at times forgetting the fundamental principle that every person deserves a quality home they can afford. No event has highlighted this more painfully than the tragic fire at Grenfell Tower. Whatever the outcome of the public inquiry, it is clear that the residents of Grenfell Tower were failed by the system that should have protected them. We must ask whether successive Governments have put in place sufficiently robust measures to protect residents.
In 2010, government disinvestment from social housing, combined with a sudden drop in funding for local government, meant far fewer homes were available and affordable. Research by the National Housing Federation shows that the nation's commitment to building homes fell from £11.4 billion in 2009 to £5.3 billion in 2015—from 0.7% to 0.2% of total GDP. This was at a time when more than a million families remained on the housing waiting list. Furthermore, the cumulative impact of welfare policies, including universal credit, has made many people less secure in their homes and put them at risk of rent arrears.
Policies such as right to buy may support people in their aspiration to reach that first rung of the housing ladder, but when this is not balanced by building truly affordable homes, the market cannot work. The cost and distribution of land is an additional barrier to the availability of affordable housing. I entirely agree with the points made about this by my noble friend Lady Young of Old Scone and the noble Lord, Lord Best. Too often, in planning and viability assessments, economic value is prioritised over the social value development can offer, leading to unaffordability. Will the Government give public bodies the powers to dispose of land based on quality, tenure mix and speed of delivery?
Housing associations and local government have campaigned tirelessly for those left behind by the broken housing market. They have maintained delivery of affordable homes, despite Government and private developers looking elsewhere. Nearly 50,000 social-rented starts were made last year by housing associations, 74% of which were delivered outside the affordable homes programme. The housing association sector has a track record of finding innovative ways to continue to provide homes for those who need them the most, while also investing in communities as part of our enduring social purpose. This is not something the sector has been able to do on its own: it needs support from the Government but, importantly, it also needs a positive relationship with local authorities. I am heartened to see how housing associations and local authorities work together when united in a single purpose of increasing the supply of new homes.
I am glad that the Government are at last catching up. The newly announced money can go some way towards tackling the huge numbers of people on the waiting lists for housing. Even 5,000 homes a year will make an immeasurable difference to the lives of the families within them, and I for one unequivocally welcome this policy as a much-needed first step. I hope the positive outcomes that housing associations will generate from this additional investment will encourage the Government to invest further in social rent in the future. I also welcome the long-awaited certainty about the future of housing association rents. The rent cut imposed in 2016—this one policy—took £3.9 billion out of the sector’s business plans to build more homes. The Government need to do more long-term thinking and to consult with the sector and tenants to design a long-term approach to rents.
I want to make one final point about social housing. For older people, the homeless, those with mental and physical illness, and the victims of domestic violence, supported housing is their only way to access housing that will enable them to live independently. Some of the most vulnerable people have been hit by the Government’s proposed application of the local housing allowance to supported housing. Recently published data showed an 85% drop in the number of new supported-housing homes that are planned to be built. The Government have to sort this out. We can only say we have a fair housing market when these lifeline services are protected.
Both the Government and the Opposition recently committed to a comprehensive review of social housing policy and how it serves communities. We have a rare opportunity to make a real, meaningful change and to rebalance our housing market to help those left behind. This is an issue that now goes beyond party politics. It is the beginning of a journey to make housing available and affordable for all. I hope that all sides of the political debate are now united in delivering more homes for those most in need and, as my noble friend Lady Donaghy said, in ensuring that those homes are genuinely affordable and accessible.
Lord Shipley (LD)
My Lords, I remind the House of my vice-presidency of the Local Government Association. I thank the noble Lord, Lord Smith of Leigh, for enabling us to have this debate. It has proved to be extremely important: it could serve as a compendium for the Government of both what is wrong with housing in this country and what they should do about it.
From these Benches, my noble friend Lord Greaves reminded us that the Government have promised to build more homes but their policies have not delivered them. He also emphasised the need for greater local flexibility. He said, rightly, that the planning system is not to blame because nearly all planning applications are approved, with several hundred thousand unfulfilled permissions as we speak. He also reminded us that neighbourhood plans can build more houses than is the case with top-down planning.
My noble friend Lord Stunell reminded us that the Government want to build more homes, and I agree that they do, but he pointed out the obvious problem, which is that there is a ceiling on the number of private homes that a private builder will build without a subsidy. He also reminded us that planning is not a bottleneck, and he emphasised the importance of building on smaller sites because you build more quickly. He then asked how we build the extra homes. He said that to deliver a steady, consistent investment, we require local authorities to build more and that they can produce best value for money. He too pointed out the impact of Help to Buy on rising prices.
My noble friend Lord Stoneham of Droxford talked about the value and potential of housing associations, but he pointed out their need for certainty and continuity of policy. He raised the question of policies on rents—subsidy levels, the impact of rent levels on the ability to build more new homes and the impact of rent levels on those of modest means. He also reminded us of the problems caused by the business model of private housebuilders and the need for us to focus on and promote public/private partnerships. He too raised questions about Help to Buy.
My noble friend Lady Grender reminded us of the scourge of homelessness. She too, in the hours before the Prime Minister’s speech, experienced that burst of optimism that the Government were going to build council housing at a level not seen for a generation. However, that shows no sign of being fulfilled. She asked the Minister whether the Government would ever get to the situation where it replaced sold council houses on a one-for-one basis.
The last 20 years have seen 15 Housing Ministers and over 100 Bills affecting housing policy. Despite all that effort, we have built 100,000 homes too few every year for those 20 years. The Government admit that we have a broken housing market. In recent years, public investment in housebuilding has declined by half, when housing benefit costs have almost doubled because of the shortage of homes and rising rents. The Government need to build more homes that people can afford to live in—that should be the Government’s strategic aim.
Surely it was foreseeable that, unless action was taken to build more social homes for rent, rents, homelessness and government costs would rise. We have ended up in a situation where 20% of households in this country are in private rented accommodation. The total has risen by 1 million households in the last 10 years. The Government are still not getting to the root of the problems of housing supply, and that is because they promote owner-occupation to the exclusion of building enough homes for affordable and social rent. As an example of the problems that this causes, since 2015 the Government have overseen the sell-off of over 25,000 council homes, replacing just one in three of them.
In March this year, the Chartered Institute of Housing said:
“The government’s ambition to solve the housing crisis will not be possible if an imbalance in housing funding continues”.
The institute pointed out that just £8 billion of the £51 billion earmarked for housing up to 2021 will directly fund affordable homes. The consequences of that policy are clear.
As we have heard, there is some evidence that the Government are responding in aspirational terms to building more homes generally. They now accept that there is a housing need amounting to 266,000 homes a year for the next 10 years. My question to the Minister is: do the Government have an action plan that will deliver those homes?
The Prime Minister’s announcement at the Conservative Party conference that the Government would put in an additional £2 billion for affordable and social housing sounded better than it has proved to be. It is just one-fifth of the extra subsidy going into Help to Buy and from it we will apparently secure only an extra 5,000 homes for social rent a year. That is a very small number, which is described as “a start”, but we have known about this problem for some considerable time and we should not be in the position where we are still trying to start.
There is a value to be addressed here. I feel very strongly that someone on the living wage should be able to afford to live reasonably close to where they work. Many are not able to do so because of the cost of housing. If this is not addressed, things will only get worse. I suspect that the Government’s announcement and their Green Paper will not do much to build the volume of social homes for rent that are needed. The Government acknowledge that there is a problem but it is very hard to see how the announcement by the Prime Minister will deliver a long-term solution to the unaffordability of housing for those on low household incomes. Social housing units now stand at 4 million, whereas there were 5.5 million just over 30 years ago. Successive Governments have not replaced homes sold under right to buy. I think that we are reaching the point where local housing authorities should have the right to decide whether homes in their area are sold.
As we know, home ownership is at an all-time low. For young people under 35, over the past 15 years it has dropped from 58% to 37%. That is a huge decline which cannot be allowed to continue. We have already heard the comment that I am about to make but I agree entirely that housing needs Cabinet-level representation—it needs a higher focus in Whitehall.
In addition, housing associations and councils must be seen as part of the solution, with sustainable long-term financial frameworks for councils to build more new homes, including for supported housing, through borrowing to build against their assets. I particularly appreciated the contribution of the noble Lord, Lord Horam, who identified a blockage in the Treasury on this issue.
I think that we have to redefine the meaning of “affordable”. The noble Baroness, Lady Donaghy, explained the problem. Maybe it means about 30% or less of household income. We have heard about viability assessments not being public, and that is something that the Government have to look at. The Government too have to change the rules to ensure that public land disposal enables new homes to be built. We should not require public bodies to sell at best consideration, something that the White Paper promised. We should instead be using social return as a basis for decision-making, as well as financial return.
This debate is all about availability and affordability, and has turned into a challenge to Treasury orthodoxy. It has been a very good debate, but as we speak, homelessness continues to rise and more than a million households are awaiting a social home to rent. That is an unacceptable situation.
Lord Kennedy of Southwark (Lab)
My Lords, first, I join other noble Lords in congratulating my noble friend Lord Smith of Leigh on securing this important debate on the availability and affordability of housing. Secondly, as usual in these debates, I refer the House to my declaration of interests, in particular the fact that I am a councillor in the London Borough of Lewisham and a vice-president of the Local Government Association.
It is accepted that we are in the midst of a housing crisis, with people being let down on every front. As the noble Baroness, Lady Neville-Rolfe, said, to lower prices we need to increase supply. We have the lowest levels of home ownership for 30 years, and the homelessness crisis on our streets is a scandal. If you walk to this House from any of the nearby mainline stations such as Charing Cross, Waterloo or Victoria, you will be met with people living on the streets. If you arrive at Westminster Tube station and go to the entrance to the Palace, you will usually be greeted by a rough sleeper. In the fifth-richest country in the world, in one of the richest cities in the world, that is truly shameful.
The Government did put the Homelessness Reduction Act on the statute book before the election, but they have provided completely inadequate sums of money for local government to deliver on its obligations. The cap on housing allowance, and the pressures that brings, means that more and more people are becoming homeless. Councils are housing over 75,000 families in temporary accommodation, including over 118,000 children. The situation is scandalous, and damaging to families and children and their development.
The noble Lord, Lord Bourne, who is not in his place today, has on many occasions expressed his determination to sort out the broken housing market, as have his friends the Secretary of State for Communities and Local Government and the Prime Minister herself, as did her predecessor. But the actions, no matter how well intentioned, have not delivered on the stated aim of fixing the broken housing market. The Government are clearly under pressure and struggling to find a way forward.
Just look at where we have got to in recent times. The Housing and Planning Act must rank among the worst, most ill-thought-out legislation promoted by any Government in recent years. Some of the more contentious measures were either formally dropped or lost in the department as the reality of implementation dawned: pay to stay and the forced sale of council housing, to name but two. We come then to the housing White Paper, the build-up to and crescendo of which never quite matched the reality. Then there is the recently announced housing Green Paper. It is fair to say that had we started with the Green Paper, the solution would never have been the Housing and Planning Act. We need more homes built across all tenures.
It is a laudable aim to want people to own their own home, but I wonder if there should be greater focus from the Government on building more homes. We need to consider carefully the serious problems with schemes such as Help to Buy, which overheated the market making homes even more expensive, rather than building more homes for sale.
I recall the debates on the Housing and Planning Act with the noble Baroness, Lady Williams of Trafford. We could never get a clear idea of the cohort that would benefit from the Starter Home programme. It never appeared to me to benefit the classroom assistant, the nurse, the teacher or the small business person. I agree with many of the comments of the noble Lord, Lord Kirkham, when he called for the building of more homes.
It is not councillors on planning committees or planning departments holding up development, but the problem of land that could be built on not being built on by the developers. Hundreds of thousands of planning permissions have been granted and not a brick has been put down. That highlights the problem, as the noble Lord, Lord Stunell, said. But planning departments are underresourced and action needs to be taken, as nationally set planning fees mean that council tax payers are subsidising planning services. That really needs to end, as my noble friend Lady Young of Old Scone said.
I have told your Lordships before that I grew up in council accommodation. I will always be very grateful to Southwark Council for providing my parents with a council flat, and then a council house, that was warm, safe and dry and at a rent my parents could afford. My parents worked until they retired and they paid their taxes. They did not own a car when we were young, but could afford to take us on holiday every summer and pay for us to go on school trips. We were happy and able to take up the opportunities that were available to us. That was the benefit of council housing. It liberated our family and enabled us to get on. The right reverend Prelate the Bishop of Chelmsford referenced this in his remarks. I am the eldest of four children and we are now all home owners.
The Government must do more to support real affordable housing in the public sector at social rents. In London and other cities, the affordable rent product promoted by the Government is unaffordable, as my noble friend Lady Donaghy said. I hope that the Chancellor of the Exchequer will lift the cap on borrowing for local authorities for social housing. It really is needed to help tackle the broken housing market, not just for young families but for older people who want to downsize to a smaller property. There is a looming problem in sheltered and supported housing that the Government need to get a grip of, as my noble friend also said.
The private rented sector works for many people, and there are some excellent private sector landlords who provide homes that people want to live in. But there are also many problems with the rogue elements of the private rented sector, and much more needs to be done to solve this, as my noble friend Lord Smith of Leigh referred to.
I want to pay tribute to the work being done in Newham by the mayor, Sir Robin Wales, and his team. In 2013, Newham became the first local authority in England to require mandatory licensing of all private sector landlords operating in the borough. The scheme expires at the end of December 2017, and Sir Robin and his team applied to the Government for permission to continue it for a further five years. The figures in the first five years are quite startling. Newham has initiated 1,217 criminal prosecutions against landlords, recovered over £3 million in unpaid council tax and banned from operating 28 of the worst landlords. The police have made 745 arrests for a variety of offences during licensing operations, and £300,000 of housing benefit fraud has been detected and stopped. What Sir Robin and his team are doing is making a real difference: tackling rogue landlords, driving up standards, protecting private sector tenants, recovering unpaid council tax and detecting benefit fraud and other criminal activity, including slavery. The Government should be supportive of the excellent work being done by Sir Robin and Newham Council and look at ways that they can support this forward-thinking authority and encourage other local authorities to develop similar schemes. I am not sure if the noble Lord, Lord Young of Cookham, is aware of this scheme or has been to Newham, but I know he would get a very warm welcome there—perhaps we could go together.
There are two other issues affecting the private rented sector that we need to see some action on. The first is client money protection. Following on from the Housing and Planning Act, a working group was set up, chaired by my noble friend Lady Hayter of Kentish Town and the noble Lord, Lord Palmer of Childs Hill. The consultation closed in October 2016 and the report was published on 27 March 2017. The next day, in reply to a Question from my noble friend, the noble Lord, Lord Bourne, announced that the Government were going to go ahead with a mandatory scheme. That was great news, protecting the money of both tenants and landlords from rogue letting agents.
Secondly, we have the ban on letting agent fees, such as inventory fees, tenancy review fees and agent admin fees. For tenants who are often forced to change homes every year, these charges cost hundreds of pounds of money that they do not have. The CAB reported recently that 42% of renters had to borrow money just to pay their fees, and that is on top of rent deposits. The ban was announced in the Autumn Statement in 2016 by the Chancellor of the Exchequer. It then appeared as a pledge in the Conservative Party manifesto and was announced in the Queen’s Speech on 19 June. But since then there has been very little. Those two fairly simple measures, despite reviews, announcements, pledges and commitments, have made very little meaningful progress. No one could accuse the Government of acting in haste in bringing these measures into force.
Our housing association sector, whose very ethos is about people living in decent homes that they can afford, is struggling with a lack of investment in homes for social rent, so it has worked to deliver other forms of ownership and then cross-subsidised those with the lowest rents. The mandatory rent cut has taken £3.9 billion out of the sector business plan so far, as the noble Lord, Lord Stoneham of Droxford, mentioned. The sector needs certainty so that it can develop with confidence and play its part in delivering the homes that we need.
I also fear that the Government operate in silos. Housing benefit is now well over £20 billion a year. The Government find themselves in a perfect storm but refuse—for reasons that I hope the noble Lord, Lord Young of Cookham, will explain when he speaks—to tackle this with the urgent action needed. Home ownership is at an all-time low. Social housing is under pressure. The borrowing cap needs to be lifted so that more homes can be built. There is huge pressure in the private rented sector, with rents in certain areas rocketing, and the market is overheating. Housing associations, housing co-ops and other alternative providers are frustrated by the Government’s failure to allow them to deliver what is needed. There has been a failure to deliver even small things that have been announced by the Government, such as client money protection and the ban on letting agents’ fees.
It could all be so different. Lifting the borrowing cap would enable more homes at a social rent to be built. Whenever we have met the challenge of housing before, the public sector has had to play its part. That would help with the housing benefit bill and it would also take some of the heat out of the private rented sector, which would also help with the housing benefit bill. If the Government switched their strategy and looked at how we can shift some of the vast sums of money we spend on and with individuals into actual bricks and mortar, that would also have a positive effect on the housing benefit bill, as well as on family well-being, enabling families to thrive. That would have a positive effect on the home ownership market too. I very much agreed with the comments of the noble Lord, Lord Horam, that we need positive action from the Treasury on these matters.
I grew up in a council house and I rented in the private sector when I was younger. Today, I am a home owner. That is quite a normal aspiration for anyone and a positive outcome and something that government policy should enable to happen. But despite everyone seeing that as a reasonable way to proceed, the Government, for ideological reasons, have to date refused to take the big steps needed.
Lord Young of Cookham (Con)
My Lords, I join others in thanking the noble Lord, Lord Smith of Leigh, for selecting this subject for debate and for bringing to his opening speech his wealth of experience as leader of Wigan Council for 26 years—a local authority with major housing challenges. I thank all those who contributed, some of whom have taken an interest in housing for many decades. I first discussed housing with the noble Lord, Lord Best, when I was chairman of a housing association in the early 1970s. All those who spoke in the debate have been motivated by a sense of impatience—and a sense of anger, at times, from the noble Lord, Lord Cashman. That has run right through the debate: impatience at the lack of adequate progress over recent years to meet the legitimate aspiration of every family to have a decent home to live in.
I am conscious that I cannot respond to all the points that have been made in the debate—and when I do not of course I will write. As the noble Lord, Lord Smith, said in his opening remarks, and as others, too, have said, successive Governments have failed to provide the homes that we need. As a result, whether for sale or rent, housing is increasingly unaffordable. As the noble Lord, Lord Smith, told us, an average home to buy in England now costs almost eight times average earnings. Twenty years ago it was three and a half times average earnings.
The right reverend Prelate the Bishop of Chelmsford told us of the social consequences of moving towards a more polarised housing market and the dislocation for families who have to move, and my noble friend Lord Kirkham reminded us of the frustration of young people who cannot get a decent home of their own. Our manifesto commitment is clear: we want to deliver 1 million homes by the end of 2020 and 500,000 more by the end of 2022.
The noble Lord’s Motion has two themes—availability and affordability—and I will address each in turn. I agree with what my noble friend Lord Kirkham said: housing is more important to the man in the street than Brexit.
On availability, in the last Parliament we set out over £25 billion of spending on housing up to 2021 and last week at the party conference we announced another £12 billion of spending up to 2021 in order to tackle the failures at every point in the system. This includes a further £10 billion of new funding for Help to Buy—I will say a bit more about that in a moment—which could help around 135,000 more people to buy their homes, and another £2 billion in additional funding for affordable housing in England.
As a former Treasury Minister, I will say that at a time when there has been intense downward pressure on departmental budgets, the figures that I have mentioned represent a very substantial commitment by the Government to investment in housing and show our determination to do better. As the noble Lord, Lord Stunell, said: yes, we will have to pay and yes, we are paying. I will pass on to the Chancellor of the Exchequer my noble friend Lord Horam’s suggestions about the division of spending into capital and current.
If we want new homes to be built by councils and housing associations, we recognise that they need a stable investment environment. The noble Lord, Lord Stoneham, said that continuity was what his chief executive really wanted. That is why we have recently set out a long-term rent deal for social landlords in England, limiting increases to CPI plus 1% for five years; an announcement welcomed by David Orr, chief executive of the NHF, as,
“a huge change in tone and approach”.
I am grateful to the noble Baroness, Lady Warwick, for her generous comments on some of the recent announcements.
What everyone in this debate wants is to see these extra resources spent effectively and promptly and targeted at those in greatest need. Our policies are already having an impact. In 2015-16 we delivered nearly 190,000 homes in net additions. That number was up 11% on the previous year and was the highest level since 2007-08. We do not yet have the net additions figures for the most recent year, but measures of new-build starts and completions are up again. In the year to June 2017, new-build dwelling starts totalled 164,960—up by 13% compared with the year to June 2016 and the highest for nine years. During the same period, completions totalled over 153,000, an increase of 11% compared with last year. For the year ending March 2017, the planning system granted permission for 304,000 new homes, up 15% on the year ending March 2016 and up 70% on the year ending March 2012. We have policies, which I hope to come to in a moment, to ensure that these permissions are translated into homes for families more promptly than in the past—a point mentioned by the noble Lord, Lord Smith, in his speech.
The message from today’s debate is that, however well we have done and however much better we may have done than our predecessors, it is not enough. We know that there is a lot more that needs to be done if we are going to address today’s unmet needs, such as on waiting lists, mentioned by the noble Baroness, Lady Warwick, and at the same time keep up with future demand while ensuring that we also deal with affordability. Our housing White Paper, which we debated earlier this year, sets out how we will: make more land available and help local areas plan for the right homes in the right places; build homes faster, giving local authorities the tools they need to drive new housing and hold developers to account and assisting local authorities where necessary with extra infrastructure; bring new players into the housing market, reducing the dominance of a few major housebuilders, as mentioned by the noble Lord, Lord Best; and champion modern methods of construction and support new investment, hopefully driving up productivity—a point mentioned by my noble friend Lady Neville-Rolfe. We also want to give local people a say over new development and ensure that they feel the benefits of new infrastructure.
Many noble Lords spoke about planning and the constraints it has imposed on securing the necessary consents. I may be wrong, but I think that there has been a shift in public opinion about the imperative for more homes, as more and more families have children or grandchildren who struggle to get a decent home. I detect a growing, but not universal, impatience with unjustified nimbyism. Of course we should be alive to the need to avoid development that is inappropriate, but in my last years in another place I detected a recognition of the need—and at times a welcome—for well-designed, appropriate development on sites that might have generated a more hostile response in earlier years, particularly if it was targeted at meeting local needs.
Often, the concern has been not so much about the development but about the infrastructure—a point made by several noble Lords in this debate, including my noble friend Lady Neville-Rolfe, who spoke about roundabouts. That is exactly why we have introduced our new £2.3 billion housing infrastructure fund to make sure that the infrastructure is put in first. We launched our prospectus on 4 July and applications closed on 28 September, with the ambition of reaching as many councils as possible. The fund is oversubscribed and we expect to start announcing successful bids in early 2018. The money will be focused on areas of greatest housing need, helping to deliver up to 100,000 new homes.
My noble friend Lady Neville-Rolfe mentioned the release of public land. Again, we are taking direct action there. Since 2011 we have released land or identified land to be released with the capacity for up to 249,000 homes. Once permission has been granted—I think it was the noble Lord, Lord Stunell, who said that there were 600,000 extant planning consents—we are proposing greater scrutiny and transparency of a site’s delivery prospects. This includes more streamlined completion notice procedures and new guidance encouraging more active use of compulsory purchase powers by local authorities at stalled housing sites. Those are just some of the measures we have introduced to secure a step change in the volume of new starts.
Affordability is the other subject of the noble Lord’s debate. Affordability has to be a priority for any Government. Traditionally, affordable homes were provided by local authorities and many questions have been raised in the debate as to why we cannot do what we did in the 1950s. If we could build nearly 200,000 council houses in 1953, why can we not do so now, when the country is more prosperous? The House is grateful to my noble friend Lord Horam for his historical intervention explaining how that commitment came about.
The time has come to think again about our approach to social housing, not least in the wake of the Grenfell Tower tragedy. The noble Lord, Lord Stoneham, made the point that we need that review. In a speech to the National Housing Federation conference, the Secretary of State recently announced that the Government will be bringing forward a Green Paper on social housing in England—a wide-ranging, top-to-bottom review of the issues facing the sector. It will be the most substantial report of its kind for a generation, tackling head-on the issue of affordability—which was the motivation for the social housing movement several generations ago—and looking at the role of social housing in society today. I will ensure that all the contributions of noble Lords in today’s debate are fed in to that review.
However, the context has changed since the 1950s and 1960s, and I will spend a minute looking at this. Housing associations were not significant players then and historically have been classified as private sector bodies. As a result, Governments of all parties have routed public funds for social housing to housing associations rather than local authorities, because housing association borrowings did not score as public debt. That meant that for every given public pound, the Housing Minister could get more social housing through housing associations than local authorities. I will avoid a theological debate as to whether that should score as public expenditure, but that is the reality and that has been a significant change.
There has been another since the golden years of the 1950s. Section 106 planning obligations were not there then; they mean that local authorities can secure the direct provision of, or financial contributions toward, affordable housing, with the cost borne not by the public purse but by landowners securing less of a windfall gain when they get planning consent. In 2015-16, over 12,000 affordable housing completions were fully funded, and 350 partially funded, through Section 106.
The final change is that local authorities are no longer the significant landlords they were. Since 1988, through large-scale voluntary transfer, some councils, with the support of their tenants, voting in a ballot, decided to transfer their housing to a housing association. They did this because it helped improve the standard of their housing stock, with faster access to investment. In many cases it got them a more benign rent regime and additional benefits such as greater tenant choice and participation. So the context has changed; but, having made those points, the Government do see a significant role for local authorities again. More than twice as much council housing has been built since 2010 than in the previous 13 years and more affordable homes overall delivered in the last six years than in the last six years of Labour government. The numbers of new council homes have been increasing year on year, and they are now an important source of new supply. In 2014 we saw the highest number of council house starts for 23 years.
We want to go further. We want to see a new generation of council house building and housing association homes. The extra funding and rent certainty we have just announced will further support councils and housing associations in areas of acute affordability pressure, where working families are struggling with the costs of rent and some are at risk of homelessness. We will be looking to the sector to show that it can make the best possible use of its resources and make a substantial contribution to building the homes that all noble Lords want to see built.
The chief executive of the National Housing Federation said:
“The additional £2 billion will make a real difference to those let down by a broken housing market. Building homes for social rent will make work pay and help bring down the housing benefit bill in the long run by moving people out of costly private lets”.
Those announcements build on the flexibilities that councils already have, following the self-financing settlement in 2012, which will enable them to build more homes to meet housing pressures.
A number of noble Lords mentioned the borrowing capacity of local authorities and wanted the ceiling lifted or abolished. There is still around £3.4 billion of borrowing capacity available to local housing authorities. Some £300 million of additional borrowing was made available to councils in England in 2013, but only £144 million was taken up by councils. There are also substantial reserves, not just in the housing revenue accounts of local authorities but in the reserves of those councils that have transferred their stock over to housing associations. The Government responded to the Economic Affairs Committee’s report. We had a debate on it, which I think I may have answered. In response to the noble Lord, Lord Kennedy, and others, on the issue of raising the capital on local authority borrowing, we will look seriously at any request from councils that will result in a significant investment in additional housing.
On the second prong of the Motion—affordability—we have plans to increase the output of affordable homes. Affordability is an issue for home buyers as well, as my noble friend Lord Kirkham mentioned. We are supporting first-time buyers to achieve their ambition of home ownership. That is why last week we announced £10 billion of new funding for the Help to Buy equity loan, which could help around 135,000 more people to buy homes by 2021, on top of the 400,000 households that have been helped by government-backed schemes—over half of them through Help to Buy.
We ran into a bit of headwind during the debate on Help to Buy; it was criticised by the noble Baroness, Lady Donaghy, and others. Some 39% of buyers had an annual household income of less than £40,000. An independent evaluation report of the Help to Buy scheme concluded that Help to Buy does not materially impact on house prices, it has helped to improve market access, especially among first-time buyers, and has encouraged more lenders into the new-build market. Help to Buy customers are satisfied with the buying process. The £10 billion for Help to Buy is different from the £2 billion referred to earlier, in that the Government will get money in Help to Buy back. In effect, it is a loan that the Government get back, possibly with additional funds—depending on the movement of house prices—whereas the Government will obviously not get the £2 billion investment in housing back.
I want to touch on one or two of the points made by noble Lords. There has been a lot of focus on homelessness from the noble Lord, Lord Smith, my noble friend Lady Neville-Rolfe, the noble Lord, Lord Cashman, the right reverend Prelate and others. We are committed to doing more to prevent more people becoming homeless in the first place. I am grateful to the noble Lord, Lord Best, for piloting through this House the most ambitious legislative reform in decades: the Homelessness Reduction Act. On resources, a point raised by the noble Lord, Lord Kennedy, we have allocated £550 million until 2020 to tackle homelessness and rough sleeping, as well as supporting the Homelessness Reduction Act. We are protecting £350 million of funding for local authorities and £149 million of central government funding for homelessness programmes.
There was much comment on Section 106 and the issue of viability assessments. I think there was a case, after the economic downturn, for having another look at some of Section 106 where, if no change was made at all, no houses would have been built. I take on board the criticisms made in the debate by the noble Baronesses, Lady Donaghy and Lady Young, the noble Lord, Lord Best, and others. Viability assessments are necessary to make sure that plans and individual proposals are deliverable, but we are aware—even more so now because of the debate—that their use can add complexity and uncertainty and lead to delays in and the reduction of affordable housing.
We are consulting on a new approach to viability with a view to speeding up the decision-making process by reducing the use of VA at the planning application stage. In response to demands for increased transparency, we are consulting on increased transparency so that local communities know what contributions are expected. The plans should set out how developers can contribute to infrastructure and affordable housing.
The noble Lord, Lord Best, spoke about the broken housing market being dominated by a small number of big players. Our housing White Paper set out our plans to encourage new players into the market through loan funding for small builders, custom builders and innovators. We are also improving transparency on buildout and proposing to make developers publish data on how quickly they build after getting planning consent.
A number of concerns were expressed about supported housing, a matter of great interest to this House which has been debated on many occasions. As noble Lords know, we announced proposals for a new funding model for supported housing, to kick in in April 2019. There have been a number of responses to that. We understand that the sector needs certainty now to plan delivery. We will announce next steps shortly in response to the consultation process.
I am conscious that I have about 15 pages of notes in front of me responding to the many very valid points that noble Lords have made. If the House will accept it, I should like to write to them, in no way devaluing the importance of their contributions.
We have so much to do. Successive Governments have failed to provide the homes we need. Progress has been made, but it is not enough. This Government are determined to work with every local authority, organisation and business with a role to play to ensure that we build more of the good-quality homes this country needs, and help more people to achieve their dream of home ownership and help more people into good-quality rented accommodation at a price they can afford. We are committed to deliver on our promise of 1 million homes by 2020 and a further half a million by 2022, and the action that I have set out in this debate shows how we propose to achieve it.
Lord Smith of Leigh
My Lords, I thank everyone for their contribution to the debate today. I think there was an overwhelming consensus on the scale of the problem. Considerable expertise and knowledge were shown. As the Minister reflected on, there were obviously criticisms of government, but they were criticisms of outcomes. There were a lot of positive suggestions from across the House on what we should do and what changes are to be made to see results.
I also felt a lot passion, again from across the House, with speakers understanding that if we are to help people achieve that aspiration for decent houses we have to do better than we are doing today. The Minister is well respected in the House and gave us a good summing-up—we will obviously read all that. It is an issue of supply, although it was not mentioned that the Governor of the Bank of England has already advised us that interest rates are likely to rise in the near future, which usually impacts on housing—and of course we do not know the impact of Brexit. My noble friend Lord Morris of Handsworth suggested that we might put as much emphasis on housing as we do on Brexit. I hope that he was not suggesting that we put David Davis in charge of housing, because that is something that I do not think that we could agree on.
The word that we heard across the House was “investment”: investment in buildings and investment in people. That should remind us that the benefits of housing are financial across the range for the Government. If we did a proper cost-benefit analysis of getting affordable housing right, we would see that we would save on housing benefit, on social welfare costs and right across the piece. I welcome the Government’s commitment to housing. We want to see a positive outcome—that was the mood across the House. I again thank noble Lords for their contributions.