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Lord Shipley
That this House takes note of the case for building more affordable housing.
Lord Shipley (LD)
My Lords, I declare an interest in that I am a vice-president of the Local Government Association. I am pleased that so many colleagues have put their names down to speak in this debate, and I thank them. I thank too all those organisations that have sent briefings to us for their contribution to this debate; it is appreciated.
This debate is an opportunity for us to examine government policy on affordable housing. The Motion talks about the case for building more affordable housing—that is, more housing that is officially defined as affordable, but also housing that is more affordable for individuals, which increasingly is not the case. The general public think of affordability as related to income rather than market rates.
The term “affordable” has existed for some years. It was created by the then Deputy Prime Minister—now the noble Lord, Lord Prescott—in 2006. It was defined as,
“subsidised housing that meets the needs of those who cannot afford secure decent housing on the open market either to rent or buy”.
That seems a thoroughly reasonable definition. The official definition of “affordable rent” is that it is set at a maximum of 80% of local market rent. That definition was first introduced by the coalition Government in 2010. The problem is that that concept of affordability is out of date because it is no longer affordable in high-cost parts of the country. Indeed, the Joseph Rowntree Foundation estimates that today’s policy on affordable rents will see 1.3 million more people in poverty in 2040, placing huge additional pressures on the housing benefit bill.
In the words of Shelter, we need,
“a new generation of homes for social rent”.
Just 5,380 were built in 2016-17. Shelter estimates that we need at least 90,000 a year to meet the backlog. We have a huge shortage of decent homes and a huge backlog in demand for them. The Office for National Statistics may have downgraded its household growth projections from 210,000 per year to 159,000, but that remains a large number and may anyway omit households that would have formed but could not afford to.
The lack of affordable homes has led to the current crisis in homelessness. I am grateful to Shelter for its latest figures, which show that there are 268,000 homeless people in this country, including 123,000 children; there are 80,000 households in temporary accommodation, up by nearly half in the last five years; and there are 1.2 million households on council house waiting lists. Today we learn from the Huffington Post that 50,000 homeless households have had to move out of their communities in the last five years. I find that a national disgrace.
The Government’s White Paper, 18 months ago now in February 2017, Fixing Our Broken Housing Market, said:
“The starting point is to build more homes. This will slow the rise in housing costs so that more ordinary working families can afford to buy a home and it will also bring the cost of renting down”.
However, I submit that to bring down the cost of renting requires government support.
The evidence of unaffordable prices and rents is stark. Buying a home costs eight times annual workplace earnings; 20 years ago that figure was three and a half. Home ownership has gone down from 71% in 2003 to 63% in 2016-17, and it is just 37% today in the 25 to 34 age range. Private rents have risen steeply. The English Housing Survey in 2016-17 showed that private renters are spending 41% of their income on housing, as opposed to 31% for social renters and 19% for owner-occupiers.
There is a major affordability crisis in the private rented sector. Take Bristol: on Sunday the Observer reported that 200 people are sleeping in their vehicles in Bristol because the cost of private renting is unaffordable, given the low wages that they earn. According to the Valuation Office Agency, rents have risen 33% in Bristol in the last four years.
The Prime Minister has taken a keen personal interest in housing. She has talked in terms of a national housing crisis. She is right, but we need a coherent strategic plan to deal with the housing crisis, which still seems to be lacking. The Government’s emphasis has been on promoting owner-occupation. Last year, a further £10 billion was announced for Help to Buy but only an additional £2 billion for affordable housing, which meant only an extra 5,000 affordable homes a year. The Chartered Institute of Housing reminded us last year that only £8 billion of the £51 billion allocated for housing to 2021 will fund affordable homes. At the same time, the Office for Budget Responsibility has recently said Help to Buy pushes up house prices.
The balance between support for rent and support for owner-occupation is wrong, and perhaps there is growing recognition of that. Earlier this month, it was finally admitted that the cap on councils borrowing against their assets to build houses should be lifted. Might the Minister tell us why that decision took so long, when it could lead to around 10,000 extra affordable homes a year?
However, this speech is not all about criticism. I want to praise the Government for something: I praise them for not implementing the worst elements of the Housing and Planning Act, such as the forced sell-off of high-value council homes. What is the policy on starter homes, since they are defined as affordable? And is the forced sale of housing association homes now well and truly in the long grass? I also look forward to the impact of some of the reforms that the Government have introduced: the role of Homes England, the changes to the National Planning Policy Framework and, hopefully, some announcements in the Budget as a consequence of the Letwin review on the build-out rate.
In August, we had the social housing Green Paper, which was delayed almost a year. It is unclear why it took so long to write when in the last five years, according to the Chartered Institute of Housing, 150,000 social homes have been lost. I wonder whether the Government have taken account of the impact on the housing benefit bill of the increasing dominance of the private rented sector. The Joseph Rowntree Foundation has stated that,
“investing in 80,000 affordable homes per annum could reduce the housing benefit bill by £5.6 billion per annum by 2040”.
That demonstrates that government policies must be for the long term.
But so much effort is having to go into dealing with the symptoms of the lack of sufficient homes: high house prices; high rents; rogue landlords; the misuse of viability assessments for affordable homes, which I hope is now at an end; and high housing benefit costs caused by inflating rents. As we know, private sector conditions can be very poor with insecure tenure. Almost 750,000 tenants live in unsafe or dirty homes because rogue landlords ignore the rules. Thankfully, the Government want to make progress on these issues, but they are taking time and there is a need for resources both nationally and locally. The only long-term solution to these problems is to increase the supply of new homes at prices that are genuinely affordable to those on average incomes.
Underpinning public policy should be agreed values that we are aspiring to achieve. I submit that only when those values have been achieved will we be able to say that the housing crisis is over. We need to agree the values that should underpin our approach to housing policy. These are that no one should be forced to spend more than a third of their income on housing costs. Those in work on the living wage should be able to afford to live reasonably close to where they work. No one should be forced to sleep rough or depend on temporary accommodation when they cannot find a permanent place to call home. No child should be forced to move school and away from friends because a landlord serves notice to quit because that landlord can command a higher rent if the existing tenants leave. Space standards for new homes should be sufficiently large to enable families to live comfortably in them.
I have concluded that the current housing crisis represents the biggest failure of public policy of the past 20 years. Over that time, we have built about 2 million too few homes, resulting in high prices, high rents, many fewer social homes and serious difficulties for younger people wanting to buy their own home. The Government need to achieve a threshold of 35% of affordable housing in all private developments, with a higher 50% threshold on all public land. We need to promote high-quality modular building, with its potential cost savings and faster building timescales.
Crucially, we need to capture an uplift in land values for public benefit. I note the work of the Centre for Progressive Capitalism, which states that currently 75% goes to the landowner and 25% to community benefits. It should be reversed. That requires reform to the Land Compensation Act 1961.
I also believe that the time has come to suspend the right to buy until the problem of the inadequate provision of social housing is put right. Suspending the right to buy has occurred in Scotland and will be introduced in Wales next January. Above all, we need to achieve the building of 300,000 homes a year.
If there is one immediate thing that we could achieve from this debate, it would be that the Government agreed to stop using the term “affordable” when, for so many people, homes described as affordable are out of their reach. I beg to move.
Lord Young of Cookham (Con)
My Lords, with the constraints of a two-hour debate, given the number of noble Lords who wish to speak and the published time limits, the mathematics reveal very little margin for error. I urge noble Lords to stick to the limit of four minutes.
Lord Horam (Con)
My Lords, thank heavens there are not even more Liberal Democrats wanting to speak on this subject, but we are grateful to the noble Lord, Lord Shipley, for introducing it and I agree with much of his remarks.
We are at a hopeful moment in tackling the serious problem of providing affordable housing. As the noble Lord said, the Prime Minister takes a keen personal interest in housing, and I know that to be true. We have a Secretary of State who is new to the job and whom I know—I was a neighbour of his when I was the MP for Orpington—understands the problems of outer London. We have a Minister for Housing who was leader of Fulham Council and therefore understands very well the problems of inner London. We have my noble friend Lord Bourne, who is also aware of the problems from his local government experience. We have a good team.
In comparison with the dire days, if I may call them that, of the Housing and Planning Act—I see the noble Lord, Lord Kennedy of Southwark, nodding his head fiercely—we are heading in the right direction on policy. The first augury of that was the Prime Minister’s announcement at the Conservative Party conference that the Government will be lifting the cap on local authority spending on housing. Some of us campaigned for that for years and years and are absolutely delighted that it is happening.
However, there is a big roadblock, a huge boulder in the way of achieving proper policy on affordable housing: the price of land. In the south-east of England, agricultural land is priced at £22,000 per hectare. After planning permission is granted, it becomes £3.6 million per hectare. In London, that figure of £22,000 becomes £29.1 million per hectare. Land is 275 times more valuable with planning permission than without. As the noble Lord, Lord Shipley, pointed out, 75% of all the gains of that, which are reckoned to be £13 billion a year, go to the developers, the speculators and the landowners, when it should be the other way round.
As Shelter pointed out in its admirable document, New Civic Housebuilding, the problem is that the more that goes to the landowner or developer, the less goes into keeping the price down, having good design and quality and good local services to connect to the housing. The answer, as Shelter pointed out in its document, is to reform the compulsory purchase orders and revise the 1961 Act. That was in all our manifestos; we are all committed to that. I remind the House that no less than 150 years ago, Joe Chamberlain, the then Mayor of Birmingham, said of the CPO orders he was putting through:
“We have not the slightest intention of making profit ...We shall get our profit indirectly in the comfort of the town and in the health of the inhabitants”.
I say amen to that.
Baroness Warwick of Undercliffe (Lab)
My Lords, I congratulate the noble Lord, Lord Shipley; his debate could not be more timely. I declare an interest as the chair of the National Housing Federation, the trade body for housing associations in England. Everyone should be able to access a good-quality home that they can afford either to rent or to buy, but so many cannot, in so many parts of the country. For many, there is only a bleak future. This is a real crisis.
Despite recent welcome announcements by the Government, public funding for social housing has been declining for decades: 40 years ago, it was £18 billion a year. In 2015-16, it was just £1.1 billion. Over the same period, the housing benefit bill grew from £4 billion to £24.2 billion a year. The figures are stark. Crisis, the National Housing Federation and Heriot-Watt University found that issues such as hidden homelessness and young people desperate to move out of their parents’ house meant that the real need was to build 340,000 new homes per year for the next 10 years. Some 145,000 of these need to be affordable, including 90,000 for social rent. Last year in England we built only just over 5,000 homes for social rent. Rural areas fare worse than towns and cities; people are forced to leave their communities, so local pubs and schools close. What is happening to people with particular care needs? Affordable supported housing is vital to their health and well-being. Last year, virtually all the homes for affordable and social rent were built by housing associations. They are not-for-profit, so any surplus is reinvested to build more affordable homes. Government grant for affordable housing fell from 2010 to 2017, but housing associations kept building.
I was delighted to introduce the Prime Minister at the National Housing Federation conference last month. She committed an extra £2 billion for affordable housing in the next spending review period. With this certainty, housing associations can buy land and plan ahead. But housing associations will not solve the housing crisis on their own. I hope that the recent announcement of the lifting of the HRA borrowing cap for councils will unlock a new generation of partnerships between councils and housing associations to build tens of thousands more homes.
As the noble Lord, Lord Porter, has recognised, these homes will be developed by harnessing the skills, finance, land and experience of local authorities and housing associations working in partnership. I echo the noble Lords, Lord Horam and Lord Shipley, in saying that the biggest barrier to building more homes is access to land. The planning system, the developer-led “speculative” homebuilding model and the laws around land ownership and purchase have created a dysfunctional and inefficient land market. Shelter, the Conservative think tank Onward and many others have proposed reform of the Land Compensation Act 1961, so that a fairer proportion of the uplift in land value will be shared with the community and will include affordable housing. This makes sense: landowners make over £13 billion profit each year by selling land for housing. Capturing even a modest proportion of this for affordable homebuilding could be transformative. I welcome the Government’s recent acknowledgement of this, and I urge them to be bold in next week’s Budget. Will the Minister urge the Government to lead by example and make better use of the land the Government own themselves? They should instruct Homes England and departments to deliver at least 50% affordable housing across the land they own.
The country desperately needs more affordable homes. I support the measures that the Government have announced so far and, of course, the ambitions of my own party in building the homes that we need. Housing associations sit at the centre of these solutions, but they need action on land if they are to build the affordable and social rented homes that we need.
Baroness Brinton (LD)
My Lords, I add my congratulations to my noble friend Lord Shipley on securing this important debate on affordable housing. I will focus solely on the provision of new affordable housing for people with disabilities, including long-term illnesses.
The 2011 census reported that, overall, 29.8% of households have a person with a disability; 3.3% of households have a wheelchair user, whose housing needs are even greater. Whereas 60% of households are owner-occupied, for people with a disability it is 26%. An extraordinary 48.9% of disabled people live in social rented accommodation, which contrasts with just 17% of the ordinary population. Disabled people find it the hardest to get appropriate accommodation because there is so little of it.
Along with my noble friend Lady Thomas of Winchester, I sat on the Lords Committee on the Equality Act 2010 and Disability, which published its report in March 2016. In chapter 10, paragraphs 482 to 498, we set out the problems with building regulations, Part M, and Approved Document M. The two key recommendations made by the committee to the Government were, first, to ensure that building control officers have access to expert advice to monitor compliance with both Part M of the building regulations and the Equality Act; and, secondly, that local authorities should be required to provide a significant proportion of new dwellings to be wheelchair accessible or adaptable, in line with standard M4(3), and ensure that all other new dwellings comply with optional standard M4(2). Why is this important? At present, these requirements are optional and very few local authorities outside London use these higher standards, but they should. Standard M4(2)—the lifetime homes standard—provides much longer-term savings to councils, hospitals and care homes. Why? Building in the higher standard removes the needs for expensive case-by-case adaptions in the future.
Leonard Cheshire pointed out in its 2014 report The Hidden Housing Crisis that the cost of adaption to a standard home can reach £20,000. Installation of a ramp and widening the front door and other internal doors for a wheelchair costs £5,000, with nearly £10,000 for a stairlift. But we can contrast that with only £1,100 extra in the initial building costs for a lifetime home, and very reduced costs for a stairlift—just £2,500—because of the initial infrastructure design. These lifetime homes allow people with long-term conditions and a disability to remain independent at home. This is also true for the elderly as they become more frail. With an ageing population, that is vital. In these homes, it is less likely that they will fall and end up in hospital, because they have in-built rails and ramps; and less likely that they will need domiciliary care—because of walk-in showers—or, worse, to move to a care home. All these are savings to the state in the future, and so easy to build into the design. The MHCLG estimates that this could save £83,000 in the lifetime of one house.
Our Lords committee asked the Government to strengthen the Part M regulations to require a higher standard of lifetime houses. In the Government’s response to our report they did not even address this part of the recommendations. We are told that Part M is being reviewed following Grenfell, which is important, but we must also have the lifetime standards as the norm. We know from Scope, the Access Association and the lived experience of those with disabilities that trying to find accessible or adapted affordable housing is close to impossible. With the pressure on affordable housing, one group of people is the most vulnerable, and is looking to the Government to ensure that our homes of the future have accessibility built in. I ask that the Government make it a requirement that the percentage of lifetime houses is increased in all new-build homes across the country.
Lord Best (CB)
My Lords, I thank the noble lord, Lord Shipley, for initiating this debate and for addressing so ably the many points that the rest of us will not have time to cover today. I declare my interests as on the register, especially my chairing of two commissions. One is the Smith Institute/Nationwide Foundation Affordable Housing Commission, which was launched in this House last week with an extensive programme to seek solutions to the problems of housing shortages and affordability.
At our launch we unveiled the results of a YouGov survey of public opinion. This discovered that two out of three people think there is a national affordable housing crisis. Seven in 10 renters said they would need to win the lottery to buy their own home, and nearly half of the people questioned have faced financial difficulties in the last year because so much of their income has to go on paying the mortgage or the rent. So, thanks to the new Affordable Housing Commission, we now know that the great British public are right behind us in recognising that the housing difficulties faced by nearly everyone under the age of 40 represent a real crisis.
I also chair the Centre for Social Justice Housing Commission, which will publish an important report this weekend; I can give a sneak preview today. The report spells out the huge costs of failing to build new homes for those on the lowest incomes. The collective failure of successive Governments has pushed more families into the private rented sector where they struggle with higher rents. This also means the taxpayer has to pick up a frighteningly escalating housing benefit bill for the growing numbers who simply cannot afford these higher rents. The CSJ is spot on here.
In the couple of minutes I have left, I would like to congratulate the Prime Minister on her exciting, surprise announcement that local authorities will have new freedoms to borrow to build a new generation of council housing. In the year I first came into the world of social housing—1968—councils built half of the 387,000 homes constructed in the UK. In recent years their output has dried up and housing associations, great as they are, have put back less than a third of the lost council output.
In the days of the coalition Government, the noble lord, Lord Shipley, and I took an LGA delegation to discuss this issue with the Chief Secretary to the Treasury. We heard how impossible it was for the Government to lift the embargo on local authorities borrowing to build new homes. This would lead, according to Treasury thinking, to a massive increase in the national debt, frightening off international investment in this country. We pointed out that prudential borrowing for housing—that is, borrowing only what can be repaid from rental income—would not frighten the horses and was recognised internationally as outside the definitions of public spending and national debt. We got nowhere.
Thank you, Prime Minister, for overruling the Treasury at last and opening the door to—according to calculations by the consultancy Savills—at least 15,000 extra homes each year. If local authorities give prominence to rentals that are truly affordable to those with low or no earnings, in mixed-tenure, high-quality developments, then this will indeed be an historic step forward.
Baroness Bryan of Partick (Lab)
My Lords, when we look back on how, as a nation, we have responded to housing crises, we know that we are capable of amazing achievements. After the First World War, local authorities were given support to build council houses, but it was John Wheatley’s Housing Act in 1924 that revolutionised housing for hundreds of thousands of families who could leave overcrowded homes and slum conditions for well-built affordable family homes. Again, after the Second World War there was a blitz on slum housing under Aneurin Bevan—who was, tellingly, the Minister for Health and Housing, which recognised the essential link between good housing and good health. Instead of being overwhelmed by the enormous challenges, the Attlee Government supported the building of more than 1 million homes, 80% of which were council houses. This tells that once there is political will, housing crises can be dealt with.
I am sure that many of us will remember the 1966 TV classic “Cathy Come Home” and the massive impact it made on public consciousness. But unfortunately, that shared memory began to fade, particularly with the introduction of the right to buy. It was particularly hard for long-term tenants to resist the lure of huge discounts that were made available to them. But the worst aspect of that Housing Act was that it prevented councils using the income from those sales to invest in new housing. Many home owners learned at great cost the uncertainty of home ownership and the vagaries of boom and bust. As has been said, houses that should have been affordable became unaffordable.
If you look at a chart of house price inflation over the last 30 years you see what looks like a big dipper ride of huge rises and big drops, and it then goes up and down again. Common sense tells us that surely there is a much better way of doing this. Does the Minister agree that, in the first instance, housing is a human right and not a luxury? Does he also accept that democratically accountable local authorities are the best means of ensuring that local housing needs are met rather than simply leaving this to market forces?
Finally, what can be done to protect private tenants from exploitation? Is the Minister aware of the proposal in Scotland for a Mary Barbour law, which would give tenants greater security and protection from excessive rent rises? Mary Barbour led the Glasgow rent strikes during the First World War, and we need more Mary Barbours today to fight for genuinely affordable and secure housing.
Baroness Walmsley (LD)
My Lords, I will focus my comments on housing which is not just affordable to buy or rent but to live in. It is very tempting to think only of the capital cost of building new houses without considering the whole life cost of heating and maintaining it. By definition, people who need affordable housing are on low incomes and cannot afford the inevitable rising cost of energy. That is one reason for building and adapting houses that need little or no energy for space and water heating. The other reason is, of course, global warming and the need to hit our 2050 climate target well before 2050. Indeed, we should be aiming for energy positive, not just energy neutral, homes.
Energy used in homes accounts for about 20% of UK greenhouse gas emissions, and three-quarters of that comes from heating and hot water. Eighty percent of the homes people will inhabit in 2050 have already been built, meaning that it is not possible to rely on new builds alone to meet legal energy-saving targets set in the Climate Change Act 2008.
The Institution of Engineering and Technology has published a new report that highlights how the UK cannot build its way to a low-carbon future without retrofitting old, cold homes to meet 2050 climate targets. Deep retrofitting is a whole-house approach to upgrading energy efficiency in one step, as opposed to a series of incremental improvements. This includes: adding solar panels and local microgeneration, insulation and ventilation, and sustainable heating systems. It has identified the barriers to the development of a national programme of deep retrofit. They include: lack of customer demand; no effective policy driver for change, high costs per home, as there is not yet a supply chain that can deliver deep retrofits cost effectively, in volume, and at speed; and a lack of initial financing.
The report calls for both national and local government to take the lead in encouraging and supporting the necessary changes, which include: consistent policy objectives and a national programme for deep retrofit and climate resilience, with an initial focus on social housing; reducing costs and building supply-chain capacity by developing pilot programmes; engaging with home owners to discuss the benefits of deep retrofit; and creating larger projects that are attractive to investors, by aggregating smaller projects into bigger blocks and introducing more flexible ways for local authorities to borrow and invest in such programmes.
Affordable housing should be regarded as essential infrastructure: good-quality shelter is as important as food, mobility, healthcare and community. We simply cannot compete in a global sense if our housing infrastructure is inadequate and poor quality, but at present we fail on both counts.
I will finish with three other, often disregarded issues. The first is progressive, integrated design and delivery models. A House of Lords report recently dealt with offsite and modern methods of construction. We have a tremendous opportunity in the UK to embrace a genuine culture shift away from construction as we know it, towards progressive, integrated methods, employing design for manufacture and delivery. This could be a game-changer, and move us from what is now an unattractive, backward-gazing sector, to one which attracts the brightest and the best, and moves forward in an exciting way.
The second is making the most of the UK’s renewable resources, particularly timber. We have untapped potential, with the development of UK-derived innovative timber products, which could safely replace plastics, steel and concrete, which are often imported. Not enough focus is being put into supporting R&D in this area.
The third issue is the large, interconnected network of low-carbon and circular-economy industries, such as domestic-scale, micro-renewable technologies, which could emerge across urban and rural UK regions. This is particularly relevant to Wales, highland and south-west Scotland, but many other regions could contribute. I would be grateful for the Minister’s comments on these three opportunities.
Lord Wei (Con)
My Lords, I thank the noble Lord, Lord Shipley, for tabling this timely debate. I declare an interest as an adviser and director of various real estate related companies, as outlined in my register of interests.
For too long in this country, we have allowed ourselves to be trapped in a siloed way of thinking about creating new communities. The truth is that we need to come together across divides to innovate in every area. We need to recreate the bottom rungs of the ladder to owning not just property, but your own business, vehicle, and, one day, even robots, while recognising that rents are often too high, and that we need to increase supply in every possible way, both traditional and innovative.
I want to cover an area which perhaps gets less attention compared to discussions about the role of larger private and government sector involvement in house building: the potential for meanwhile use of underutilised and dormant, or even landbanked land, whether in the form of indoor warehouses—there are millions of square feet empty in zone 1 in London alone—or in the form of outdoor sites such as car parks, derelict or even moderately contaminated land, or the hundreds of thousands of rooftops that are underutilised or empty, or partially empty, homes.
Earlier in the week, I had the privilege of launching with the mayor of Bristol an attempt to find and showcase imaginative solutions to the need for both public and private affordable housing, through the Bristol Housing Festival. At any one time, in many cities, a significant proportion of land is unused, awaiting redevelopment, or underutilised, for example in car parks, roofs or even church buildings.
Working with Bristol city council, the festival seeks to unlock some of this land for up to five years at a time, or longer, and harness interim measures to enable the world's most innovative modular-build companies and non-profit organisations to “pop up” in such sites, to provide housing for communities on waiting lists, for entrepreneurs and artists, and others living in transition. It represents a huge opportunity to learn, fail fast and figure out what could work in our future cities.
The festival will provide a way for companies such as ZEDpods, whose innovative prefab solution sits on top of existing car parks, using solar panels in the roofs above them to help charge electric cars below, to scale up and get the support from the likes of Homes England and other experts to overcome technical and regulatory challenges. It will also enable smart city innovation to progress, harnessing technologies such as blockchain and the internet of things to accelerate planning and consultation, and create meanwhile and longer term infrastructure.
Working with and serving the needs of local communities, the festival seeks to create a less combative approach to local planning, enabling communities to “try before they decide” to turn a new village into a permanent feature, as happened with Boxpark in Shoreditch, in London. It asks questions such as how we might harness industrial buildings and land and create safe, creative spaces for young and older people to live and create in while securing property; how we can work with, rather than against, the major housebuilders who landbank, encouraging them to free up space for pop-up living while they work out what to do long term with their sites; and how new models of financing housing can be developed to enable people to co-own, fractionally own and crowdfund their housing journey more sustainably.
I believe that the work in Bristol is just the beginning. The dream is to see housing festivals established in every city and region in the UK, and globally; to unlock car parks in hospitals, schools, and government buildings; to enable nurses, teachers and others to access key-worker housing affordably, and to mix that housing with that of families, young entrepreneurs and creatives to avoid the ghettos of the past. In the UK alone, raised interim housing solutions on top of car parks could create accommodation for at least 200,000 people.
The key is to help engineer down the cost of different models and to find new and old ways of financing such pop-up villages, working with employers and social housing providers open to where they will be located over a minimum seven-year period. To achieve this will require all kinds of partners—in Bristol, throughout the UK and around the world—to replicate concepts such as the festival. There will be many legal, financial, marketing, engineering and cultural challenges to overcome.
I believe that there is room for hope about the future of our country, if we are prepared to be creative. It is time that we thought outside of the box. Will my noble friend the Minister and his colleagues be open to looking at this strategy as part of the mix in addressing the housing crisis?
Lord Rooker (Lab)
My Lords, I congratulate the noble Lord, Lord Shipley. The last time I looked at the figures for construction, conversion and demolition, I found that the average house in this country has to last 2,000 years. In the mid-1980s, when the national federation published the Duke of Edinburgh’s report on housing, the same calculation produced a figure of 800 years—that is the difference. I will concentrate today on the points made by Shelter. There is no sense in going over the problems; I want to concentrate on the solutions put forward by Shelter, and I will touch on some of them.
The first is the restoration of the affordable housing programme, cut by 60% in 2011 when the funding for social rent was completely removed. We also have to start to use our brains. I was on the original Standing Committee in the Commons when rent allowances became housing benefit. We warned at the time of the possibility that this subsidy to private landlords would get out of hand—it is now £24 billion. Look at the Guardian: four pages today and yesterday on the housing benefits scam for private landlords. Some of that should come back into creating social housing.
We have a housing team in the department, which I fully accept and back. But I hope that the Government have grown up. Nick Clegg said that he could not remember whether it was David Cameron or George Osborne who said:
“I don’t understand why you keep going on about the need for social housing—it just creates Labour voters”.
That was reported in the Independent on 3 September 2016, and it is not a grown-up way of looking at public policy. Given the fact that the Tories got 44% of C2DEs at the last election and Labour got 42%, the calculation and assessment does not apply anymore anyway.
Back to Shelter. Greater CPO powers for land to come into development has been touched on. The legislation could be put in the Queen’s Speech, and, as the noble Lord, Lord Horam, said, it is in all the parties’ manifestos—there is no division between us on this, and some serious action should be taken. The land value scam is crucial.
The third point Shelter made is that we need to get a central grip on this. I know that everybody says that it should be done from the bottom up and be community based—I worked with John Prescott for three years to get community planning right. But there has to be some drive in Whitehall at the top, because civil servants and Ministers come and go. You have to have a drive forward at the top, without micromanaging locally. Therefore, Shelter wants to establish development corporations that are powerful and able to assist and assemble a master plan for land, because you have to deal with CPO powers as well and act as master planners. Closing planning loopholes and the viability loophole are pretty crucial as well. Permitted development rights are really a bit of a scam that should be dealt with.
I have a suggestion. Back in 1997-98, when new Labour came into power—I am quite proud of new Labour by the way; my current leadership is not but I am—my noble friend Lady Armstrong of Hill Top, who was Housing Minister at the time, was lobbied by various bodies including Shelter about what to do about rough sleeping. So she said to Louise Casey of Shelter, “Okay, come into government and fix it”. The legacy of the plan put by Louise Casey, which I inherited for a couple of years as Housing Minister, was that by 2010 we had virtually eliminated rough sleeping in this country. All the statistics show that. So my suggestion to the Government is to think big. Go back to Shelter and say, “If you’ve got a plan and you’ve got solutions, why doesn’t one of you come in and help drive this forward?”.
Baroness Thomas of Winchester (LD)
My Lords, I shall add to what my noble friend Lady Brinton said about housing that is accessible to disabled people. In Britain, 13.3 million people are disabled, with the figure set to rise rapidly as the population ages—and yet in England only 7% of homes have minimum accessibility features. As we have heard, Part M4 of the building regulations provides three accessibility standards: category 1, the default minimum; category 2, the much better lifetime homes standard: and category 3, the better-still wheelchair housing design standard.
This year, Habinteg, a housing association specialising in accessible homes, analysed the accessible housing policies detailed in 263 of the 365 local plans across England. It found that, although 65% of the local planning authorities that it reviewed made reference to the lifetime homes standard or category 2, only 32% made a firm commitment to deliver a specific proportion of new homes to that standard. Just 18% committed to a specific proportion of new homes using category 3.
Surely we should future-proof our investment in new homes by making the category 2 standard our minimum requirement. This is already specified in the London plan, but not everywhere. Should not requirements to meet access standards set out in building regulations be extended to change-of-use developments, which account for a significant number of new homes, particularly in our cities?
It is important to note that disabled people whose housing needs are met are four times more likely to be in employment than those with unmet needs, and having more accessible and easily adaptable homes can alleviate pressure on health and social care services and budgets, as we have already heard, for example by speeding up hospital discharge and enabling greater independence at home.
As for adapting existing housing, local authorities should be urged to make use of the new toolkits produced by the Equality and Human Rights Commission in partnership with Habinteg which cover, among other things, providing and managing housing adaptations and the allocation of housing. I also make a plea for an increase in the disabled facilities grant, because a lot of families face serious financial hardship when they try to fund vital adaptations to their homes themselves. This is a particular problem for families with wheelchair-using children as they get bigger and cannot be carried up and down stairs. The need for more accessible and adaptable homes is very pressing, and I urge the Government to see what action they can take to tackle this problem as soon as possible.
Lord Kerslake (CB)
My Lords, I first thank the noble Lord, Lord Shipley, for initiating this debate, and declare my interests as chair of Peabody, chair of Be First and president of the Local Government Association. The term “affordable housing” has been a rather slippery concept in recent years. Those of us involved in the debates on the Housing and Planning Act—how could I forget them?—will remember well the arguments about starter homes. However you define “affordable”, there is now a consensus across the main political parties that housing has become increasingly unaffordable for too many people, and that this must be tackled as a national priority. There is also now, thankfully, a consensus that the only sustainable way to tackle this is to build many more homes of all types and tenures, and to maintain this increased delivery for a long period of time. There is no quick way of building to affordability for market, sale or rent but, ultimately, significantly increasing supply in high-demand areas is the only answer.
The wider arguments on affordable housing have been well covered in the excellent briefings we have had, and indeed by other speakers—I particularly note the point made by the noble Lord, Lord Shipley, about the need for a delivery plan. I want to concentrate on two issues: the future of Help to Buy, and the need to dramatically increase the supply of social rented housing. It is important to remember that Help to Buy was introduced first and foremost as a countercyclical measure, at a time when the economy was stubbornly refusing to grow. Now that we are out of that recession, the scheme has become too big, too costly and counterproductive, driving up prices and creating a huge dependency in the sector. As I have said before in this House, we should not completely do away with Help to Buy, but make it much more targeted and expect much more from the housebuilders who benefit from it. Whatever the Government decide on Help to Buy, we need to end the uncertainty and get on with a decision about its long-term future. It would be helpful if the Minister in summing up could indicate when he thinks an announcement will be made on this.
After a truly terrible period when government seemed to see social housing only as part of the problem, we now have a welcome recognition by government of its vital importance. As Shelter says in its briefing, social rent is the “only tenure” that can reduce,
“homelessness and take pressure off the housing benefit system”.
The lifting of the cap on borrowing by local authorities is therefore particularly welcome, and it would be helpful for the Minister to say when measures to deliver this will be brought forward, and if he believes that primary legislation will be required.
We should be in no doubt, though, of the huge amount of ground that has to be made up. According to the Institute of Fiscal Studies, the number of social houses has declined by a half from the 1980s when they housed a third of all families, mainly due to the non-replacement of Right to Buy. To seriously reverse this decline, we need getting on for a third of the 300,000 new homes planned by the Government to be social-rented or genuinely affordable. This would involve getting on for a tenfold increase on what we are currently achieving. To deliver this will need more than lifting the local authority borrowing cap, helpful though that is. It will require restoring social housing grants, increasing grant rates, investing more in enabling infrastructure and providing some protection on sales risks in a very uncertain market. Without this, however committed housing associations like Peabody are to raising our game and delivering more, we will struggle to do what is needed.
I hope the Minister recognises the scale of the challenge we face here. We should be clear, though, that this is not mission impossible. We have done this before in our country, and we can do it again.
Lord Whitty (Lab)
My Lords, I thank the noble Lord, Lord Shipley, and agree that we need an entirely new approach and strategy. I applaud him, the noble Lord, Lord Best, and my noble friend Lady Bryan for putting the centrality of council housing at the heart of the debate.
The debate has been pretty restrained but a lot of people are angry about this issue. I am angry too. Within half an hour’s walk of this House, we can see how dysfunctional the housing market is. On the other side of the river, the biggest housing development in London has housing available for seven-figure sums, much of it empty and used as an investment by foreign investors. Within spitting distance of that, parts of social housing estates are being blocked off for two or three years, awaiting a regeneration programme that will itself reduce the number of social housing units. We see run-down estates. We see rabbit hutches, uninhabitable for any length of time, in the private rented sector. We see excessive rental rates, affordable by only the top 10% or 20% of the population. That is totally dysfunctional. It is unfair and a political time bomb.
Who do we blame? I blame the Government. In fact, I blame every Government for the past 40 years. They have neglected and, at times, exacerbated the problem. Most interventions by various Governments of every political hue, whatever the intent, have exacerbated the problem in practice by either inflating demand or constraining supply. Let us hope that we are in a new era. I see little sign of it being delivered but I do not blame only the Government. Some of the blame rests on those who are supposed to be centrally delivering housing in these areas. I blame some local authorities. Admittedly, they face appalling financial constraints, but some of them have gone in too deeply with developers and forgotten what they need to deliver social housing and affordable housing to their own people. I blame some housing associations. They have also lost the central part of their ethos and have become developers and landlords as much as the private sector.
In particular, I blame the building industry, which is now dominated by an oligopoly of half a dozen companies. In that sector, profit is delivered by either building high-end expensive housing or producing in volume what I refer to as rabbit hutches, with the worst space dimensions in Europe—only about half of what the Parker Morris standards previously provided. There is a lot of blame around, including from me but particularly from under-40s who face an inability to access decent housing. When I say decent housing, the quality dimension emphasised in particular by the noble Baronesses, Lady Thomas and Lady Brinton, is important. We are building houses that are not appropriate for young families, the disabled or our elderly population. Such houses add to the numbers but do not begin to resolve the problem.
We need a new strategy, and it has to be a pretty radical one. Over the years, I have enunciated, with no great effect on any passing Government, that we need two things. First, we need a central, effective ministry of housing that subsumes not only the supply and demand for housing but the range of housing benefits; my noble friend Lord Rooker alluded to this. Secondly, 90% of the public resources that go into housing go through the benefits system; it used to be about 10%. We could redeploy that money for a new strategic housing intervention, led by central government and delivered locally, but we need leadership. We do not need a system where we change the Housing Minister every five minutes, with all due respect to the noble Lord, Lord Bourne, who has been here a bit longer than that and, largely unlike his predecessors, is delivering some very positive outcomes from his ministry.
We need a new era. We need a new central vehicle. We need local authorities to replace the capacity they have lost in their housing, planning and architects’ departments. We need to ensure that we make a new beginning.
Lord Suri (Con)
I thank the noble Lord, Lord Shipley, for his work in securing the time for this debate. I think that there is a new consensus in British politics. We all agree that house prices are far too high and that home ownership is completely beyond the reach of younger generations.
To be clear, there are real benefits to renting—people can move around more easily and diversify the assets they hold—but it can be only a phase, rather than a permanent destination. Renting indefinitely with no scope to raise the deposit required is a miserable state to be in and saps the vitality of the employment market.
Home ownership improves the stewardship of not just homes, but public places, as people have a real and tangible stake in the community they live in. Sky-high rents also prevent people moving to the parts of the country that they would be most productive in. While the evidence is mixed as to the agglomeration benefits of British cities, cities such as Oxford, York, London and Bristol substantially increase the productivity of those who go to work there. But the lack of affordable homes for sale or rent saps the ability of young people to move.
The reasons for this are quite plain. Our efforts to improve affordability have failed and might be doing damage to the overall cause. The benefits of Help to Buy have disproportionately gone towards housebuilders, who can raise prices knowing that their customers have an additional revenue source. In this country we have tinkered at the edges of a demand-side policy without addressing the real problem, which is a lack of supply.
As the draft analysis of the Letwin report says quite clearly, there is no evidence that developers try to “lock up” land from the market before they seek final planning permissions. The key problem is the lack of available land. It has been a mantra of the nimby tendency to repeat that brownfield land can solve our issues, but there simply is not enough left in our major cities to meet demand and increase supply to reduce prices to an affordable level. If developers do hoard land to maintain prices at unsustainable levels, there is a good justification for intervention by taxing the unused land at a high and escalating level.
The metropolitan green belt was a sensible idea when it first arose. Trying to prevent urban sprawl made sense and industrial urban centres were seen as something to be contained. But cities now host relatively little manufacturing and require homes within commutable distance for employees who work in service industries. Those of us who commute past Battersea power station will appreciate how mixed residential and office spaces can revive an area.
The policy has now been hijacked by an array of special interests that have a primary aim of trying to keep house prices high. In the south-east, the main complaint is that developments will be poorly planned, with no heed for infrastructure upgrades. This is patently wrong. New towns built in the post-war era are some of the most pleasant and well-served places in the country, even if they do have too many mini-roundabouts.
The land for New York’s Central Park was earmarked before the urban city grew out to meet it, due to good planning. Applying an assumption of favourability to planning applications in the green belt would end the choke that they put on truly affordable housing.
Lord McKenzie of Luton (Lab)
My Lords, I draw attention to my interest in the register. Like others, I welcome this debate, initiated by the noble Lord, Lord Shipley. My starting point was to put this debate into the no-brainer category, although I have been forced to reflect a little on such a simplistic approach by our Library briefing, which looks in more detail at the definitions of affordable housing and the types of affordable housing included within it.
Factors influencing the availability of affordable housing include stock and building levels, rental and purchase prices and household formation. We have a plethora of housing statistics. The most recent I have seen are to March 2017 and identify the number of affordable homes delivered in 2016-17 to be 41,530. This comprised just 5,380 for social rent, 24,000 for affordable rent and 11,800 for intermediate affordable housing. This last category includes 2,060 affordable home ownership, 8,810 shared ownership and 940 intermediate rent levels.
So the term “affordable housing”, covering all of that provision, does not carry the tag that it is universally affordable. Affordable rented housing let by local authorities or private registered providers of social housing is subject to rent controls of up to 80% of the local market rent. The noble Lord, Lord Shipley, dealt with this. In some cases, this puts so-called affordable rents way beyond the reach of most families.
In Luton, rental costs in the private sector are significantly above affordable levels, and 22% of homes are now in the private sector. The loss of a private sector tenancy, in Luton as in the rest of the country, is the main reason for homelessness. Another challenge in Luton is the gap between local housing allowance rates and actual rents. The local authority has mapped these matters, showing that a household on median income could not afford anything larger than a one-bedroom property in the private rented sector—a family in a one-bedroom property. Families looking to rent a three-bedroom home at average market rents need to be within the top 30% of incomes in the town for it to be affordable. Luton is by no means unique in facing these challenges. The briefing from Shelter, referred to by others, tells us that 268,000 people are now homeless in England, including 123,000 children. Some 80,000 households are living in temporary accommodation, and 1.2 million households were on council waiting lists last year.
In what is now my home town of Luton, homelessness is a significant challenge, with more than 1,000 households currently living in temporary accommodation and more than 12,000 currently waiting for affordable housing. Last year, only 551 homes became available for letting, and only 10 homes for the 579 families waiting for four-bed or larger accommodation.
All of this supports the argument in favour of more affordable housing, particularly social housing, which others have mentioned and which, Shelter asserts, is the most effective way of reducing levels of homelessness and taking the pressure off the housing benefit system. Its analysis shows that, nationally, the private rented sector has more than doubled over the past 20 years, with private rents rising 60% faster than wages. Home ownership has, as we know, declined.
Shelter also argues for changes to planning legislation, which, it asserts, gives too much control to landowners and developers over what gets built and who takes the profit. The Minister may care to comment on this. Could he also say how he thinks the duty to co-operate is working, especially given the welcome opportunities provided by the lifting of the local authority borrowing cap, albeit not just yet?
Despite what seems to be complacency on the part of eminent economists, I submit that the extent of our housing crisis is best judged by those who suffer the misery of homelessness, dilapidated and rat-infested accommodation, high rents and diminishing prospects of home ownership.
The noble Lord, Lord Shipley, is right to call for more affordable housing and a related strategy. I think that my noble friend Lord Whitty has written a big chunk of the latter for him.
Lord Greaves (LD)
My Lords, I wish to speak on behalf of a distant land—parts of the north of England—with a different perspective, where councils want to provide more affordable and other housing but cannot do so due to local housing market conditions, and where Homes England has failed to adapt its policies to local conditions. I speak with particular knowledge of east Lancashire—Pennine Lancashire—and declare my interest as a local councillor there.
These are areas where land prices are low—some will think them unbelievably low—and where the uplift in land values when houses are built can be negative, taking into account all the costs of the land. In my ward, for example, you can buy two or three-bedroom terraced houses for between £50,000 and £100,000. They are good, decent houses that are well worth living in. Former council houses cost £75,000 or a bit more. New two-bedroom houses in my ward can be bought for £130,000. Renting costs £400, and that is for a month and not a week.
The costs of building a house or managing a rented house in these areas are nevertheless the same as in other areas. There is therefore a huge question of the economic viability of new housing. If the costs of building, including land remediation on brownfield sites, are more than can be recovered from sales or rents, it needs gap funding. It is no good providing loans, because if the housing is not viable, the loans cannot in future be repaid; it needs subsidies from somewhere.
I have with me an internal briefing from my own council in Pendle, written by the senior council officer responsible for development and given to me to use by the chief executive. It is clearly too long to read out to the House, although I would really like to do so. I have provided a copy to the Minister and ask him to pass it to appropriate civil servants and to provide some answers as to how we can contribute with regard to the need to provide housing in the whole country. There is a need for housing in our area; there is just not a financial market for it.
I shall quote one sentence: “As the HCA approach”—
or Homes England as it now is—
“has moved from a regional to a more national one, increasingly we are having problems accessing funding as we are in competition with authorities across the country who often have better housing markets and the availability of much larger sites”.
The briefing gives as an example one site, Further Clough Head in Nelson, which is suitable for 200 housing units—that is big by our standards. It needs gap funding. The council has applied under five different schemes but not yet been successful. The problem is that the methodology that Homes England now uses does not cater for areas such as ours. It requires an uplift in land values, which is not there; it places an emphasis on funding much larger schemes, which it will find easier but is no use for us; it does not cater for specific local needs; and it imposes risk in respect of these marginal sites on local authorities and their agencies, which the local authorities simply cannot take on. If Homes England is not able to share the risk, it is very difficult.
I have with me a list of government schemes over the past five or six years. There were no fewer than eight or nine, which your Lordships will all be familiar with, from which the councils tried to get funding and all we got was peanuts. There are different places and different circumstances. Can we please have different policies, so that we can contribute to providing the houses that the country needs?
Baroness Donaghy (Lab)
My Lords, I thank the noble Lord, Lord Shipley. One thing that we can be sure about in this debate is that the Minister will not use his reply to say, “I’d rather not talk about that. It’s been covered already, actually”. I can understand why the chief executive of Persimmon, Mr Jeff Fairburn, said it as he walked off the set of BBC’s “Look North”. If I had had my bonus cut from £131 million to £75 million, I might feel a bit snippy with the media as well, but I think that we can rely on the Minister to give us a good reply. More than half the homes sold by Persimmon benefited from enormous taxpayer subsidies under the Government’s Help to Buy scheme, aimed at people who would have been able to buy their own home anyway. These new homes are out of the reach of 83% of working private-renting families, even with Help to Buy. I doubt whether Mr Fairburn is interested in affordable homes, whatever the definition.
As my noble friend Lord McKenzie said, we have the lowest levels of social rented housebuilding on record. Social housing is leaching out of our housing stock because of various government policies, permitted development rights, the notorious viability assessments, which took too long to clamp down on, and finally right to buy. I question whether there should be a right to buy council housing, but at the very least councils should be able to keep 100% of receipts, instead of the one-third, for investment in new housing.
The Local Government Association has estimated that local authorities have lost enough homes to house the population of Oxford in the last five years. Termination of private rented sector tenancy is now the single lead cause of homelessness, ahead of family or relationship breakdown. Other noble Lords mentioned the borrowing cap on local authority housing and mention has been made of the lax rules surrounding permitted development rights, which represent 8% of the new-build sector, with no community obligations. I agree with all that has been said. The LGA has said that we have lost more than 7,500 affordable homes over two years under the current PDR scheme.
I turn finally to housing associations. We need to bring forward the £2 billion announcement from 2022 to now. It is a relatively small figure but it might help cash-starved housing associations to preserve their stock. In my street in Peckham there are two empty properties owned by different housing associations. One is a four-storey house and the other is a ground-floor flat. Both need major refurbishment to make them habitable. There is a desperate need for social housing in the area. What is going to happen? They are both going to be sold off. The ground-floor flat has been home to successive families in need for more than 35 years, to my knowledge. Now it will no longer be available to those who are poor. If the Government really care about housing associations, they should bring forward the £2 billion grant and stop the sell-off now.
Baroness Thornhill (LD)
I declare my interest as one of the many vice-presidents of the Local Government Association in the House. I am privileged to be able to contribute to this debate, which has been true to the standard of your Lordships’ House—well informed, passionate and extremely wide ranging. I thank my noble friend Lord Shipley for affording us this opportunity to discuss what is, without doubt, an important issue. My contribution will be a gallop around the course.
Several noble colleagues, particularly the noble Lords, Lord Best and Lord Whitty, succinctly summarised the current housing crisis and offered some solutions. So much expert opinion, government policy and our own contributions today show that, to a greater or lesser extent, the case is proven: we need more affordable homes. I was grateful to my noble friends Lady Brinton and Lady Thomas for particularly highlighting the need for more supported homes and lifetime homes. We are indeed building far fewer such homes and of those we are building, an even smaller percentage are social homes for rent. It is important to repeat that of the 42,000 affordable homes built last year, only 5,380 were for social rent.
Let us be in no doubt about the difference; we are all guilty of using the terms interchangeably, but the real need is social rent, currently described as up to 60% of market rent, although perhaps, as has been pointed out, that is not necessarily the best definition. The noble Lord, Lord McKenzie, was particularly exercised on that point.
I am personally in full support of the Government’s drive for diversity among housing providers and in tenure. As has been evidenced by several speakers, including the noble Lord, Lord Kerslake, the current policy emphasis seems to be on the delivery of numbers and home ownership. While this is indeed the tenure of choice for many, the harsh reality is such that we cannot build ourselves quickly out of this crisis and that there will always be a need for low-cost rented homes. I also believe in the diversity of people within communities and recognise that there are millions of low-waged working people for whom a home of their own is, and always will be, the council house or the housing association’s socially rented property. A sustainable town means a town for all. Our country needs these workers; indeed, I would argue that they are the lifeblood that keeps our towns, cities and villages moving and functioning.
The Government need to prioritise the delivery of homes for social rent as it is the only tenure that will effectively reduce homelessness and take pressure off the housing benefit system, as amplified by the noble Lord, Lord Rooker. While there is good news in the White Paper, the revised NPPF and the Letwin review, the current Green Paper seems to reinforce the idea that the Government see social rent as a springboard to ownership or other tenures. Can the Minister clarify the Government’s position on the need for social housing and its importance in the menu of fixed tenure?
Many of the Government’s good proposals are medium to long term but in the short term, as the noble Baroness, Lady Donaghy, said, will the Government consider allowing councils the power to restrict right to buy or have a moratorium on new-build social homes while a solution is sought to ensure one-for-one replacement? The LGA’s figures show that almost £3.5 billion in right-to-buy discounts have been handed out to council tenants over the last six years, at an average cost of £60,000 per dwelling last year. The loss of this social housing risks pushing more families into the private sector, again driving up the housing benefit bill. As we know, eviction from the private rented sector is now the single biggest cause of homelessness.
In the short term, the rise in planning fees by 20% was also welcomed. But given that the industry is still being subsidised to the tune of £125 million a year—I checked that figure but it is correct—when will we know the outcome of the recent consultation on councils’ ability to raise planning fees even further?
The noble Lord, Lord Rooker, passionately pointed out that conversions from office to residential under permitted development rights have been problematic. While it has obviously increased the number of homes, it has meant depriving councils of an opportunity to leverage any contributions from developers. The LGA has shown that this has led to a loss of 7,500 potential affordable homes over two years—not to mention the lack of ability to enforce housing standards, say on room size and quality, let alone environmental standards, as outlined by my noble friend Lady Walmsley. Old office blocks do not necessarily make good homes, especially if there is nowhere for the bins, bikes and buggies to go. Will the Government reconsider removing these permitted development rights to allow councils to decide where and when it might be appropriate to use these powers to create sustainable neighbourhoods and, perhaps more importantly, to secure more homes for social rent?
The lifting of the borrowing cap was mentioned by several, including the noble Baroness, Lady Warwick, and certainly welcomed by most. Will the Minister outline the timeframe for this so that even more councils can get cracking and build? Councils want to be part of the solution but I draw the House’s attention to the massive variations that exist between places in the cost of building social housing. In my own authority we have spent a great deal of time and expertise, which the Minister might be pleased to know we have shared with his civil servants, on working out the true cost of subsidy for building a social home in Watford. It is at least £100,000 per unit, and that is where the land has been provided at no cost and based on Homes England’s 40-year appraisal model. By contrast, the same model built to the affordable rent standard would break even, but it is social homes that we need. Do the Government recognise that councils will need consistent long-term funding for a new generation of public homes at social rather than affordable rent levels?
It is certainly the perception of residents that under the current system landowners and developers have too much control over what is built and where. Does the Minister agree that fundamentally what is needed is to get land into development at lower cost? The high price of land is the main driver in the loss of developer contributions when the unpopular viability test is applied.
Speakers have acknowledged that in the revised NPPF this viability loophole has, we hope, been closed. It is now imperative that councils use their powers to set strict and ambitious targets and achieve them. This will become more pertinent once the housing delivery test starts to apply. The Government will no doubt be monitoring closely how this plays out.
To make progress in the longer term we need a recognition that this speculative development model with its low-value land capture is not working for communities and ordinary people. As has already been said, the Centre for Progressive Capitalism has said that 75% of uplift in land value goes to landowners’ profit and only 25% to community benefit. Interestingly, in the rest of the EU the reverse is true. Perhaps this is why we have turned a nation of nimbies into BANANAs—build absolutely nothing anywhere near anybody.
Most recently, government policy, as expressed in the NPPF, sets a default level of 10% of housing on all development sites to be designated affordable. Noble Lords should note that the word is “affordable” not “social”. Did the Government give any thought to allowing councils to decide what is right for their area rather than the presumption of 10%, which is inflexible and limits local authorities’ bargaining power about what is most desirable for their area?
Finally, the noble Lords, Lord Horam and Lord Suri, eloquently expounded that the cost of land drives the current speculative development model which an increasing number of experts believe to be broken. There must be better ways of taxing land which are fairer for all parties. I know that that thinking is above my pay grade, but are our Government looking into this for serious long-term change or are they happy with the status quo? Rather controversially, is it perhaps not now time to question the whole premise of social housing being provided through the developer 106 contribution model, which is arguably ineffective, time-consuming, costly and loathed by all parties, and look to fund a much-needed renaissance of council house building by other means? It would be very popular and much needed.
Lord Kennedy of Southwark (Lab Co-op)
My Lords, first, I draw the attention of the House to my relevant interest as a vice-president of the Local Government Association. Secondly, as other noble Lords have done, I congratulate the noble Lord, Lord Shipley, on putting this Motion down for debate this afternoon.
Everyone agrees that we are in the midst of a housing crisis and that urgent action is needed to tackle the problem. To be fair, the Government have in recent times made some welcome moves, most recently with the announcement by the Prime Minister that the local authority borrowing cap will be removed—but much more needs to be done and I support calls for urgent clarification about when the cap will be removed. I agree with the noble Lord, Lord Horam, that most of the policies in the dreaded Housing and Planning Act have been dropped or quietly forgotten, which is excellent news. The latest one to disappear was the plan for the forced sale of council homes, which was very welcome indeed. But we are still not building enough homes and we are certainly not building enough affordable homes. The noble Lord, Lord Kerslake, made an important point that a significant increase in housebuilding across all tenures is urgently needed.
My noble friend Lord Whitty set out the housing problems and dysfunctional nature of the housing within a few hundred yards of this House, which can be clearly seen by all of us. The noble Lord, Lord Greaves, made the fair point that the housing crisis is different in different parts of the country, and we need to be more flexible in addressing these issues with different solutions in different places. My noble friends Lord Rooker and Lord McKenzie made reference to the tragedy of homelessness, which again we can see on the steps of this House, and how much we as a country need to do to tackle it.
A number of policy decisions, initiatives and even unintended consequences have come together to create a very different picture of housing in the UK today from what we see if we look back 30 or 40 years. The term “affordable housing” has become tainted and misused. In many parts of the country, and certainly in London, many of the homes deemed “affordable” are clearly unaffordable for many people. That has huge consequences for communities and society as a whole. Ensuring that everyone has a property that is warm, safe and dry is further away today than it has been for a very long time. For all the problems that this country has, it is still one of the richest in the world, so the situation of people who are not living in a decent home tonight is all the more tragic.
I shall look at some of the policy issues in play here. When right to buy was introduced, it was both popular and controversial. It was intended to help people to become home owners, and there is nothing wrong with that. The problem of course has been, as the noble Lord, Lord Kerslake, said, that the social homes were not replaced; councils still cannot keep all the capital receipts from the sale of those homes, as my noble friend Lady Donaghy referred to; and the number and quality of social homes for rent have reduced significantly over recent years, to the detriment of local communities, as my noble friend Lady Bryan of Partick made reference to. So will the Minister agree to speak to his right honourable friend the Chancellor of Exchequer and raise with him the case for local authorities keeping 100% of the receipts from right to buy sales to invest in new social housing? I make it very clear that these funds should be used to build new council homes on social rents.
The right to buy policy has created further problems, with many of these former council properties finding their way into the private rented sector, with vastly increased rents and, in some cases, becoming houses in multiple occupation. Communities have been disrupted and areas that were very stable now see a constant change and flux. This is no way to build strong and stable communities.
The private rented sector has grown dramatically. While most private sector landlords offer a reasonable product, there are rogues who rip off tenants and treat them very badly—and even when they are banned by one council they continue to operate in other areas, as we have seen reported in the press in the last few days. The rogue landlord database has been a failure in this regard, and urgent changes are needed.
The housing benefit bill has soared, as my noble friend Lord Rooker said. The Government do not own a brick for the billions that they pay out in housing benefit each year as families are forced to seek accommodation in the private rented sector because there is no local authority or housing association housing for them. I agree with the comments of the noble Lord, Lord Best, in this regard.
The planning system has often been wrongly blamed by the Government as a barrier to building new homes. The facts do not bear that out. In the past year, local authorities have approved more planning applications to build houses than have been completed. In 2016-17, 321,000 planning applications were approved and there are still 423,000 approved planning applications where not a single brick has been laid. I agree with my noble friend Lord Rooker on the need to deal with permitted development scams.
There are problems with planning that have not been addressed. We have the council tax payer still subsiding the planning process, even after the 20% rise in fees, and it would be helpful if the Minister could update the House on the consultation for a further increase of 20%. I very much support the position of the Local Government Association that we should seek to abolish these fees and introduce locally set fees to reflect local demands and local pressures.
Housing associations also have a big role to play in providing affordable homes, and are a key partner for both the Government and local authorities to provide the homes that are needed, as my noble friend Lady Warwick of Undercliffe mentioned. Housing associations are up for playing their full role in helping to build the homes we need, but the emphasis should be on truly affordable homes. The price of land is probably the biggest single barrier to building homes, as a number of Peers said.
It was most disappointing to me, when we passed a previous Bill on planning and compulsory purchase towards the end of the previous Parliament, that we were unable to persuade the Government to agree to the reasonable request from TfL and the Mayor of London to allow them to sell land below the cost value for homes for social rent. The department would not agree, which was very regrettable. I hope that the Government will see the value in allowing that to happen in future, so that the biggest barrier to building new social homes can be reduced to some extent.
The noble Baroness, Lady Walmsley, referred to off-site construction of housing. I concur with her remarks. My friend at the London Assembly Nicky Gavron produced an excellent report on off-site constructed housing and how it is set to play a much bigger part in solving the problems we are discussing today. I recommend her report to anyone who is interested in housing, as I think it is very much part of the solution.
I am a Labour and Co-operative Member of the House, and I think that the co-op sector has a big role to play. There have been exciting developments in community land trusts, which is community-led housing set up and run by local people to develop and manage homes. CLTs act as long-term stewards of the housing, ensuring that it remains generally affordable, based on what people earn in the area—and it will be affordable for years to come, for future occupiers. They have great potential to make a real difference, as does co-operative housing in general. Where the tenants are the co-op, they employ the staff and elect the board to run the co-op. I have seen wonderful examples of where co-operative housing has transformed areas to help local communities. The rents are truly affordable and estates are clean, well-managed and stable. There are excellent examples, such as the Ewart Road Housing Co-op in Crofton Park and the Phoenix Community Housing, which covers the Downham Estate in Lewisham. Both are providing community-led housing in meeting people’s needs.
It would be good if the Minister could say something about government support for housing co-ops. I hope that he agrees that, if enabled, the sector could play a much bigger role in dealing with the housing crisis.
In conclusion, I thank the noble Lord, Lord Shipley, for tabling the Motion for debate today, which has enabled us to discuss this important issue.
The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)
My Lords, this has been an excellent debate and I thank everyone who has participated in it for their contribution, particularly the noble Lord, Lord Shipley, for bringing it forward and for what was a real tour d’horizon at the beginning. He covered so many different areas of policy. I will try to do justice to his contribution, but some of his points are well above my pay grade and outside my experience. He made some excellent points.
I agree that there is a massive problem here. In fairness, all noble Lords who opined agreed that this problem did not suddenly happen; it has built up over time under successive Governments. That does not make it any less serious, but it means that we to some extent all share the blame. From the contributions I have heard, I am sure that we all want to share in solving the problem. I very much agree with the noble Lord, Lord Kerslake, that there is nothing that we cannot overcome here. There are serious challenges, but there are policy options which should be investigated and many of them were touched on in the debate.
I shall try to deal with the contributions that were made. I may end up sending my speech as an addendum to the points that I have not covered, because I am not sure I have time to make it—that will be horrific for those in my Civil Service team who have spent so much time on it. I will ensure that it is sent round.
First, my noble friend Lord Horam made some points about the cost of land. It is absolutely true that the magnet of the south-east of our country and other hot spots means that the cost of land is prohibitive in some areas. He and the noble Baroness, Lady Warwick, talked about land value and compulsory purchase powers. That was covered in our manifesto, and we are looking at consultation contributions on compulsory purchase issues. We will certainly be looking at that area.
On land value more specifically, which was raised by the noble Baroness, Lady Warwick, we have recently introduced major reforms in planning to help local authorities to capture land value for affordable housing and to make sure that developers know the contributions expected of them. I think that this was in the Neighbourhood Planning Act, from memory. Currently, we are reviewing responses to consultations on reforms to developer contributions. It is important that we explore the options; I absolutely agree with the noble Baroness. I also thank her for her kind words about the Prime Minister’s role in this and their sharing a platform. It is important that we are seen to be tackling this together, because there is no partisan issue in seeking to get this put right.
I thank the noble Baroness, Lady Brinton, for what she said about the importance of tackling long-term disability issues. As she knows, we have a home ownership scheme for people with long-term disability—the HOLD scheme—but, on the specifics of the standard, she made a very powerful case. I am happy to meet with her and the noble Baroness, Lady Thomas, if that is helpful, to see what we could do in that regard. If they can leave it with us, we will contact them to move that forward.
On the disabled facilities grant, which the noble Baroness, Lady Thomas, mentioned, I will make sure that that point is made available to my noble friend Lady Buscombe at DWP. I will also share the Hansard of this debate with other government departments, because it has been so wide-ranging and there are so many issues that have come up elsewhere.
I turn to the noble Lord, Lord Best, who was the next to speak, I think. Few people have greater experience than the noble Lord, though he wears that very lightly, and I take very seriously the specific points that he made. We differ perhaps on the Help to Buy scheme; we take a different view of that, though of course we have to make sure that it is a proper use of government money. I believe that there is an aspiration of people to own their own home—though not necessarily throughout their lives because, sometimes, after leaving college or at an early stage in their career, people will want to rent and have that flexibility; it may be later that the aspiration for home ownership kicks in. It is true that not every country regards home ownership in the same way as we do; it is different in France, for example. So I might differ from the noble Lord on some of the specifics of that.
I thank the noble Baroness, Lady Bryan, who gave something of a historical overview of the issue, perhaps touching on issues of globalisation, which present problems that the Attlee Government would not have had. There is no escaping the way that the Attlee Government tackled the problems at the time; it was outstanding, but it was a very different world, as I think the noble Baroness would acknowledge. Issues of globalisation—also touched on by the noble Lord, Lord Whitty—mean that, in London, people come over and buy up huge tracts of land, which would have been unthinkable in the period immediately after the war or even in the 1960s. That is well beyond the narrow scope of my department on its own, but it is a problem for Governments around the world, particularly Governments in this country because of London’s international nature. It is not all in one direction, and it is tempting to say, “Let’s stop it”, but one has to remember that the magnet that brings people to London also brings capital and jobs to London. Many of the people we are talking about who aspire to own their own homes are in that category. There is no easy solution, but I acknowledge that there is certainly a problem that needs tackling.
The noble Baroness, Lady Bryan, asked about our policy on providing greater security to private tenants. It is important that they have appropriate security. Under the Protection from Eviction Act, I think that they largely do, but we have ramped that up in relation, for example, to retaliatory eviction in the Deregulation Act 2015—if I am wrong on that I will write to her. I accept the point that she made. On the basic point of people having a right to housing and whether we accept that as a right for people, yes we do and that is, fundamentally, why we want to eliminate rough sleeping. I will come on to that later—it all links in with the basic point.
I turn to the comments of the noble Baroness, Lady Walmsley. Many of the issues she raised were not matters for this portfolio but included issues from my previous portfolio in energy and climate change, which I feel keenly. Indeed, I was the person who signed the climate change treaty for the UK in New York in early 2016, following the historic agreement in Paris. I agree very much with some of the points she was making about the need to meet targets on climate change and about this being something that links in, not with the cost of the housing per se, but with the cost of living. I am very happy to look at some of the points she made and to write to her.
There is a company the noble Baroness is probably familiar with in Swansea, South Wales, called Specific, which has done great work in making what it calls BAPS—buildings as power stations—where not only the roofs have solar panels but so, too, do the walls and windows. The Government have given money to Specific via BEIS; it is doing epoch-making stuff that links with work done by an institution she will know, the Centre for Alternative Technology in Machynlleth.
Many British companies are doing this kind of work, producing houses using modern methods of modular construction; they are very much something to look out for in the future. They can be constructed very cheaply and are often well-designed. They are not like the old kind of prefabs; they are energy-efficient and in some cases, as with Specific, they feed back into the National Grid. I am keen to support this work and have tried to do so through the Ministry of Housing, Communities and Local Government; it applies to England only on housing policy, but that does not mean we should not be promoting these companies wherever they are in the United Kingdom.
There are issues of transportation, which is not always simple or energy-efficient. Some of the houses are almost flat-packed, but there is still a need to get permission from police forces to move them around the country from A to B, which can be costly for the producers. It is something we are looking at. I will write to the noble Baroness and make sure the noble Lord, Lord Henley, sees this too. I agree with her comments on integrated design and renewable resources, and on domestic-scale micro generation, very much indeed.
I thank my noble friend Lord Wei for his contribution, which blindsided me a little, on the housing festival in Bristol and the pop-up modular housing happening there. I would like to take that forward with him at a meeting as it sounded very interesting. He mentioned landbanking and housing delivery, which is associated with the Letwin review. That is something we have mentioned previously. Again, I will write a letter to cover where we are with timescales on the housing review.
I also thank the noble Lord, Lord Rooker, for bringing up Shelter. I would like to pay tribute to Shelter, which is a valued partner in a lot of what we do, and to Polly Neate in particular, who is excellent in her role just as she was in her last one at Women’s Aid on domestic abuse. She is on the advisory committee looking at homelessness, which is advising Minister Wheeler on this. I will get more details to the noble Lord. I agree that it needs oomph to ensure that we are all over it. I know he had a previously powerful role in delivering in that area.
I agree that rough sleeping is a very important issue. I apologise if any of my responses are out of order. I have already covered the point made about the meeting by the noble Baroness, Lady Thomas; I thank her for the matters she raised including on the disabled facilities grant. The noble Lord, Lord Kerslake, gave a very fair speech; I thank him very much for the way he phrased it and for agreeing over the diversity of what we do now. I will not overwhelm the Attlee Government with tributes, but they did a great thing that was appropriate at the time—on housing estates then, doors had to be the same colour; you could not paint your own fascias and soffits. In short, the challenge is there, but it is different. Now it is a case of diversity, because we have to look at this in the context of where we are now.
Many noble Lords touched on social housing; it was central to this debate. We have said over a period of time that social housing is a central part of what we have been seeking to do. We have perhaps made that more words than action until recently, but many noble Lords, including the noble Lord, Lord Kennedy, said that we have moved on this. Indeed we have, partly through the raising of the cap. That has not been immediate; the only reason for that is the need to consult with local authorities on the precise wording of what is going to be done—no more or less than that. But again, I will cover the particular timescales in the letter. In addition, and significantly—noble Lords have been fair on this—there was the Prime Minister’s announcement of the £2 billion from 2022 in partnership with, I think, eight housing associations to deliver social housing. In so far as I have more details on that, I will cover them in the letter.
I have mentioned some of the points made by the noble Lord, Lord Whitty, and I thank him very much for his kind words. He talked about the massive problems that are there, and was fair in saying that this is about every Government over the last 40 years. That is true, but I reiterate that the problems are not insuperable, and that they are associated with land value, although not in every instance. That was exemplified by points made by the noble Lord, Lord Greaves, on how different parts of the country are in different positions. There are even hotspots in the north where housing is unaffordable, but there are certainly difficult areas in the north where housebuilding is just not on the horizon because of other problems; that probably applies to some parts of the south as well, but more notably to the north. I thank the noble Lord very much for the handout that he gave me, fairly, at the beginning, and I will make sure that we get answers to him on the various points in there that he was unable to cover in his contribution because of time pressure.
My noble friend Lord Suri spoke about the importance of people having a stake in the community they live in, and the desire for home ownership. Not everybody has that desire, but many do, and we should not ignore that. It is easy for most if not all of us, who probably own our own home; we should not forget that many other people want to own their own home and should seek to help with that where we can while ensuring proper use of resources.
The noble Lord, Lord McKenzie, dealt—again, fairly—with the issues of affordable housing from his own experience of Luton, which has pressures on house prices, as do many towns in the east and south-east. He talked of the growth of the private rented sector, which has been a feature of the last 20-plus years and certainly the last 20 years. That is not necessarily a bad thing as long as it is properly regulated. We are seeking to do that and have made some good moves on that—we are currently doing so in the Tenant Fees Bill. It has to be properly regulated, but it is part of a diverse housing pattern, and it is not that people will necessarily want to rent houses for their whole lives. Some might—that happens in France, for example—but most will perhaps see it as a part of their housing journey and may want to do it for a relatively short period. It provides some flexibility and mobility in the job market, which is needed.
I think I have dealt with the point made by the noble Lord, Lord Greaves, and I will certainly pick up the other points he made.
The noble Baroness, Lady Donaghy, spoke about Persimmon. She is absolutely right that this is part of the issue as well, but it is multifaceted and not just about land value. We have to make sure that we are getting proper value from some of our large builders, and the point was well made. She talked about receipts for council house sales, as did other noble Lords, including I think the noble Lord, Lord Kennedy. We had a consultation alongside the Green Paper; I think we are looking at the responses to it but I will cover that in the letter, as I was slightly blindsided by the question of where we are specifically on that.
In a wide-ranging speech the noble Baroness, Lady Thornhill, talked fairly about and supported the diversity of provision, putting her finger on many of the issues about the costs and land value which I have touched on. She also mentioned design and modern methods of construction which I am very much signed up to; that is very important. She left us with a very lasting phrase in “build absolutely nothing anywhere near anyone” and I thank her for that. That is certainly not something we are in favour of, but I suspect civil servants will use that phrase for ever more.
The noble Lord, Lord Kennedy, set out the position and some of the problems very fairly, as always, and I do not disagree with him. He was very fair in saying that we have moved on some of these things. I will get back to him on the specific issue of the co-op; I know that is dear to his heart and the sector does much good work. I will look at that and respond. He knows the position on the rogue landlord database. I am very keen, as is the Secretary of State, to make sure that that is open, and not just to local authorities. We are looking at a particular legislative vehicle to do that, but it is out of scope. I pushed to see whether we could include it in the Tenant Fees Bill, but we cannot. As I say, the Government are signed up to that and want to do something at the earliest possible opportunity.
In order to leave the noble Lord, Lord Shipley, a minute to speak, I thank noble Lords very much indeed for a very worthwhile debate.
Lord Kerslake
I thank the Minister for his comprehensive response. There was just one issue I raised on which I would welcome a reply: what is happening to the future of Help to Buy and when will we see an announcement on that?
Lord Bourne of Aberystwyth
I think we still remain committed to Help to Buy, but I will cover that in the letter in case there are points that I can add by looking at some of the detail.
Lord Shipley
I thank the Minister very much for his full reply, and thank all those noble Lords who have taken part in the debate. It has been extremely instructive and helpful, and I hope that when we read Hansard, there will be much in it to reflect on; the Government will no doubt reflect on it too. We have the Budget next Monday of course, and we will listen carefully to it. I understand there will then be a debate on it in your Lordships’ House on 13 November. I certainly hope that we will be in a position to explore some of these issues further on that occasion.