Housing (Built Environment Committee Report)
(2 years, 1 month ago)
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Lord Moylan
That this House takes note of the report from the Built Environment Committee Meeting Housing Demand (1st Report, Session 2021–22, HL Paper 132).
Lord Moylan (Con)
My Lords, I begin by drawing the House’s attention to my registered interest as a member of the board of the Ebbsfleet Development Corporation. In moving this Motion, I pay tribute to my noble friend Lady Neville-Rolfe, who chaired the committee from its inception and during the period when it was producing this report. It was published as long ago as January this year, although it seems much fresher than that. I think I speak on behalf of all members of the committee in thanking her for her work and the way in which she welded us together as an irresistible inquisitive force trying to understand the workings of the various aspects of society that come within our purlieu.
In producing this report, we started from some common ground, the first element of which is that there are too few homes for the population in this country. There are too few homes for those who want them, but also not all the homes are necessarily the right homes to meet demand in terms of size, necessary amenities and so forth; nor are they all in the right place. I think we all started with the common view that building more homes was at least a very important part of the solution to that problem.
The Government have set themselves a target of seeing 300,000 homes built per annum. It is sometimes said that the Government have promised to build 300,000 homes, but they do not build homes, or not in any significant number; the homes are to be built by the private sector. That figure is obviously an approximation and is what would I describe as a stretch target. There is nothing wrong with setting yourself a stretch target as a tool for motivating effort, provided, of course, it is understood as such. In the current year, the industry expects to be on track to build approximately 240,000 new homes. Although that figure is less than 300,000, it is none the less not to be regarded in any way as a failure.
With that common background, our report focused on the barriers to increasing the number of homes being delivered per annum and bringing it closer to that 300,000 figure. As it is such a long report, in the interests of time, I shall inevitably be selective about the items that I draw to the House’s attention, hoping that the other members of the committee I see in the Chamber will alight on other issues.
I intend to focus on three issues. One is the house- builders themselves, though in what I am about to say I do not intend any criticism of them at all. The large housebuilders—the ones that do the volumes we need—are relatively few in number. They do not have the capacity, either financial or in personnel, to ramp up the number of houses they are building every year on the scale that the Government would necessarily hope for.
There are difficulties in becoming a large housebuilder; it is an industry that has barriers to entry. One needs the land, the resources and—I will come to this in a moment—the skills necessary to negotiate the planning system in order to get the permissions that allow one to build large developments. One of our recommendations was that everything should be done to encourage more small housebuilders, to help take up the slack. We noted that the number of small housebuilders over the last two decades had declined and the share of the new-build market they were responsible for was probably at its lowest level for a very long time. One thing we want to see is more encouragement for smaller housebuilders, partly to add to the diversity of the housing stock available to members of the public looking for a new home, but also in the hope that some of the small housebuilders might, over time or even quite rapidly, become large housebuilders so that they are able to offer some competition and spur to the existing large housebuilders.
That brings us to planning. I have already mentioned the expense and complexity of obtaining planning permission. Certainly, when it comes to the smaller housebuilders, one has to take into account the fact that a substantial amount of money must be put up in advance, at risk, as one seeks planning permission. Leaving aside the cost of the land itself, which one could take an option on, the fact is that the design, the architectural work, the necessary studies, the environmental impact assessments and so forth, together with the planning fees, represent a significant upfront investment, which may never be recovered if it turns out that the application is simply doomed to fail. That is a significant deterrent and part of the barriers to entry that I mentioned, which prevent smaller house- builders offering more competition to the large ones. Overall, however, even in relation to large housebuilders, the committee found that delays in the planning system and uncertainty over planning reform had a chilling effect on housebuilding.
We also found that in a plan-led system for development, such as we have had in this country since the end of the Second World War through the Town and Country Planning Act, the system does not work—or does not work well—unless local plans are in place that are up to date and relevant to the needs of the local area and the forecast demand for homes. We also found that local plans need to be simpler, clearer and more transparent. In that regard, we look forward—as we have done for some time—to scrutinising the Levelling-up and Regeneration Bill, and hope to see reform of local plan-making in that Bill.
In relation to planning, we were also particularly concerned about the Government’s wish to move further away from Section 106 payments in the direction of an infrastructure levy. We appreciate that if an infrastructure levy can be a simpler method of calculating the contribution expected from a developer than Section 106, that is an attraction. Our concern is not that but that Section 106 contributions must, by law, be relevant to the development taking place. Therefore, if money is paid to contribute to or provide a primary school for a large new development, the contribution is tied to that primary school and one can be reasonably confident that it will be delivered. Our understanding of the infrastructure levy, however, is that the local authority can simply take the money and it becomes part of its general funds, so the connection with the development, and therefore with providing the amenities necessary to support it, is lost. We would therefore like to see some sort of assurance in that respect.
We also noted that planning departments in local authorities up and down the country lack sufficient skills to process the applications coming to them and to assess the increasingly complicated factors loaded on to planning applications. If we are to have a plan-led system and the Government are to insist on a certain level of complexity, it is incumbent on them to ensure that there are sufficient planning officers with the right skills to process them so that development can take place.
In relation to housebuilding, it is worth moving on to skills in the construction sector as well, the point on which I shall conclude. It is fair to say that the skilled trades necessary for the traditional method of house- building have been in decline for quite a long time—well over a decade, possibly longer. That is why, long before Brexit, the phrase “the Polish plumber” had become almost standard in our language. By encouraging immigration in those skilled trades, we had been responding to a long-standing decline in local availability of those skills. That was long before Brexit. The lack of plumbers, carpenters and so forth has not been produced by Brexit; it was already there. Brexit has changed the arrangements in the use of immigration to make up the shortfall.
In this respect, it has to be asked whether constantly importing skilled trades from the European Union was a sustainable and feasible response over the long term to the problem, anyway, especially given that many of the countries from which they were coming were themselves becoming richer and had demand for that labour at home.
We therefore think it behoves the industry to consider new methods of building alongside traditional methods—and perhaps taking their place—including automation, innovation and modular housing. It struck us that modular housing has been promised for many years but has never quite taken off. The Government should be looking closely at that and trying to understand why the many words that have been spoken about it have not turned into the revolution in housebuilding we might have expected.
Many hands have gone into the making of this report. I am grateful to all the members of the committee who attended so many evidence sessions, undertook visits and made such a great contribution. I have already mentioned my noble friend Lady Neville-Rolfe. I should express thanks to our special adviser, who looked after us throughout, Professor Paul Cheshire, Emeritus Professor of Economic Geography at the LSE. I thank all the clerks and the other House staff who supported us in producing the report. I will probably break some terrible taboo in your Lordships’ House by mentioning our lead clerk by name, Dee Goddard, and giving her a special vote of thanks, because she has looked after the committee since its inception and is leaving the service of the House in a couple of weeks’ time to relocate with her family to another part of the country. I give a special word of thanks to her as I sit down and commend this report to your Lordships’ House
Lord Davies of Brixton (Lab)
My Lords, I thank the noble Lord, Lord Moylan, for introducing this report. A bit to my surprise, I found myself agreeing with virtually everything he said. I mainly thank the committee for its hard work in this important area. Given the nature of an all-party report, it is excellent, covering the whole territory. There is much to learn.
I will focus on one part of the report, which simply states:
“There is a serious shortage of social housing”.
I want to make one straightforward point on the importance of council housing. We face some public policy problems to which there is no obvious solution, but we have other problems to which we do know the solution. History tells us what the solution is but, for some reason, we avoid the obvious. We know from history that the way to obtain a bigger supply of social housing is to build council houses.
I could quote the experience of the 1964 Labour Government—there is justification for that—but I am going to look at the 1951 Conservative Government. I have been rereading Harold Macmillan’s autobiography. There is much to learn. As I read, I had to ask myself whether he would have a place in today’s Conservative Party. I think the answer is no, but I do not know; obviously, he was a man of many parts. He was the Minister for Housing from 1951. He inherited a decision of the Conservative Party conference that it wanted to build 300,000 houses a year—an interesting figure. Of course, it is worth stressing that this was new-build and at the same time, it was having to undertake a massive restoration of the housing stock, which had been destroyed or run down during the war.
Macmillan set about achieving that objective. In 1953, there was a White Paper, Houses: The Next Step. I will quote for noble Lords the biography of Harold Macmillan by Charles Williams, which says that, after the White Paper, Macmillan realised that he would
“have to persuade his own colleagues that the only way to meet the promise given to the electorate”—
the manifesto promise—
“was to engage in a sustained programme of local authority housing.”
He goes on to explain that
“the only way to achieve the housing target was by subsidising local authorities to build for rent. In other words, council housing was to have the top priority.”
By way of background, during the subsequent debate in the Commons, Macmillan gave a routine acceptance of a property-owning democracy. His whole argument was that, as a long-term aim, property ownership was fine. However, Williams states:
“Council housing for rent was the only way to meet the political objective he had been set—and which he was determined to achieve.”
We have the same target now and the same means of achieving it; that is the true meaning of the shift.
Many years ago, when I was a member of a local authority, people said, “We shouldn’t be subsidising bricks. We should be subsidising people”. That is clearly wrong. The only way to solve a housing shortage is to build houses, and the most direct and simple way to achieve that is through a massive council housing programme.
Baroness Thornhill (LD)
My Lords, I thank the noble Lord, Lord Moylan, for his introduction. I am pleased to be a member of the Built Environment Committee. I found this brief challenging and I too thank our committee officers and special adviser, Professor Paul Cheshire, who helped us to see the wood for the trees —or, in my case, at least to try to. Our title is Meeting Housing Demand, which is a wide field. The breadth and level of expertise of our witnesses was phenomenal. I felt privileged to listen to many of them.
In my contribution on this wide-ranging report, I propose to focus on the planning system and the role of councils, and perhaps to be a little challenging to us as politicians. It goes without saying that, as a member, I agreed with most the recommendations, subject to the usual wrangling in coming to consensus.
The report focuses on how to build the now-accepted target of 300,000 homes a year. Actually, even that target was disputed. What was not disputed was that the Government are failing to reach it. In all fairness, so have decades of politicians; this is a long-term issue.
However, all the major parties agree that we need more homes. They broadly agree on the numbers and we even all mention this in our manifestos and general political rhetoric, but I have two points on this fact alone. First, it is all empty bravado and meaningless if the underlying problems in the system are not addressed. The report, with which we largely concur, uncomfortably highlights many of these for the Government.
Secondly, this is completely at odds with the subsequent rhetoric and actions of individual politicians of all parties when it comes to development in their own constituencies or wards. We have seen a nation of nimbys go BANANAs—build absolutely nothing anywhere near anybody. This is a serious issue and it needs serious attention. Taking the public with us is critical to success, and we need a radical, innovative approach to engagement. I hope the Minister shares the plans for this with us.
Following a range of comments made by senior politicians recently, there seems to have been backtracking on targets and housing numbers. I would welcome the Minister clarifying whether targets and top-down housing numbers allocated to local councils are to be continued under this new Government. In particular, how effective or not do the Government believe they have been in getting more homes built?
As for housing numbers, what progress have the Government made on deciding what the right honourable Michael Gove MP said, on returning to the Cabinet, is a
“fair way of allocating housing need”?
I am sure every politician in the land is eager to learn what constitutes a fair allocation in their council area.
This kind of statement epitomises one of my main concerns: it sounds plausible and sensible, along with other soundbites, such as “simplify the planning system”, “cut red tape” and “the right homes in the right places”, but what do they actually mean? We heard lots of those in our evidence, but they clearly mean different things to different interest groups.
Take the simple statement that is often repeated of delays in the planning system or that councils are to blame for reduced completions. For the housebuilders, this gets the politicians, and therefore the community, out of the picture. It means minimising housebuilders’ involvement, reducing their fees and levies, and simplifying policies so that expectations are known up front, riding roughshod over local consideration. This was more clearly and very recently expressed in the Home Builders Federation’s report Building Homes in a Changing Business Environment. Some noble Lords were sent that report, and more could and should be said on it, but time prohibits it.
I turn now to council planners, whose version is probably closer to that of the Government: to please stop developers trying to get out of their commitments to Section 106 and infrastructure levies, particularly around social housing; to give them stronger powers to insist on higher environmental building standards so that they do not spend ages haggling with developers; and to stop trying to water down their local policies, designed with and for their communities, in efforts to make it all simpler—for the developers.
I do not doubt that some councils are not performing at their best. How do we bring the worst closer to the best, and how do we empower council officers to stand up to developers which refuse to follow our best practice? Can the Minister tell us whether the Government will in fact be bringing forward plans to reform the planning system? In particular, what changes will there be to ensure that the skills and recruitment issues within councils outlined in the report are fully addressed?
We heard that qualified planners can earn significantly more money working for developers than for councils, which, especially small district councils, cannot compete with those salaries. Within the reforms, will the Government grasp the nettle of real community engagement, make the case for the national need for more homes, and be prepared to challenge not just councils—because, hey, they are a faceless piece of bureaucracy that the Government can tell what to do, and the Government bear down on them through such mechanisms as the housing delivery test—but council leaders and MPs who use that slogan, “the right homes in the right places”, and try to ride the tide of anger from their residents while, in some cases, actually voting for the policies that are prompting the rise in unpopular developments?
How will the Government face the challenge that local communities have virtually no incentive to permit residential development while saying that they will have a major say in local plans in the future, giving them opportunity to shape what happens in their area? Once again, the soundbite is good, but what does it mean in reality? How will it be different from what many good councils have been trying to do all along? How will it get communities to accept development? Are the Government still supportive of neighbourhood plans, for example, which seemed to work in some places in this regard?
Many residents’ objections are about the strain on local services, and this is well documented in the report. What are the latest plans on CIL—the community infrastructure levy—and Section 106 contributions, and, in particular, the recent proposals that such fees should be paid by the developer not only when the development is completed but the homes occupied? Is that still going ahead? Who will therefore be responsible for funding the infrastructure while it is being built? Will it be cash-strapped councils?
What do the Government intend to do with the 61% of councils without a local plan? They would argue that the Government should please stop changing the goalposts and let them get the plans finished—but, then, guess what? The goalposts change. Depending on the Minister’s answer, they will probably have to change again. In which case, will the current plans still be valid, and until when?
Finally, many witnesses spoke of uncertainty within planning permission—all the chopping and changing, and playing the blame game. I hate that we pit developers against councils, and councils against their communities, because this will not get community buy-in for 300,000 homes a year. This is only one aspect of the many highlighted in the report. However, I purport that, without it, it will make it politically difficult to deliver those essential 300,000 homes, and we will continue to fail to meet our critical housing needs.
The Lord Bishop of Durham
My Lords, I begin by commending the report and thank the noble Lord, Lord Moylan, for introducing this debate. I also commend the work of my right reverend friend the Bishop of Chelmsford, who, as the Church of England’s lead bishop for housing, has tirelessly engaged with this issue and the Social Housing (Regulation) Bill.
Last year, the Archbishops’ Commission on Housing, Church and Community published its Coming Home report, which set out a vision for housing to be sustainable, safe, stable, sociable and satisfying. It is through these values that strong and lasting communities can be built, enabling people to thrive and flourish. It was very interesting to note how warmly these five values were welcomed by the industry itself as a guide.
However, the reality is that a large proportion of housing in this country does not embody these values. It is widely stated that we face a housing crisis, including a shortage of social housing. Social housing is designed to help those whose needs are not served by the market, most commonly those on the lowest incomes. However, when Meeting Housing Demand was published, 1.9 million households were on local authority waiting lists for social housing in England. With rents and interest rates rapidly rising, more households are being pushed into poverty and this list is only growing longer.
This social housing shortage is forcing huge numbers of lower-income households into the private rental sector, while others are placed in temporary accommodation. I recognise that, for some, temporary housing is a valuable lifeline, but it cannot become the long-term solution. In 2021, 124,290 children were living in temporary accommodation. The Archbishops’ Commission revealed that some families had been living in temporary accommodation for over a decade, during which time they had been moved around multiple times. In London, 37% of those in temporary accommodation are placed outside the resident’s home borough and, in some cases, moved to other parts of the country. This means that they are moved away from family, friends, schools, jobs and communities. This is no way for a child to grow up and it is why we need much more social housing.
Furthermore, the crisis is being exacerbated by a lack of genuinely affordable housing. Affordable rents are set at about 80% of the market rate, but in many areas this is not affordable for those on low incomes, so it pushes more households into poor-quality private rented sector housing. Do the Government have any plans to change the percentage of the market price at which housing is deemed affordable, or instead to define affordability in relation to household incomes?
To mitigate this crisis in the long run, it is crucial that more social and affordable housing is provided. Over the past 40 years, there has been a halving of the social rental sector. The Government’s target is ambitious at 300,000 new homes per year and 1 million new homes by 2024, but they have not outlined what housing types and tenures these will be. What percentage of these targets will be genuinely affordable social housing? A more detailed plan is required, outlining targets for the proportion of these homes that will be affordable.
As the Meeting Housing Demand report reveals, many tenants who previously would have been in social housing are now privately renting expensive accommodation, with their rents subsidised through housing benefit. This is costing the Government £23.4 billion per year. Providing more social housing is a matter not only of helping some of the most vulnerable in our society but of financial common sense.
I highlight the work of the local authorities in my region of the north-east, as they strategise and begin to build new social housing. In particular, I highlight Sunderland City Council, which is collaborating with Sunderland College and the Ministry of Building Innovation and Education to develop a housing innovation and construction skills academy, which will educate, train, and upskill local people, who will then be able to build local homes. I commend these local authorities as they work to build new social housing and reduce the skills shortage at the same time, but there must be a more detailed commitment on a national level. I ask the Minister: how widely are the Government encouraging councils, colleges and industries to work collaboratively on upskilling people in the housing industry?
Here, in line with the point made by the noble Lord, Lord Moylan, and the noble Baroness, Lady Thornhill, I ask about Section 106 money. The connection to local social provision has been hugely important for schooling and other community facilities. Can the Minister confirm that any proposed changes will not lose this connection to local provision?
I conclude by returning to highlight the work of the Church Commissioners, who have begun to use church land more specifically to build affordable housing that embodies the five core values of good housing, as previously stated. In the north-east, they are partnering with local councils and currently plan to build 3,952 new homes, between 510 and 930 of which—possibly more—will be affordable. I encourage local developers to follow their lead.
With the rising cost of living, it is vital that urgent action is taken. I reiterate my request to the Government to produce a clear commitment and strategy for good-quality, affordable social housing, built at net zero. Without it, this crisis will only worsen, severely impacting children, families and households across the country.
The Earl of Lytton (CB)
My Lords, it is always a pleasure to follow the right reverend Prelate. I declare my professional interest as practising chartered surveyor, and I follow the noble Lord, Lord Moylan, in saying what a wonderful chairman we had in the person of the noble Baroness, Lady Neville-Rolfe, for the production of this report. Its sharpness—the edge that it has—is her hallmark. What a privilege it has been to serve on the Built Environment Committee and to work with colleagues. I add my thanks to our clerk, policy analyst and committee operations officer for their untiring efforts.
For me it was a real pleasure to come across Professor Paul Cheshire again. He was one of my lecturers when I studied at the College of Estate Management 50 years ago. I just hope he felt that some of the fairy dust and some of his wisdom had sunk in.
I warned our chairman, the noble Lord, Lord Moylan, that I might be making a bit of a departure. I will leave the bulk of the report to speak for itself because I think it largely does that. I should like to address a little of what I might call the size of the remaining iceberg that lies beneath the surface. I may be slightly nearer to the noble Baroness, Lady Thornhill, than she might at first suppose.
We concluded that behind delivery shortfalls against target there is some lack of coherence in government policy in relation to delivery, particularly in the area of planning, which has been referred to. It is not that the Government do not have clearly stated targets—they clearly do—but the mechanism for getting results seems in disarray. A series of patch and repair operations has been undertaken over many years with an absence of thoroughgoing assessment of the implications in a very complex interleaving of tiers of government, executive agencies, international commitments, national priorities, societal and special interests, along with significant infrastructure challenges, not least when you have to meet them upfront as part of a development process. This may be due to the number of departments involved but also to the underresourcing of planning departments. They are matched by increasingly financially powerful volume housebuilders. They have been referred to in other circumstances as showing oligopolistic tendencies.
I think there is a wide perception of minimal corporate ethics in a sector that sits uncomfortably close to the political elite in the sponsorship of party conferences, political donations and photo opportunities for Prime Ministers and others wearing hard hats and high-vis jackets emblazoned with corporate logos. These might not be harmful of themselves, despite appearances, but there is obvious potential for what might be called high-level offline activity.
Closer to home, and with resource-starved authorities in high-value areas, there is clear evidence that these influences are being brought to bear in policy-making at local level, often—I suspect, and this is certainly the suspicion of many citizens—in priority to the express wishes of communities. After all, local planning officers can be effortlessly outgunned by skilled legal teams, even without recurring aspects that the average citizen would perceive as fundamentally dishonest. Strategic housing allocations are made but then built out at a dribble, thus perpetuating high and growing house prices and placing forward housing rollout in the hands of unaccountable private companies.
In turn, this leads to further manipulation and horse dealing over available sites. Railroading of developments is often done via ruinously expensive appeals and inquiries. Despite clear local and neighbourhood policies, citizens’ wishes are being overridden. As the noble Lord, Lord Moylan, pointed out, SME operators have been squeezed; they simply cannot compete in this environment. The public perceptions are negative, mistrustful and disbelieving of the conditions and controls, especially Section 106 ones, that they are told local authorities are able to impose.
Certainly, in my own area, one does not have to join up many of the dots to understand what has been going on over the last 18 months between the majority party on the council and a series of well-funded developers. Indeed, on the current matter of water neutrality, which is well up the agenda, it is beginning to look as if the clear principles set out by Natural England may be up for grabs via a system of permits according to a tariff, with long-term but ultimately unenforceable requirements of things such as low-flow taps and diminutive bath-tubs. Of course, none of these will diminish the core problem of growing abstraction and the resultant damage to environmental assets—at least, not any time soon.
Adequate delivery risks failure, not just in build-out rates and the quality of place-making and durability of homes but in less physical ways—for instance, rent charges, where a new freehold house is tied into annual payments for maintenance and management of common areas or public realm assets. That is the roadways, hard and soft landscaping, storm water drainage arrangements, play areas and maybe security systems and lighting—things that have not been adopted by the local authority. These charges are prone to being ratcheted up and can easily reach levels at which mortgage companies may decline to lend. This has earned the name “fleecehold”. Such additional charges, as compared with the generality of homes in a district as a whole, cause value writedowns and selectively unfair treatment. This is one of the unsatisfactory outcomes we are dealing with.
During my own researches, I happened upon one local authority that had set up a company to own and manage these rent charge opportunities, explaining as it did so that it would make a profit of several million pounds in the first few years of operation. This is from a council that decides the planning merits, sets the conditions and planning contributions, writes the Section 106 agreement and has the power to adopt public realm assets or not, as it chooses.
I could go on and explain—but I will not—how similar cost-recovery schemes may in due course feed into new home owners paying disproportionately for wider societal issues such as water neutrality, as I mentioned, or, perhaps more topically still, biodiversity net gain, and how the administration of these can easily cross the line between obligations, objectively fair administration and the appearance of disreputable practice. The entire delivery process is therefore between rocks and hard places, and sits above a crevasse.
The HBF—the noble Baroness, Lady Thornhill, referred to this—also sent me the report. That set out 12 critical additional burdens on the housebuilding sector, which cumulatively would add £20,000 to the build cost of every new home. That was an average; the range was £19,000 to £21,000. If that is correct, then affordability will go out of the window and, as the HBF suggests, development viability with it. There is just too much being taken out of the system.
I hope the Government will take careful note of the issues for meeting housing demand that we have reported. What we have set out are really the headlines; there is a good deal more subtext underneath. We need to recalibrate and facilitate better social housing build-out and, as the noble Lord, Lord Moylan, has said, a better situation for small and medium-sized enterprise. That will require a substantially different model because, as I see it, resources from housing development and the housing delivery process are being dissipated.
Lord Carrington of Fulham (Con)
My Lords, it is a great pleasure to follow the noble Earl, Lord Lytton. I do not propose to be quite as technical in my speech as he was in his; the expertise that he has brought to this debate is much appreciated.
I start by congratulating and adding my thanks to my noble friend Lady Neville-Rolfe, who led our committee; in the context of this debate, I suppose she is best described as our foundation chairman. She did an excellent job on this report and she is now doing an excellent job in her new role as a government Minister. I also add my congratulations to my noble friend Lord Moylan on taking over the bed of nails which is the chairmanship of this committee. I wish him all success going forward; based on what he said today in his speech, I have no doubt that he will be there for many years, producing many good reports.
What we learned from this report is that, by general agreement, 300,000 houses a year is required. We are not achieving that. Indeed, we heard a considerable amount of evidence that 300,000 houses a year is not enough; there would need to be 350, 000 or even 400,000 houses a year. That raises some very interesting questions, one of which the noble Lord, Lord Davies, raised in his speech when he mentioned Harold Macmillan and the 1950s housebuilding boom, which was largely concentrated on council housing. That is certainly one solution. The problem with it in the 1950s was the quality of housing that was put up and—as I will come to, a bit, in my speech—the quality of the design of the housing.
I want to take a little digression to one of the problems that, as a London politician, I found in council housing generally, which is that it tends to be a trap for the tenant. The great problem is that, since it is so difficult to change the tenancy for another tenancy, should the tenant wish to go and work somewhere else—or family circumstances require them to go somewhere else—they tend to get trapped in a place that may have been appropriate at the time of the initial tenancy but, over time, becomes inappropriate. It becomes very difficult if family moves away and the tenant becomes isolated. So council housing is not the panacea for everything, although it certainly has parts of the solution.
The real problem in building 300,000 houses a year is of where you are going to build them. That problem has presented our housebuilding with enormous difficulties over the years. I take up the concern of the noble Baroness, Lady Thornhill: this really has to be resolved at a local level, because it has to get local acceptance. That is acceptance by not just the local councils but the local people in those areas, because that is where the objections—the rebellion against the imposition of new housing—will come from.
The real question that has to be addressed is: how do you overcome that objection and persuade people that new housing in their area will benefit them? That is extraordinarily difficult, made worse by the fact that where you need to locate 300,000 houses is on the whole where the jobs are, where people consequently already live and where the pressure on housing tends to be already greatest. It is an extraordinarily difficult problem. Any survey you care to do on where we need to put housing will show one of the big areas is the south-east of England, which is the most difficult place to get agreement to put in housing.
I suggest there are lots of reasons why there are objections. One is the impact on local services, obviously. It is about the lack of new roads and new public transport. It is about the lack of schooling and doctors, and of a decent sewerage system, which is so catastrophic in terms of the pollution that we are seeing in neighbourhoods. That needs to be resolved, but I suggest that one of the really big issues is design.
Most of us in this House are old enough to remember that great folk group the Weavers, and when Pete Seeger sang about ticky-tacky “Little Boxes” being built. So much of the modern housing that goes up—even if it is expensive, let alone the cheap modern housing—is either ticky-tacky little boxes or ugly. We used to build beautiful houses, in tune with the time in which they were built. We used to have architects who were able to design housing that people wanted to live in. I will give one example from London’s experience: the Bedford Park estate, which was a great development of the 1880s built by one of our greatest architects, Richard Norman Shaw. It is still desirable to live in, in a rather retro manner. But we need modern Richard Norman Shaws who will, in the modern idiom, design buildings that people want to live in, whether as houses or flats.
We can start doing that by creating houses that people find attractive, and at the same time persuading communities that we are building something which will enhance their community and provide new homes—but do so for local people as well as people coming in from outside, so that the children of the community where the housing is being built can find somewhere to live near their parents or grandparents, while they bring up children and create a community which they can take pride in. If we can do that, we stand a chance of solving this problem. But if we impose from the top housing which is in the wrong place, badly serviced, not near jobs or able to provide access to work, and which is ugly so that people do not want to live in it, we will fail. We have to overcome those problems and make the housing that we are putting up something we can be proud of.
Lord Grocott (Lab)
My Lords, I agree with pretty much everything the noble Lord, Lord Carrington, said, but particularly the last part. A number of things have already been said, but I make no apology for repeating my thanks to our committee secretariat, led by Dee Goddard. I also thank the person in the chair, the noble Baroness, Lady Neville-Rolfe. It was the first big piece of work of a new committee, and I am very pleased to have been associated with it.
It has been some time since we reported: 10 months since the publication of our report. The main problems we identified remain the same, though some of them clearly are getting worse. This is particularly true when considering the issues raised in chapter 3 on “Housing types and tenures”. There are 24 million households in England, with 65% owner-occupied, 19% privately rented and 17% are homes for social rent. There have been significant changes in these proportions in recent years. Owner-occupation is down from 71% in 2005. Social housing is dramatically down from 30% in 1980. The only sector that has grown, and quite dramatically, is the private rented sector, which has doubled from 10% in 2003.
There is a real paradox at the heart of these figures. The sector that has been growing the fastest is the sector which, as far as householders are concerned, is the least popular. Owner-occupation has long been the most popular form of tenure and for social housing there is overwhelming evidence of unfulfilled demand. One measure of it is that in 2021 there were no fewer than 1,187,641 households on local authority waiting lists. Faced with huge waiting lists for social housing and the escalating costs of owner-occupation, people have no alternative but to turn to the private rented sector.
There are, of course, plenty of private tenants in well-maintained rentals that they can afford. However, the evidence tells us that the picture of the sector overall is not so rosy. There is lower continuity of tenure for private renters, who move on average every four years, compared with social renters, who move every 12 years, and owner-occupiers, who move every 17 years. As we say in our report:
“Those living in the private rented sector are more likely to live in poor quality, overcrowded conditions than owner–occupiers, and often have limited forms of redress.”
We also know that in terms of monthly expenditure—this is astonishing, but it is familiar to all of us—it is cheaper to be an owner-occupier on a mortgage than to be a private renter. The figures in our report are for 2020 and clearly will have changed since then with all that has happened. At the time, they showed that the average monthly cost for owner-occupiers in the north-west, for example, was £576 compared with the average monthly cost of private rent, which was £723. In nutshell, of the three main forms of housing tenure, the fastest growing is the least secure and the most expensive.
That almost defies economic logic, so here are the obvious questions to the Minister. What plans, if any, do the Government have to address the acute shortage of social housing? What are the Government’s targets for the provision of new social, local authority housing? I agreed with every word my noble friend Lord Davies said and particularly with the speech of the right reverend Prelate the Bishop of Durham—in fact, when he finished, I very nearly said amen. What plans, if any, do the Government have to enable those people on very high rents in private accommodation to move towards home ownership, which, as we have seen, is cheaper and for which there is clearly a huge demand?
It is taken as read, throughout our report as well as by the Government, that we need more homes. Most of this demand will have to be met by new builds. However, there is another potential source of supply among existing housing networks. Sadly, we do not have much to say on this in the report; we could say only so much. In paragraph 55, we report that, in England alone, there are around 500,000 empty properties—we were given the figure of 479,000. Regrettably, as I said, our committee did not take specific evidence on this, although we know that a number of different local authorities are trying to tackle the problem in a variety of ways. Empty homes that are neglected for long periods can blight not just their streets but the wider neighbourhood. While empty and neglected homes are clearly a problem, it is also the case that 500,000 unused properties could be part of the solution to housing demand. I ask the Minister: what is the Government’s estimate of the number of empty properties and is there any best-practice advice for local authorities about how to deal with the issue? Surely, if the aim is to provide 300,000 more homes a year, reducing the number of empty properties could be a very helpful part of the solution.
Whether we are talking about existing properties being renovated or new houses being built, we must address the fundamental problem of the supply of skilled people to do the work. You can have all the planning permissions, all the environmentally friendly targets and all the town planners and architects in the world, but, at its heart, what is needed most of all are bricklayers, plumbers, electricians, carpenters and all the associated building trades. We spell out in our report the existing acute skills shortage, which is destined to get worse. Some 48,000 vacancies in the construction industry were recorded between April and October last year. In the same period, 53% of SME builders said that they were struggling to recruit carpenters and 47% said the same about bricklayers. What is more,
“35% of the workforce are over 50. Only 20% … are … below 30”.
These are skilled trades requiring apprenticeships and for which vacancies cannot be filled overnight. They are also trades that, in practice, overwhelmingly recruit men. Only 8% of construction apprenticeships are undertaken by women and only 5% of construction workers identify at BAME. As we say in our report:
“Diversity remains a major issue in construction trades … It will be essential to draw on a wider talent base to meet the demand for skills.”
There are many reasons for this shortage. I simply do not have time to go into them all, but one is undoubtedly the difficulty of career progression, as well as the fact that wages do not tend to increase over a lifetime for most of the building trades. Table 5 of our report shows that the median hourly rate for a plumber in his 30s is £13.41 and in his 50s it is £13.59 —assuming he is still physically fit enough to do the job. As I said, one of the challenges in this sector is the lack of career progression. However, the blunt truth is that, unless the problem of skills shortage is addressed, there will simply not be the people to build the 300,000 houses that the Government are committed to providing. I ask the Minister for her assessment of just how serious this problem is and what measures she proposes to address it.
Amid all the challenges in our report, at least there is agreement on the objectives: we need more houses of good quality at prices and rents that people can afford. If the Government remain committed to their target of 300,000 builds, and to their levelling-up agenda, the message of our report is that they need to do better and quickly.
Viscount Waverley (CB)
My Lords, I am totally sympathetic to the point about skills and training made by the noble Lord, Lord Grocott. I will address that in a different way, the manner of which I will inform the House of in a moment. I have found this a fascinating debate, particularly as it is not one that I would normally be identified with. I am totally sympathetic to the approach of the noble Lord, Lord Moylan, and his concerns about homes, as I have been to those of all noble contributors. As he said, homes are not necessarily being built in the right place. I will concentrate on that point about land by adding a differing dimension, which I fear may be considered out on a limb but not out of sync.
Beyond having only one substantive but fundamental point that pertains to planning applications, and by whom and how those applications are managed, I support any move to introduce the compelling of those who secure land for the construction of housing projects, whether developers or construction entities, to use that land in short order for the purpose for which the use was granted or lose it. That could be easily achieved and the Chancellor may care to take note of that.
I offer my remarks this afternoon not as a policy proposal, but as a co-chair of two APPGs, one on the future of the United Kingdom freight and logistics sector and the other on the future of trade and investment, both of which have parallel criteria to get things moving in the national interest. Both are undertaking a strategic review and planning is a key component of the former—but I speak, of course, as an individual.
I am in line with the initial remarks of the noble Earl, Lord Lytton, and with how he intimated, without specifically mentioning the detail, that existing airport operations must be at the forefront of joined-up decision-making when new housing developments are being considered and be consistent with differing government policy. Planning processes can hold the national interest hostage, given that airports are prize assets which support the export ambitions of the United Kingdom. Housing developments should not be built within the noise envelope of an airport.
My concluding remarks will offer a case study, identifying one such district authority, of when all this went horribly awry, with national government having to intervene. It would be helpful if the Government—for all that I imagine the Minister will defend the case otherwise—approached decision-making across departments when planning applications are considered in a way that was more holistic, rather than with a silo mentality.
One principal objective of the 2013 aviation policy framework was to ensure that air links continued to make the UK one of the best-connected countries in the world, enabling it to compete successfully for economic growth opportunities. The framework noted that airports acted as focal points for business development and employment by providing rapid delivery of products by air and access to international markets. The framework specifically recognised the importance of Heathrow and East Midlands Airport, and identified that EMA acted as a hub for freight, noting that three of the four global express air freight providers, including DHL, maintained major operations at that airport.
The Government are developing a long-term aviation strategy to 2050 and beyond. As part of this emerging strategy, the Government have referred to a number of documents, including Aviation 2050: The Future of UK Aviation, a consultative publication from December 2018. I shall not tire the House by quoting the detail of paragraphs 4.45 and 4.48, which specifically recognise the importance of the 24-hour operation at EMA, particularly the provision of night flights. It is clear that the Government rightly consider air freight a particularly important part of the UK economy, confirmed in paragraph 4.49, recognise the importance of night flights at EMA and encourage their continued growth.
Housing development in the wrong locations can have an adverse impact on residents and local businesses, such as potential development in the surroundings of national and regionally significant airports. Two quotes from the National Planning Policy Framework are worthy of note. One says:
“Planning policies and decisions should ensure that new development can be integrated effectively with existing businesses and community facilities … Existing businesses and facilities should not have unreasonable restrictions placed on them as a result of development permitted after they were established.”
The second says:
“Where the operation of an existing business or community facility could have a significant adverse effect on new development (including changes of use) in its vicinity, the applicant (or ‘agent of change’) should be required to provide suitable mitigation before the development has been completed.”
This is where it becomes complex, because a local authority is the airport’s “competent authority”. Therefore, the local authority is required to consider the “balanced approach” when establishing noise-related operating restrictions at an airport. The “balanced approach” is promoted by the International Civil Aviation Organization and comprises four principal elements: land-use planning and management; reduction of noise at source; noise abatement operating procedure; and operating restrictions. On land-use planning and management, the ICAO states that:
“Compatible land-use planning and management is also a vital instrument in ensuring that the gains achieved by the reduced noise of the latest generation of aircraft are not offset by further residential development around airports.”
I end with my case study. A prime case has directly impacted the aviation modal, with the Government having written to Uttlesford District Council, in which district Stansted Airport resides, confirming that it is to remain in special measures, which limit its planning powers as not being in line with the Department for Levelling Up, Housing and Communities, noting that UDC’s decisions were “shameful”. I was adversely impacted by the operations of Stansted Airport, both flying out of the airport and, regrettably, when I returned, because of those decisions. I must, however, place on record how grateful I am to the owner, Manchester Airports Group, for its courtesy in giving me an on-the-spot detailed briefing as to what on earth was going on at that airport as a result of the types of decision-making that the district council to which I referred made. Central government has concluded that the number of major planning applications overturned on appeal was unacceptable. The chief executive, Mr Holt, was clear that the special measure vis-à-vis Uttlesford District Council was “absolutely intrinsically linked” to the absence of an acceptable local plan to deliver on government targets, including for the smooth running of Stansted Airport.
I felt that needed to be put on record in a debate on which, frankly, I have a great deal of sympathy with the whole issue of the housing and the planning elements. I give these my absolute full-hearted support, but there are other issues that need to be taken into account when we consider the national interest.
The Deputy Speaker (Lord Young of Cookham) (Con)
My Lords, the noble Lord, Lord Campbell-Savours, will speak in the gap remotely, and I invite him to speak briefly.
Lord Campbell-Savours (Lab) [V]
My Lords, an error on my part has led me to speak in the gap in a truncated contribution and I apologise. This report is a comprehensive canter round the course of housing demand. The committee is to be congratulated. I want to speak narrowly. Paragraph 180 states:
“The Local Government Association set out proposals to help councils encourage faster build out rates”,
including
“a streamlined compulsory purchase process to acquire (at pre-uplift value)”.
The words “pre-uplift value” need interpretation if the public are to understand this report.
I have previously argued that some development land valuation should not be based on planning decisions but on agricultural value, with an uplift for administrative and infrastructural redevelopment costs, which means CPO. I see no reason why huge profits to landowners at the cost of house buyers should turn on the granting of planning permissions. I further argue that while Section 106 agreements are helpful, they are a complex alternative: even where they sit alongside community infrastructural levies, they often cannot deliver.
According to the report, at paragraph 54, the Affordable Housing Commission reports a substantial increase in the private rental sector and a contraction in social housing. Due to the timing, the committee was unable to comment on the recent explosion in interest rates and the consequent increased demand for cheaper public sector rental property. The problem here is that pressure on housing availability is being used not only by heavily indebted landlords but also by others carrying little debt to take advantage of housing shortage and force up rents. We have reports of 25% to 30% increases at a time when working families are under heavy pressure due to wider cost of living increases. The truth is that the table in paragraph 53 of the report on average monthly housing costs is now totally out of date as the impact of inflation feeds through into increased rent levels.
Finally, I have just a few words on the taxation of rental income. In a debate in 2017, I drew on work by the London Borough of Newham, which has established a licensing system not only to protect tenants but to ensure that tax is paid on landlord rental incomes. The IPPR had recently estimated that the Revenue lost £183 million in a single year in London alone. In Newham, only 13,000 out of 26,000 landlords had registered with HMRC for self-assessment. I wish the Revenue well as it follows this up—I hope it does so.
This is a brilliant report providing an abundance of research material to be used in the year to come. I will certainly use it again in further debates.
Lord Haselhurst (Con)
My Lords, I too am on restricted time. Nevertheless, I record my thanks to my noble friend Lady Neville-Rolfe and the staff of the committee—
Baroness Bloomfield of Hinton Waldrist (Con)
I am very sorry, but I am afraid the noble Lord is not down to speak in this debate, and we already have two other speakers in the gap.
I am told that the noble Lord, Lord Haselhurst, is welcome to speak in the gap, but perhaps he could wait for the other two speakers who already have their names down.
Lord Best (CB)
My Lords, I am speaking in the gap, with my apologies for failing to get my name down for this excellent debate last Friday. As a proud member of the committee—and with sincere thanks to our wonderful chair, the noble Baroness, Lady Neville- Rolfe, and our brilliant team, led by Dee Goddard—I will cut to the chase and pull out just one key ingredient from this valuable report: namely, meeting the demand and need for housing for older people.
The need for new homes that reflect the UK’s demographic shift is a prominent theme of our report, with one in four people being over 65 in the near future. Retirement accommodation addresses health and well-being, combats loneliness, reduces fuel poverty and prevents the need for and crippling cost of residential care. An older person right-sizing will so often achieve “two for one” by also bringing an underoccupied family home on to the market. Catering for those requiring more accessible, manageable and energy-efficient accommodation also benefits the overstretched NHS and local care services. Some 16,000 older people in hospital on any given day cannot be discharged because their home simply cannot take them back. While they continue to occupy a hospital bed, others keep waiting.
In a report published last week, Professor Mayhew of the ILC argues for a programme of 50,000 new homes for older people each year—one-sixth of the Government’s overall homes target—but the committee’s report notes that little progress is being made. The current pipeline is for less than 8,000 homes. The volume housebuilders are not interested. Stimulus from planning requirements, and stamp duty incentives—as for first time buyers—are needed. All those involved in this field welcomed the announcement in May 2021 of a governmental older people’s housing task force, with confirmation last February but with little news since then. Can the Minister update us on progress with this key initiative, involving the Ministers for both housing and care?
Lord Berkeley (Lab)
My Lords, I apologise for joining what has become a bit of a club of gap speakers. I also thank the noble Baroness, Lady Neville-Rolfe, for her excellent role as chair, and all the other members of the committee.
I will mention a couple of things about new builds, insulation and design. I do not think any other noble Lord has mentioned it, but the impression I got from the many witnesses we heard was that the key was to keep the price down. If you think about it, it does cost a bit more to insulate a house properly, to have proper water services and sewage disposal—I am not going to go into that now—and to design homes in a way that aligns with future transport provision. We do not seem to be doing that, and that compares very unfavourably with many parts of the continent I have seen. I hope we can do something about it.
Let us not forget that there is also a problem with the existing housing stock. People will be shivering in their homes because they cannot afford to or cannot get grants to insulate—there is a very large number of houses in that category. In his very powerful speech, my noble friend Lord Grocott mentioned empty houses. I live in London and lease from Camden Council. In my little block, one house has been empty for a year because the poor tenant died. Nothing has happened; it needs a good clean, but nothing at all has happened. I am sure that is very common across many cities. The 300,000 a year target is important, but let us try to make sure that the existing stock is used to the full and upgraded.
Lord Haselhurst (Con)
My Lords, I am grateful for the opportunity to speak and I apologise that I was not able to get my name in at the proper point before the debate began.
Building 300,000 new homes a year was once a matter for rejoicing, if achieved, but now there is more likely to be a hail of protest when the schemes to meet that target are brought forward. Demand continues to exceed supply, prices rise and the dream of homeownership fades. It is amazing that the ferocity of opposition to many of these schemes comes from a belief about not wanting to see the loss of green fields, yet the people who feel like that do not seem to recognise that, as of April 2018, 91.5% of land in England is classified as non-developed.
A roof over your head is a contributory step towards a caring society. We should remember that this is a strong ambition for many people and, if they can fulfil that wish, perhaps in the same village or town where their parents have lived, they are helping to build a society with a strong social structure.
What can be done? We need more planners, as my noble friend Lord Moylan said, and this needs to be an enhanced profession. The building industry ought to try to shed its image which, though it may not like it, is of people wading around in mud and lugging piles of bricks. The building industry has far more about it now, much of which should attract bright young people.
On local authorities, we picked up some signs in the course of our hearings that large unitary authorities and combined authorities are making rather more progress in building houses, maybe because their packages are better and more attractive due to the greater scope they have for place and space.
Wider public consultation is the real difficulty, as has been brought out. In collective form, with representatives of all the different interests in the effect of plans, there are signs that people will come to recognise how a well-thought-out development can help keep schools not short of pupils, strengthen the viability of neighbourhood shops, maintain local transport, produce more insulated homes and boost care of the elderly. This is the better side of development and what we must create and promulgate.
Lord Stunell (LD)
My Lords, I start by declaring my interests as an honorary president of the National Home Improvement Council and an honorary fellow of the Institution of Civil Engineers. For the purposes of this debate, I also declare that I am a mortgage-free owner-occupier, and that my wife and I have a leasehold flat in London. I am part of the housing-privileged, as are nearly all the opinion-formers in this building. We would do well to remember, when we talk about the housing crisis and housing issues, that our own perspectives may perhaps be limiting our understanding of just how traumatic and difficult it is for many people. In that light, I believe that this report is a very clear-headed and well-evidenced document that, as a committee member, I am very ready to endorse.
I will not review the speeches made by the 13 contributors so far, particularly as nine of us have been on the committee and we have probably spoken quite enough to each other about this already. I will go straight to the Government’s response to the report, which I have described elsewhere as being half-hearted—although I have to say that there have been three different Governments to choose from, and goodness knows exactly how the industry is supposed to plan when housing targets are yo-yoing all over the place. This year started off with 300,000 as the Government’s target, which was subsequently dismissed by the next Government as being Stalinist. As I understand it, the target was reinstated by the following Government to be 300,000 again—and we are of course waiting to see what happens on 17 November. In fact, with current policies, never mind the current economic situation, 300,000 is not so much Stalinist as fantasist.
We have had four Housing Ministers this year since our report was published. Is it any wonder that housing completions are falling, house price inflation is outrunning actual inflation, as it has been for over a decade, and, as the report makes clear, the balance between supply and demand for both social homes and homes in the private rented sector is totally out of kilter? At the very bottom end of the market, homelessness and sofa surfing are rapidly rising trends.
What are the solutions and how close are the new ministerial team to applying them? Noble Lords in their contributions so far have made it clear what some of those questions and some of those answers are. I will take just a quick look at local planning and ask the Government to say what they believe the locus of decision-making should be. Should it be decided in Whitehall, in the town hall, or in the local community? The committee, four Ministers ago, got a very clear answer that that Government and that Housing Minister believed that the decision should be based in the local community, who gave a great uptick to the idea of neighbourhood plans, which have been succeeding in many parts of the country. Will the Minister tell noble Lords what the current policy is on where planning should be and what it should be delivering?
I want to draw attention to one statistic which has not come into the debate today, which is that there are over 600,000 unused planning permissions for homes already in existence. The reality is that housebuilders build houses to sell. Most years they can sell 100,000 to 150,000 homes. If the Government want more homes built, they have to bribe or pay for those homes to be built. The report in front of noble Lords found that Help to Buy certainly provided the bribe okay, but there was very little evidence that, as a result, more homes were built using that money. Instead, housebuilders still sold 150,000 homes, but they cost a lot more.
Perhaps noble Lords will indulge in a thought experiment. Just imagine that there were suddenly no planning restrictions. How many homes would house- builders build each year? The answer is: not more than 150,000, although they would, to some extent, be in different places. Incidentally, it would probably be less than that, as the asset value of their jealously hoarded land banks would collapse and so, probably, would their business.
Ministers have to decide, if they want homes that are beyond the capacity of the private market to absorb, how much they want to pay to get those extra homes. They will certainly get the most homes for their bucks if they put the money into local council housebuilding. I am making the economic argument—a financial, Treasury argument—that if you want those homes, social housing is the way to get them at the lowest cost per house. They will also get those homes with fewer delays and fewer broken bones if they let local communities take control of their planning and stop imposing Whitehall master plans.
However, market failure is not the only barrier to more and better homes built more quickly. There is a major capacity and skills deficit in the industry. I was delighted to hear what the right reverend Prelate the Bishop of Durham had to say about what is happening in Sunderland to try to address part of that. That problem is an accelerating and deepening one, made worse by some of the actions of the biggest housebuilders.
The Halifax produced its running total on house prices, and the average house price in Britain last month was £292,000. That appeared in the newspapers as bad news, because it was a fall from the rise in the previous month, but what they did not report was that it was an 8.6% rise compared with 12 months before. The average house price has risen by £28,000 in 12 months. In London, where the average house price, according to the Halifax, is £551,000, the price has risen by more than £40,000.
According to a publication called Money Matters, the top eight housebuilders made £7 billion profit in the past two years. That includes Barratt, Taylor Wimpey, Redrow, Persimmon, Berkeley and others. They are all in the Home Builders Federation, their trade association. I am not sure whether it is an oligopoly, as the noble Earl, Lord Lytton, said or whether it is a 1960s trade union, but the outcome is pretty much the same: very low standards of work, with many faults and rampant poor workmanship—the situation is so bad that purchasers prefer to buy a 30 year-old house than a new one. If you were selling 30 year-old cars from the forecourt, you would expect them to go for a lower price than the brand new ones, but that is not what we have.
Yet, the HBF, in its report to noble Lords which has already been referenced in this debate, Building Homes in a Changing Business Environment, has a self-serving list of 12 areas of additional costs, for which it pleads that it needs recompense or, better still, delay or abolition of those 12 imposts. If it does not get that, it is quite clear: it will not build as many affordable homes. It threatens to offset the extra costs it alleges will arise against its Section 106 contribution—which, in 2019-20, delivered 51% of affordable homes. It still found space to complain about the loss of Help to Buy, which was fattening its members’ wallets, obviously, despite the committee’s evidence that it was a waste of money as far as getting extra homes was concerned.
So, what were those 12 things? Electric vehicle charging points were one. Upgrading homes to produce better energy performance and biodiversity net gain—matters that the noble Earl, Lord Lytton, referred to—was another. Even the levy to put right Grenfell’s cladding failures was on the developers’ list of unbearable costs that meant that they could build fewer affordable homes.
Housebuilders have inflated margins not just on their sales, with their multi-billion pound profits, but on their cost estimates for the 12 imposts that they are complaining about. I cannot go into those as we do not have the time but nowhere in the HBF’s report to noble Lords is there any hint that not only will purchasers of a new home nowadays expect to have an electric vehicle charging point but that having zero heating bills is a rather good sales pitch just now.
Of course, not a moment’s thought is given to the idea that maybe, just maybe, housebuilders should invest more in producing decent homes and take a dip in their profits. If they did, of course, that would be one important step towards letting SMEs back into the market. They develop smaller sites, develop more quickly, develop to higher standards and are usually more locally accountable.
These are my questions for the Government. First, are the Government committed to building 300,000 homes a year? Secondly, are they willing to accept the logic of the lowest-cost delivery of the homes that the market cannot provide, and to use what money there is after 17 November to invest in social housing? Thirdly, will they resist the HBF’s blackmail and insist on it raising money to pay for Grenfell cladding replacements, higher environmental standards in and around homes, and zero-carbon standards? Fourthly, are the Government ready to work with the whole construction industry to boost skills and capacity, debug the supply chain and support new entrants on to the housebuilding scene? If so, this report will have done its job.
Baroness Wilcox of Newport (Lab)
My Lords, I thank the noble Lord, Lord Moylan, for his detailed introduction of this important report; I also thank the members and former chair of the committee.
What was discovered? A UK housing market in which
“too many people are living in expensive, unsuitable, poor quality homes.”
To meet future housing demand, the report’s recommendations focused on seven areas, many of which have been mentioned time and again in this House in various debates. Planning reform, social housing provision and skills shortages were all deemed failures over the past 12 years of Tory Governments, whoever was in charge.
Government choices over those 12 years have broken our housing system, allowing developers to maximise profits, as noted by the previous speaker, and build housing for investment rather than good-quality, safe, secure and affordable homes. They have broken the link between work and affordable, secure housing for many renters and first-time buyers. The Government built only 5,955 social rent homes in 2020—a 12% decrease on the previous year and an 85% decrease from 11 years ago.
The scale of the housing crisis means that we need a bold new approach that underlines the importance of housing as a human right and the bedrock of stable, secure family life, giving people a stake in their communities and societies and supporting opportunity and aspiration. Indeed, that is the first layer of Maslow’s hierarchy of needs. Labour reforms would allow communities to build the right homes in the right places and at prices that local people can afford. We would rebalance power between developers and communities by reforming arcane purchasing powers to stop speculators reaping all the rewards and closing the loopholes that developers use to wriggle out of affordable housing commitments. We would ensure that local councils have stronger powers to deliver the affordable housing that their communities need, not the housing that will make the most profit for developers.
Labour would give first-time buyers first chances on new homes and stop foreign buyers buying up homes off plan, before local people can get a look-in. We would set out an ambition to re-establish the link between genuinely affordable housing and average earnings, bringing affordable rents and the dream of homeownership closer for those locked out of the system today.
There are nearly 1 million more people in the private rental sector than there were when the Government came to power in 2010. Too many people are stuck in a system with no power to challenge rogue landlords, no savings to get on the housing ladder and housing that falls below acceptable standards. All those renters need a deal that gives them the security and dignity they deserve. Some 800,000 fewer households of people under the age of 45 now own their home.
The Government’s current proposal to extend the right to buy will only worsen the chronic shortage of affordable homes; it does nothing to fix the lack of social housing and is totally lacking in ambition for millions stranded in the private rental sector. In England, 190,000 homes have been lost since the Tories came to power in 2010. That number is equivalent to all the homes in Bristol. Ministers have failed to deliver the promised replacement for homes sold through right to buy. Less than 5% of the stock has been replaced. Now, for the third time in seven years, Ministers are promising expansion of right to buy into housing associations, with no plan to increase the number of new social homes or genuinely affordable homes to buy. This will lead only to more people unable to secure a home.
One major reform in the Levelling-up and Regeneration Bill relates to scrapping Section 106 agreements, which have been talked about several times this evening, and replacing them with a new national infrastructure levy. I assure noble Lords that, during my tenure as leader of Newport City Council—I am sure the Minister also experienced this when she was a council leader—every negotiation on a Section 106 agreement was hard-fought, as developers employed expensive legal experts to deviate from these agreements wherever they can. Doing away with Section 106 would be completely disastrous to ensuring that developers deliver a proportion of affordable and social housing within new developments, because the proposed levy would replace this delivery mechanism, with revenues going to local authorities to build infrastructure as well as housing. Local authorities would therefore take both the financial risk and responsibility. In the current financial and political climate, that is another unaffordable option for local government.
But Labour has a plan. We will build more affordable houses, linking the definition of affordable to local wages for the first time. We will build more social homes and give first-time buyers first chances. We are going to rebuild our social housing stock and bring homes back into the ownership of local councils and communities, with home ownership opened up to millions more. We will tilt the balance of power back to private renters through a powerful new renters’ charter and a new decent homes standard, written into law. The charter will have far-reaching consequences for those in rented accommodation, including by ending Section 21 evictions, reducing eviction powers for landlords whose tenants are in arrears, introducing four-month notice periods, creating a national register of landlords and initiating a legally binding decent homes standard in the private rental sector.
We will close the loopholes developers exploit to avoid building more affordable housing and put an end to the outrageous practice of foreign buyers purchasing swathes of new housing developments off plan, before local people can even see them. We have an ambition to re-establish the link between genuinely affordable housing and average earnings, bringing affordable rents and home ownership closer for those locked out of the system.
I conclude by asking the Minister the following questions, some of which my noble friend Lord Grocott and others addressed earlier. While building more homes is essential to address the housing crisis, supply alone will not fix the affordability crisis, which is as much a part of the housing crisis as pure numbers. Last year, there were fewer than 7,000 social homes built in England. What plans do the Government have to increase social housebuilding? What does the Minister believe is an acceptable number of social homes to build each year, and will the Social Housing (Regulation) Bill deliver this?
The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Scott of Bybrook) (Con)
My Lords, I begin by thanking the noble Lord, Lord Moylan, for securing this important debate on the committee’s report. I also thank the noble Baroness, Lady Neville-Rolfe, the noble Lord, Lord Moylan, and the members of the Built Environment Committee for their thorough inquiry into housing demand and the subsequent report. Let me also thank all noble Lords for their contributions today. It has been a very wide-ranging but extremely challenging and interesting debate. If I may, I shall go through the tenets of the report and the issues arising from it in this debate.
I start by saying that housebuilding is a priority for this Government. We are committed to continue working towards our ambition of delivering 300,000 new homes a year. However, our focus is not just on numbers. The types of homes provided, their quality, the infrastructure that new developments need and the communities that they are in all matter very much.
The committee’s report highlighted the need to give full consideration to our ageing population, especially those older people living alone, when developing housing policy. I thank the noble Lord, Lord Best, for all the work he does in this area of housebuilding. My department is working closely with the Department of Health and Social Care and with housing, health and social care stakeholders to assess how we can support the growth of a thriving older people’s housing sector. The affordable homes programme, enabling the delivery of housing for older, disabled and other vulnerable people, is extremely important to this Government. Our older people’s housing task force will also look at ways to improve the choice of and access to housing options for these groups, particularly older people. I understand that this is being taken forward by the new Housing Minister and that a date will be announced for an older people’s housing task force in due course.
Turning to housing types and tenures, our commitment is that there should be enough social homes and fewer families housed in temporary accommodation in this country. That is important to us. We do not have targets because we just make sure that we have enough social homes, particularly family homes, so that families are not in temporary accommodation—this needs repeating. Since 2010, we have delivered over 598,900 new affordable homes, of which over 157,200 are for social rent. The Government are also committed to reducing the need for temporary accommodation by preventing homelessness before it occurs. To this end, we are investing £2 billion in tackling homelessness and rough sleeping over the next three years. These are all issues rightly brought up by the noble Lords, Lord Davies of Brixton and Lord Grocott, the right reverend Prelate the Bishop of Durham, and the noble Earl, Lord Lytton.
The report outlined the importance of home ownership. Since its publication, the Help to Buy equity loan scheme has ended, on 31 October 2022. From the scheme’s launch in 2013, it has supported over 361,000 households to buy a new home and boosted housing supply: 37% of all homes sold using the scheme would not otherwise have been built.
We have also expanded the first-time buyers’ relief by increasing the level at which first-time buyers start paying stamp duty from £300,000 to £425,000. First-time buyers will be able to access this relief on property purchases up to £625,000, compared with £500,000 previously. Our shared ownership and right-to-buy schemes also continue to help people into home ownership and out of the rented sector.
SMEs have a vital role in making the housing market more diverse, competitive and resilient, as we heard from my noble friend Lord Moylan. We have put in place a package of measures to support them. This includes our £1 billion ENABLE Build guarantee scheme to reduce the cost of debt for SMEs. Since publication of the committee’s report earlier this year, we have launched the £1.5 billion levelling up home building fund, which builds on the more than £2 billion of development finance that was invested under the home building fund and continues to support SMEs and new entrants into the sector. Through the Levelling-up and Regeneration Bill, changes to the planning system will support SMEs to build more homes by making the planning process easier to navigate, faster and more predictable.
Many noble Lords brought up issues concerning planning. I particularly thank the noble Baroness, Lady Thornhill, who gave us the real nitty-gritty of what it is like in a local authority and the challenges we have all faced in the planning system—the challenges of what government, local authorities and, in particular, communities want. For me, the important thing that was brought up was the fact that you need to take communities with you. That is what local government is very good at, and we need to spend more time doing that because that is the way we get our local communities supporting the local plans early on; then we get the houses built that they and we need in this country.
The report made several recommendations on the planning system. A number of these recommendations have been addressed in the Levelling-up and Regeneration Bill, which is currently making its way through the House of Commons and will be in this House pretty soon. I will briefly cover these in turn.
The Government continue to stay committed to the planning measures in the Levelling-up and Regeneration Bill as they form a key part of the Government’s response to the challenge of levelling up the country. The Bill will modernise our planning system by putting local people at its heart, which will deliver more of what communities want. The reformed system will champion beautiful design, in keeping with local style and preferences, and ensure that development is sustainable and accompanied by the infrastructure that communities need.
Our reforms will ensure that local plans are under- pinned by better data, making them more transparent and easier to understand. This will enable local communities to more easily influence and comment on their emerging plans. The local plan preparation process will also be more standardised and shorter, supported by streamlined evidence-based requirements to reduce the burdens on local authorities—something for which they have been asking for a long time. The increased ability for local communities to get involved in planning processes will ensure that development is brought forward in a way that works best for local people.
The Levelling-up and Regeneration Bill gives the Government powers to create a new infrastructure levy. This is something else that my noble friend Lord Moylan and other noble Lords brought up. The levy will aim to capture land value uplift at a higher level than the current developer contribution regime, allowing local authorities to use the proceeds to provide the affordable housing and infrastructure that communities need. The levy will deliver at least as much, if not more, affordable housing than the current system of developer contributions. This will be secured through regulations and policy, supported by provisions in the Bill.
There were a number of questions on the levy, which I will try to answer. My noble friend Lord Moylan asked whether the levy will be for only that site. Under the levy, local authorities will be required to prepare a new document called an infrastructure delivery strategy, which will make it much clearer for communities what will be provided and when.
My noble friend Lord Moylan asked a further question on the levy. Local authorities will be able to borrow against infrastructure levy receipts and to build up cash reserves from the payment of the levy—again, something local government has been asking for. This will help local authorities to fund infrastructure that communities need.
Neighbourhood planning was brought up a number of times by several noble Lords. Neighbourhood planning is an important part of our planning system. It will now have greater weight in planning decisions, but we are also looking at allowing local communities to provide a simpler neighbourhood priorities statement which will not take as long. That can then be reflected in a neighbourhood plan as time allows.
We are proposing to make the levy a non-negotiable charge on a fixed proportion of the gross development value. That will reduce the negotiation issues to which, as we have heard from a number of noble Lords, Section 106 agreements are sometimes prone. Greater certainty and transparency around cost and the ability to factor expenditure into the price paid for the land should mean that affordable housing and infrastructure delivery is improved.
The Bill will require housing developers formally to notify the local authority via a development commencement order when they commence development. We are also modernising and streamlining existing powers for local authorities to serve completion notices—sometimes called “build-out”—which I know is very important to a number of noble Lords. These measures will increase transparency on build-out and make it easier for local authorities to take action where slow build-out occurs.
The committee’s report highlighted the importance of local planning authorities. It is vital that we have well-resourced, efficient and effective planning departments. To enable this, we are working alongside the sector to design a suite of targeted interventions to support the development of critical skills and build capacity across local planning authorities. As part of this work, the department is supporting local authorities in the development of new digital tools which will help make planning processes more efficient. We also intend to consult on an increase in planning fees that will help provide additional resources to support the delivery and improvement of planning services.
The committee’s report also suggested that we consider how best to update the calculation of local housing need. As with all policies, we are monitoring the impact of the standard method, particularly the impact of changes to the way we live and work, as that becomes clearer. We are developing policy on this topic and intend to set out further thinking on the direction of travel as soon as we are able to.
Many noble Lords brought up the skills issue. The committee’s report covered the importance of skills in meeting housing demand, and we are working to address skills shortages across the construction industry. The Government are increasing funding for apprenticeships to £2.7 billion in 2024-25. This will continue to support apprenticeships in non-levy employers, often SMEs, for which government will continue to meet 95% of apprenticeship training costs. I thank the right reverend Prelate the Bishop of Durham for giving us the example of Sunderland, where local colleges are taking this up and realise how important this sector is in increasing the skills base.
We are also part of a construction skills delivery group which has agreed new actions, including greater recruitment of apprentices, increased support for T-levels and improved routes into the industry. This work has had real-world impacts already. Apprenticeship starts in the construction sector in 2021-22 reached more than 32,000, exceeding pre-pandemic levels. As part of the building safety agenda, we are also working to develop a suite of national competence standards for individuals working on buildings.
I am conscious of the time. There was quite a lot of discussion on quality and design. As I said at the beginning, it is not just about numbers; it is about quality of housing. The quality of housing is fundamental to the well-being of communities and helps create thriving neighbourhoods. The levelling-up White Paper housing mission outlined the Government’s ambition to reduce the number of non-decent rented homes by 50% by 2030, with the biggest improvements in the worst-performing areas. This will be achieved through new minimum standards for privately rented homes and broader reforms to the social rented sector.
The noble Lord, Lord Berkeley, brought up a couple of issues, particularly on energy usage in homes. The Government are investing £12 billion in the Help to Heat schemes, which will allow investment in the housing stock we already have to make houses more energy efficient—things such as boiler upgrades, sustainable warmth competitions and home upgrade grants. There are grants out there and I am happy to give the noble Lord further details on that.
The noble Lord, Lord Stunell, brought up what we are going to do to make future homes more sustainable. From 2025, the future homes standard will ensure that new homes produce at least 75% less CO2 emissions than those built in 2013. These homes will be future-proofed with low-carbon heating and high levels of energy efficiency. That is an important part of where we are going on new homes.
My noble friend Lord Moylan mentioned modern methods of construction, which I am very interested in because that might be one way in which we can deliver more homes much faster. The report made additional recommendations about modern methods of construction. By embracing MMCs, housebuilders can deliver good-quality, energy-efficient new-build homes more quickly. The Government are working to address strategic barriers, notably the lack of component standardisation across the industry and the difficulties in obtaining product warranties, and therefore insurance and mortgages. The work we are doing will continue to provide assurance around the quality and safety of MMCs to bring them on to the market.
To conclude, I thank all noble Lords once again for their contributions today.
Viscount Waverley (CB)
It is getting late, but will the Minister kindly undertake to give the Government’s considered view on the whole question of possibly district councils, and certainly the national Government, having a key role in the decision-making over central infrastructure projects when it comes to planning permissions being given for the housing? I do not expect one now, but will the Minister kindly undertake to give a really considered view on that and write to me?
Baroness Scott of Bybrook (Con)
I was going to mention the noble Viscount and the issues of large infrastructure, such as airports, before I finished.
I thank my noble friend Lord Moylan for moving the debate and look forward to continuing the discussion and working collaboratively on the issues raised with noble Lords and the committee as it moves forward. The time is getting late. I know I have not answered everybody’s questions, but I will take a long look at Hansard, put out a letter to all members of the committee and put a copy in the Library.
Lord Moylan (Con)
My Lords, I am grateful to my noble friend for that comprehensive response. I apologise to the House, as I should have said when I first spoke that, in addition to the other registered interests that I declared, I am also an officer of the APPG for SME housebuilders; I should have said that, since it was clearly relevant, but it slipped my mind.
I am very grateful to all noble Lords who have spoken. If I may say so without giving offence, it has been a livelier and more challenging debate that I had expected when we started out. There have been many points made and much illumination cast. Many points have been made with which I could agree and some with which I do not agree. If the role of my noble friend the Minister is to respond to the points made in the debate, perhaps my role ought to be in some way to fuse together all the strands that arise from it, to create one single, coherent policy on which all of us could agree and with which we could move forward; but I fear that that would be well beyond my abilities.
I will use the couple of minutes at my disposal to focus on a single point, which struck me with great force. It was a point made by the noble Earl, Lord Lytton, when he referred to the fact that, with new housing developments of any size, the financial and managerial responsibility for external amenities is increasingly being placed on the householders through a service charge.
I mentioned that I was a member of the board of the Ebbsfleet Development Corporation. We have seen many historical planning permissions granted before the corporation was formed now being implemented, and this is the pattern of what is happening. These are services that the rest of us expect to be maintained and provided largely by the local authority through the council tax that we pay. They are to do with parks, street trees, grass on the verges and such things; yet these households are paying directly for the amenities as well as paying a full council tax to their local authority. I draw attention to this simply because I believe, and the noble Earl may agree, that this will not be sustainable, politically or financially, for very much longer. It may be the next scandal, like excessive ground rents, which are now largely dealt with. In this case, it will be service charges, not ground rents; I think that will be the next scandal that the Front Bench—the Government—are going to have to reckon with.
This is the only point that I pick out from the debate because I thought it needed amplifying, and I agreed so much with it. With that, I thank everybody who has participated and beg to move the Motion standing in my name.