Residential Construction and Housing Supply
(4 years, 12 months ago)
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Lord Bourne of Aberystwyth
That this House takes note of the residential construction sector, modern methods of construction, and the steps being taken to boost the housing supply in a sustainable way.
The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)
My Lords, I apologise for the delay to this debate—by either three weeks or three hours depending on which calendar you are working from—but it is a great pleasure to introduce it. We will be looking at the residential construction sector and focusing in particular on modern methods of construction and the steps being taken to boost housing supply sustainably. I am grateful to noble Lords who have given up their time to be part of the debate and to share their experience and knowledge of this important issue.
We all recognise that the country does not have enough homes. For decades, the pace of housebuilding has been much too slow, which has meant that the number of new homes has not kept pace with our growing population. We are now building the homes that our country needs so that everyone can afford a place to call their own, helping people on to the housing ladder and restoring the dream of home ownership—but of course looking at diversity of supply at the same time.
Last year we delivered 222,000 new homes—the highest number in a decade and up 2% on the previous year. To address the housing shortage, the Government have reaffirmed their commitment to deliver 300,000 homes a year by the middle of the next decade. However, the way in which the housebuilding market operates constrains the supply of new homes, because there is insufficient competition and innovation. That is why, back in February 2017, the Government’s housing White Paper recognised the potential to diversify the market and set out clear measures for how we would do this, including by backing small and medium-sized builders to grow; supporting custom build homes to access land and finance; encouraging more institutional investors into housing, including the build-to-rent sector; and supporting housing associations and local authorities to build more homes. We have been actively implementing the commitments that we made.
We also recognise that building more homes requires a modern construction industry with greater capacity to deliver. Building more homes using modern methods of construction—MMC—including off-site and smart techniques, is a key part of this.
A number of reviews have highlighted the challenges faced by the industry. For instance, in 2016 the Government commissioned Mark Farmer to carry out a review of the construction labour market. His report, Modernise or Die, set out the skills challenge facing the construction industry and the need to improve the construction labour market by increasing productivity and innovation, including the use of modern methods of construction in housebuilding as a test case for construction more widely. I had a very useful engagement with Mark Farmer at our recent design conference in Birmingham. We agreed on the need for action to drive the Government’s agenda to increase uptake of MMC.
In addition, the report of the House of Lords Science and Technology Committee’s inquiry into off-site manufacture in 2018 across the construction sector as a whole, Off-site Manufacture for Construction, is extremely helpful and provides food for thought.
We have looked to other countries too, particularly across Europe, where MMC is embedded within the delivery model and is therefore widely used and accepted, to help inform our initiatives. Countries such as Sweden have shown how it is possible to innovate the market with MMC techniques, building more homes than traditional models allow, and delivering good-quality, efficient homes that are embraced by the public. I know that Britain can become a world leader in MMC and I want to work with the sector to make that ambition a reality. I am committed to delivering the Government’s ambitions to build more of the right homes in the right places, and keen to play a major part in delivering the ambitious package in the housing White Paper to fix the housing market.
As many noble Lords will know, I am very keen on better design and quality. Lack of diversity and competition has not been good for innovation and productivity. This is why the Government have made design quality of homes a top priority and have strengthened the importance of design quality in our revised national planning policy framework, which was announced by the Prime Minister at a national conference of planners a year ago, in March 2018. I am pleased that convening the Building Better, Building Beautiful Commission is a step in the right direction towards delivering on this priority. We have also recently announced the appointment of a head of architecture in the department. He is working to create a cross-government network to promote good design, developing a design manual to underpin design quality in national policy and ensuring that design quality criteria are embedded in government programmes.
For too long we have been overly reliant on a small group of large developers delivering in mostly traditional ways. To increase rapidly the pace of building and reach our housing delivery ambitions, we need to increase the range of producers in the market and the types of homes that they are delivering. We need a market that is more focused on the consumer, delivering to those parts of the market that are currently not well served—in short, a diversified market that can lead to more homes being delivered faster, with significant financial benefits, while delivering high-quality new-build homes. I know that modern methods of construction have a key role in powering the future of housebuilding, building high-quality homes with a smaller carbon footprint at a much faster pace, while embracing the latest technology and promoting British jobs.
New technology and innovation has improved productivity, quality and choice across a range of sectors in the United Kingdom, and we want to see the same happen in housing. We have been actively implementing the commitments we made in the housing White Paper to diversify the housing market. We are backing our housebuilders to deliver, with £2.5 billion of our £4.5 billion Home Building Fund, which particularly champions SMEs and more diverse builders to harness MMC and other cutting-edge building technologies. For example, we recently announced £9 million of funding from the Home Building Fund for a deal with Apex Airspace to deliver homes on London rooftops. These rooftop properties will be built on five sites across the capital: Tooting, Wanstead, Walthamstow, Putney and Wallington. They will be largely constructed off site before being winched on top of buildings, minimising disruption to residents. It is expected that the first three sites, comprising 32 homes, will be ready by this summer.
We have also delivered on our commitment to set up a joint MMC working group with lenders, valuers and the industry to overcome existing uncertainties about the performance and durability of MMC homes and their acceptability for warranty and insurance, and to identify measures that could give greater confidence in the quality of these homes, to allow lenders to overcome their existing caution and increase lending to match that of traditional builds. At the design conference I referenced in Birmingham, I announced one of the outcomes of our MMC working group’s work: an agreed definition and categorisation for all MMC. This definition framework has now been published on GOV.UK and will help guarantee consistency in MMC definition and categorisation across the sector. This is perhaps not glittering and exciting at first sight, but it is extremely important in ensuring that we have standardisation and the ability to move forward in helping people borrow money.
The group is also finalising details of its most important output: a unified quality assurance scheme for assessing all new technologies to guarantee their acceptability for mortgages and warranties, which will be launched this summer. All these are key parts of making sure that we use more off-site construction to meet our challenges. The Government are also keen to see local authorities go further, and the £450 million local authority accelerated construction programme will take direct action to disrupt the market in a new and innovative way. Furthermore, our affordable homes programme encourages bidders to use innovative ways of building. Homes England is working with 23 strategic partnerships—this was announced at the end of last year—and so far all 23 have indicated that they will incorporate MMC in meeting the challenge of providing more homes.
There is a real opportunity to seize the benefits of new technology here. It is encouraging to see new entrants into the field, such as Ilke Homes from Yorkshire, which plans to deliver 2,000 MMC homes per year in the next two years, and TopHat of Derbyshire, with capacity to deliver 2,000 homes per year across the country, as well as interest from housing associations such as Swan Housing, which opened its factory in Basildon in 2017. In addition, local authorities around England also recognise the benefits of MMC and are interested in supporting the growth of this innovative approach to housebuilding.
It is important that large housebuilders, too, see a role in this. The Government want to create a shared vision for a diversified housing market that embraces innovation, and we look to large suppliers too. It is encouraging to hear about some large developers, such as Barratt, Berkeley, L&Q and Crest Nicholson, which are already embracing MMC and actively looking into future opportunities. The Government expect other large developers to embrace this agenda as well. Diversifying the market, both by increasing the mix of producers and tenures and ensuring that it delivers a greater variety of products, will result in additional homes. These are challenges that we must respond to.
We announced £34 million at Budget 2017 for construction skills: this will also help. I know that there are still many out there who have yet to see how using MMC can benefit them and their customers. We want to support the industry to showcase what it can achieve. We want to see solutions that increase productivity and quality. We also want to challenge the public perception of MMC homes and give customers information about new technology, how it works and what the benefits are. I beg to move.
Baroness Thornhill (LD)
I thank the noble Lord for bringing this debate to the House. Looking at some familiar faces, we have had some cracking good housing debates over the last year to 18 months. I have to tell the Minister that there is a growing consensus around the issues and around the solutions, so I agree very much with the thrust of what he said. My contribution to this debate is my firm belief that either adding to or reprioritising government housing finance, which is currently very heavily skewed to subsidising homeowners, and instead championing a social housebuilding programme unseen since the post-war boom period, could result in a steady market for the emerging MMC industry and give vital support to SME builders, who, as the Minister said, have been squeezed out of housebuilding in recent years. It would add significantly to the overall housing supply, but most importantly it would provide secure, high-quality homes to those who cannot afford decent market housing to buy or rent.
Current housing and planning policies, according to the Letwin review, show a high dependence on a few large housebuilders as the main providers of homes with what we know is a speculative development model which necessitates a low absorption rate in the market. This has resulted in low supply, slow build out and higher prices, alongside rising homelessness and huge increases in the private rented sector. This is mirrored by increasing tenant insecurity in that sector, while the Government spend billions on housing benefit and councils are spending hundreds of millions on temporary accommodation. These, alongside issues such as land value capture—whose murky depths I have no desire to plunge into, although I am hopeful that others will—point to the need that has been mentioned to bring real diversity to the marketplace if the Government are to achieve their ambition of building 300,000 homes a year, an ambition we fully support. Of that number, some 90,000 should be for social rent, compared with the less than 7,000 such homes built last year. The Chancellor’s recent announcement of the £3 billion affordable homes guarantee scheme is obviously welcome, but when will we get the details? Will it include funding for social housing? We would be churlish not to recognise that there has been some shift back to grant aid for social rent over the past few years, but after a famine, this slight increase is hardly a feast.
It is evident that to get more homes built more quickly, we need a new and separate strand of housebuilding to take place alongside the big boys currently making staggering profits year on year, thus doing very well out of the current system. A new significant social housing sector could provide that strand but it will take money and political will. The scale of building that needs to take place cannot be done on a shoestring. By committing to a serious increase in expenditure for a new stream of social housing, and looking to promote and use new technologies such as MMC, the Government can make a real difference.
Specifically, as a former elected mayor with a positive attitude to construction, my personal experience of modern manufacturing construction is mixed. It seems that there are clear issues, which the Government need to work with the industry to sort out if this particular mode of building is to be used more widely, as it is abroad. These have been well documented by many organisations, such as the Home Builders Federation, so I will not go into detail. There are simply not enough manufacturers to make a dent in the 300,000-homes target. One issue that surprised me is that there is not enough space to construct and build; for example, a local site of ours could not be used because we did not have the craning space and the road structure for it.
Although there is huge potential, the reality is that investors are slow to lend as the technology is untried and, frankly, the public perception of such homes is far from positive. People moving into one of these homes may find insurers reluctant to insure, or their insurance may be expensive; they may also struggle to get a mortgage on such a property. There are a limited number of suppliers in the supply chain, all of which need more confidence in the industry—I believe that only government can provide that—and several of which have crashed in recent years. However, I am a convert. I believe that these issues can be overcome. I also believe that there is huge potential to be innovative. For example, using MMC, would it be possible to ensure that homes are manufactured to a higher thermal value than conventional builds, thus reducing fuel poverty? The Building Research Establishment in Watford has a stunningly innovative modular dementia-friendly home all ready to go. I say this to the Minister: we could be world leaders in this field.
On a tangential but relevant point, would a well-funded MMC industry be a more benign environment for new recruits and for developing apprenticeships on a sustainable basis to bring some diversity to the construction industry, where only 9% of the present workforce are women?
However, the key issue is funding. Some significant investment has been made by government but we need longer-term security—this is not just about pump-priming—to develop the industry in the long term or, as the Minister said, the whole thing will be stillborn.
Turning briefly to the well-documented shortage of the skills required to deliver homes at the scale and speed we all want, the proposed salary restriction imposed in the immigration criteria and the loss of EU workers who have already left the country begs this question of what plans the Government have to replace these workers, let alone increase numbers to meet future aspirations. At present, the training regime is criticised for being poor and going backwards in terms of delivery. The apprenticeship levy and the construction industry levy for larger firms are hampered by restrictions on what they can be used for, so large sums of money have gone unspent. Can the Minister update the House on the impact of the recent relaxation of the rules to allow subcontractors to benefit? Does he think that it will be enough? It is fair to say that there are chinks of light and positive nudges towards a more sustainable, progressive housing policy, but piecemeal reform will have piecemeal results. We need a concerted effort and strong political leadership to address properly the shortage and quality of housing.
Regarding the impact of a range of new policies to create more homes, particularly permitted development rights to convert office space to residential space without planning permission and the proposed extension to permit shops and other commercial properties to do the same, we believe that such conversions can be successful—but only if they work with local authorities so that decent living and amenity spaces can be created. We would resist any further expansion. Are mechanisms in place to review the impact of such policies? Will the Government listen to the results of the recent consultation, which were overwhelmingly negative regarding expansion?
We welcome the lifting of the borrowing cap. We believe that the right to buy and the discount available should be discretionary and, where possible, allow local authorities to deal with their own circumstances.
Finally, I am aware that the framework for all this lies in the industrial strategy and with the Construction Leadership Council charged with delivering the five-year plan. The Farmer report concluded that the construction industry must modernise or die. As the report is several years old, can the Minister update us on progress as I was unable to find any?
Lord Patten (Con)
My Lords, “sustainability” is used freely but it is not often well defined. However, I am absolutely convinced that one thing in this country is not sustainable: land. They do not make land anymore. You cannot renew it. There is only so much of it and anyone building anywhere has an awful—I choose that word carefully—responsibility to make sure that what is built is acceptable. I say that in declaring my registered interests in two housebuilding companies and an insurance company that, happily, has gone into building off-site homes.
I will address two key issues: the importance of making new houses look good and feel good in good surroundings, and encouraging new building methods if, and only if, they contribute to better building. That still has to be proved; there is a lot of enthusiasm as if this is magically going to change stuff. We must see what these houses look like first because most of them are not in place yet. Once they are, they will of course be irrevocably using the land we cannot renew. I am agnostic; I am not against these new methods. One of the best ways of boosting housing supply—I wish that more building companies would grasp this point—is to make new homes look good, be more acceptable on the landscape in communities and outlive their predicted lifespan, which many quite small houses and terraces have managed to do over hundreds of years in some cases.
The definition of sustainable is “changeless”. Well, we certainly need change in many parts of the housebuilding industry to create places as much as houses and beauty as well as bedrooms for the hard-working people who will live in them. That should be our central concern. I do not want to get involved in great debates about beauty in housebuilding and construction, which causes much anger and wrist flapping. I am perfectly happy to see modernist houses built by people who want to build them if they can afford to and statements made by architects who want to make them. I am just as happy to see people build backward-looking houses that go back into the depths of time, using styles such as neoclassical and Georgian, if they can afford to do so. I am much more concerned about decent homes that look and feel good for ordinary people.
People certainly deserve much better places than the site in southern England I have been monitoring in recent years; I will not mention where it is, let alone its name or that of the mass housebuilder building there, for fear of making its resale problems even greater. Out of sight and out of mind from our own property though it is, it has only just been finished after many years. It has taken a long time to finish the selling of these houses. Extraordinarily enough—this is a little moral tale—the very first show house it built, with many trumpets blown, developed cracks down the side shortly after it was completed and had to be repainted. People have indeed suffered.
This is the reverse of the Government’s hope that building better and beautifully will build more homes. I do not think that many people on the boards of big housing companies ever live in the mass estates that they have built; I can find no address of any director of any major housebuilding company who lives on a large housing estate that their company has constructed. They generally live elsewhere, safely in the countryside, a long way away. I wish that many board directors would spend at least a sojourn in their own product. Generally, I do not think they do and that is shaming. I am an investor in a couple of these companies; my warning is that I like to be a smart investor and get good value for money. Well-built houses mean better profitability and that the value of my shareholding will go up. That is all I want these people to do—not build the sort of houses that do not appeal to ordinary people.
That brings me to the second issue. I welcome these brand new houses that we are seeing built off-site. They are precision built and tailored to a new world where they will be put on-site. It is very good to see factories doing this. There is the TopHat factory in Derbyshire, which is being invested in by Goldman Sachs. Builders are normally lucky to have a big bank following them so that is very good. Equally, the money managers and insurance company Legal & General, in which I also have an interest, has a new housebuilding factory at Sherburn in Elmet near Leeds, which will produce 3,000 units a year. However, we have not yet seen any of these things on-site. We do not know what they will look like. The marketing stuff is full of precision engineering, sustainability, looking after heating loss and other issues, but we have not seen a unit on-site.
For a builder, rather than being outside all year round in all weathers—like today’s weather in certain parts of the country—and very difficult circumstances, it is much nicer to be inside a factory. It is a much safer environment and we might even get better productivity by producing houses in that way, which I am thoroughly in favour of. We could also build up apprenticeships in the right way. I do not believe, however, that we have yet proven that energy efficiency and sustainability—another word they love—are magic solutions.
On that point about sustainability I shall end. I do not think my noble friend the Minister used the word in his speech—he may have done and I am sure he will correct me later if I am wrong, although it is used in the Motion—but I have never seen a proper government definition of sustainability in housebuilding. I ask him to define what the Government mean by sustainability in relation to new houses being built, if not in his wind-up speech then certainly in any letter he circulates later. I see him enthusiastically nodding his head in acquiescence to my request.
Baroness Warwick of Undercliffe (Lab)
My Lords, I thank the Minister for his very positive opening remarks and I hope, through some questions, to encourage him to do even more. I declare an interest as chair of the National Housing Federation, the trade body for housing associations.
This is the second time the House has debated this issue in recent months. Might that mean that it is high on the Government’s agenda? It certainly needs to be—the challenge is formidable. The National Housing Federation estimates a shortage of 4 million homes in England, with 340,000 new ones needed each year. Of those, 90,000 need to be for social rent.
Housing associations have a vital role to play in boosting supply. Research by Savills found that the Government will be unable to meet their own target of 300,000 new homes a year without investing in affordable housing. Significantly, the same report found that this investment supplements private development rather than displacing it. As the Letwin review concluded, greater diversity of tenure on large sites is crucial to building homes more quickly.
It should come as no surprise that housing associations are exploring the potential benefits of modern methods of construction, which have the potential to deliver consistently higher-quality products more quickly than on-site construction. The Minister mentioned Swan Housing Association, which set up an off-site factory. It resulted in a 50% time saving against traditional construction. There are other potential benefits: Swan’s off-site factory improved the quality of its homes while reducing waste by 90% and saving 10% in cost.
Other housing associations are also delivering the homes that people need by embracing modern methods of construction. Accord, a housing association operating through the West Midlands, set up its own off-site manufacturing arm. It delivers homes for Accord, for other housing associations and for local authorities that want to build. This business recently moved into a new factory with the capacity to produce up to 1,000 homes a year.
While there is an appetite in the sector to make off-site manufacturing a success, there are barriers preventing greater take-up and government has an important role to play in overcoming them. One barrier is the insecurity inherent in any new and developing industry. High start-up costs and small initial pipelines make off-site providers financially vulnerable. Off-site products are not often interchangeable, so it is difficult for buyers to switch between manufacturers should difficulties arise. This insecurity poses a risk to buyers but is of particular concern to housing associations, given their focus on the long-term sustainability of their properties. They want the certainty that they can access the parts needed to maintain their properties for tenants tomorrow, next year and for decades ahead. The construction sector is already taking steps to develop a common set of design features. This is not about creating rows of identical houses, but rather about creating a common set of blueprints for manufacturers. Will the Minister incentivise and support these efforts at standardisation across the sector, to increase the robustness of the market in the modern methods of construction?
A second barrier is the inconsistency of demand for off-site manufacturers, which undermines the prospect of economies of scale. Off-site manufacturing works best when there is already a drumbeat of demand rather than a series of peaks and troughs. Without a regular, reliable level of demand, off-site manufacturing just is not viable. As the Secretary of State acknowledges, housing associations are part of the solution here. Their ability to take a longer-term view of housing, outside commercial pressures, gives them an important role in providing certainty to off-site manufacturers. Housing associations from across England are coming together to aggregate demand for off-site housing. They have the foresight to see that by co-operating they can give off-site manufacturers the certainty they need to operate. In turn, they and their tenants will benefit from the advantages of off-site production. I would like to see much more of this, not least by encouraging partnership working between housing associations and local authorities. Will the Minister commit to supporting housing associations and local authorities to collaborate and aggregate their demand for homes, giving manufacturers the security of demand they need to develop?
Finally, I must briefly mention planning. Our current planning system was designed with traditional construction in mind, whereby on-site providers are contracted after planning permission is agreed. Off-site construction relies on automation, limiting its ability to respond to individual applications. This makes it particularly challenging for housing associations to use methods of construction, as they often buy land after planning permission has been granted. Sometimes, planners and planning committees incorrectly associate modern methods of construction with rows of identikit houses and with poor or uncertain quality.
Despite the barriers, however, there is a real appetite in the housing sector to realise the benefits of MMC. Housing associations across the country are already doing just that. But there is more to be done, and more that can be done with government support. Traditional construction will struggle to deliver the Government’s homebuilding target, but a robust MMC sector can help to deliver the homes that families across the country need. The housing shortage is too acute for us to ignore the opportunity that modern methods of construction offer to deliver more homes, of better quality, more quickly. Will the Minister therefore commit to supporting the sector in overcoming the barriers that hold back modern methods of construction and explain the actions that the Government intend to take to support it?
Lord Borwick (Con)
My Lords, I first declare my interests, as noted in the register, as a house developer with sites in Bicester, Scotland and Sussex. I am also a trustee of a charity for the education of deaf children and of other charities involved with disabilities.
Modern methods of construction, as considered in our excellent Science and Technology Committee report last year, should include making houses more suitable for people with disabilities. The Government have shown great progress over the last six months on the matter. Accessibility is covered in Part M in the Building Regulations; there is of course more than one level of accessibility, and I am told that developments in London tend to carry the highest level. I am not sure of the geographic distribution of disabled people, but, as disability is so strongly correlated with poverty, I doubt that they are concentrated in London. However, I am sure of the distribution of people who may become disabled in the future—it is all of us, everywhere. We had better get this sorted out before it happens.
Some small changes will make a big difference for those with disabilities, making houses truly usable. Part of the subject of this debate is to build houses in a sustainable way, whatever “sustainable” means. Perhaps other noble Lords may cover environmental concerns when discussing sustainability, but it should also simply mean that the house can be used by anyone in the long term. A house may have a lifespan of about 100 years. The house may be sold every four or five years. The chances of no users of that house—including friends and relatives of the owners—having a disability are surely very slim. Those chances are reducing as society ages.
Housebuilders quite rightly want to build for the person who is likely first to buy that house—the customer. For many sites, this is predominantly young couples, many of whom are expecting a child or will likely be so in the not too distant future. That can have knock-on effects, of course. At a site I was developing, the landlord of the local pub was not so optimistic about the new development bringing in a flood of new customers—he told me, “Half the customers are pregnant, and that is not good for the sale of beer”.
I made an application in the early 2000s for a site in Runnymede, then and now in the constituency of my right honourable friend the Chancellor, and I had intended to make every unit accessible—both the commercial houses and the social houses. They were to be built to lifetime homes standards—invented, I think, by the noble Lord, Lord Best, or his organisation —and I was told that this would be the first purely commercial development to that standard; hitherto, it had been used only for social housing. Connoisseurs will detect the subtle hand of the late great Sir Bert Massie in persuading me that undertaking this task voluntarily would enable him to argue that it was reasonable for everyone to do it. From my point of view, if it brought forward the development of the site and the planning permission by several years, the cost was unimportant.
I was told by professionals that it was a bad idea. Disabled people are less likely to be wealthy, so why would I make every house fit for that purpose? I was told I was going to be building a ghetto for disabled people. But my plan was much more sustainable. Buyers may not be disabled now, but they may be much less mobile in the future. In any case, we all spend time in a wheelchair, though it may be called a baby buggy when we are small—we will be lucky if it is only at the beginning of our lives that we need wheels.
Boosting the housing supply by sufficient numbers simply will not happen as long as we maintain a system of central planning. Central plans have never worked well, whether for tractor production in the Soviet Union or a plan-led system for houses. Only the market, not the Government, has the information needed. If we are to have plans, make them as local as possible—as we are doing—but do not believe they are going to work. The Soviet Union failed to run five-year plans for tractors, but we ask councils to plan for housing up to 25 years ahead.
The only solution to the housing crisis is to relax planning laws and to grant more planning permissions. We are making some progress in that direction. We did not plan our way into the housing shortage, so why should we be able to plan our way out? So grant more permissions with a high level of accessibility built in. Say to the developer, “If you want a quick permission, be the exemplar”.
It is understandable why people may be against granting more permissions, particularly those who will be affected by more houses being built which block their view. Housebuilding planning is particularly strange, as the neighbour has a binary choice—object, or do not object. There is no middle ground, but there could be if ownership of the benefits was shared by local people, not by “the community”. People who live next door to a development could be given the opportunity to invest and receive a share in the development, for instance. That would remove the binary choice, because they would say, “I do not like the development, but at least I will make a profit out of it”. Given my earlier points about building houses sustainably so that they accommodate disabled people, I believe the current system of highly restrictive planning laws puts the apparent needs of councils against the very real needs of disabled people. Is it really more important that we have public art than accessibility?
We know that the costs of local plans are borne by developers. A developer pays corporation tax, Sections 106 and 278 and CIL costs, and the cost of providing 40% social housing. But there are two forms of tax—those costs and delays. We must be careful not to overtax. The argument goes, “There is a shortage of houses”, and the answer seems to be that we must tax the only people that produce them. The biggest cost for a developer is the cost of the land and the delay in planning. Every time there is a delay, the time-based fees of professional advisers go up. That is the reason why the small builders and developers have almost disappeared. The money spent on fees is a big speculative risk.
Talking of costs, I have often wondered whether councils might view planning applications differently if they were faced with the cost of housing benefit. The lack of housing drives up rents, which makes them unaffordable to so many people whose only option is to turn to the state for support—a council delays planning permissions, and central government picks up the cost of housing benefit. What if councils had to pick up the bill for higher housing benefit because of decisions they make at planning meetings? It is worth thinking about. Housing benefit is being wrapped into universal credit, but if that were localised, would we see councils start to grant more planning permissions?
We have a localised system designed to encourage more housebuilding—the new homes bonus paid by the Treasury to councils. But it has some problems. Why is the payment made over four annual instalments? That seems to me to cancel out the idea that this is a “bonus” payment for granting more permissions. Perhaps finding a way for local authorities to bear the cost of restrictive planning, or to reap the benefits of good planning, might be more effective.
Baroness Thomas of Winchester (LD)
My Lords, I shall follow the noble Lord, Lord Borwick, down the route of talking about homes for disabled people. The Minister knows exactly what I am going to say, and I believe I am right in thinking that he is sympathetic to my message, which is simple: we desperately need far more new accessible and adaptable homes built in a sustainable way now as the population ages, and disabled people live longer.
For that to be a reality, we need Part M category 2 of the Building Regulations to be mandatory all over the country, as it is in London, as soon as possible. Housing and planning authorities also ought to provide an adequate number of category 3 wheelchair-accessible properties in their areas; otherwise, working-age wheelchair users will not be able to live and work there or many older-age wheelchair users will not be able to transfer or downsize to a more suitable property. This must be considered as part of the sustainability agenda, particularly as many disabled people need a warmer home than others.
Just the other day, I was speaking to a man at a social event who was taking a break from caring for his mother in Manchester. He said that she was virtually bedridden and did not go out at all because she lived on the fourth floor of a block of flats and could not climb stairs any more. This story is repeated throughout the country. Elderly people, perhaps with chronic arthritis, are becoming less mobile as the years pass, ending up as prisoners in their own homes. Or they may have had a serious fall—perhaps a broken hip—and are too fearful to move about very much. I also recently met Sam Renke, a young wheelchair-using actress, who has only just moved into an accessible home. She has said:
“Having others do almost everything for you may sound idyllic to some, but actually I felt like I was in my own version of a prison at times, having to wait for others to help me do basic … tasks”.
As for MMC, I gather that both category 2 and category 3 homes can be built this way, so I assume that this means that they are adaptable—for example, having strong enough bathroom walls to allow grab rails to be installed. But it would be quite unacceptable for a developer to refuse to install enough accessible and adaptable homes because they do not fit with MMC. Yes, we need a lot more homes but surely not at the cost of accessibility. Will the Minister ensure that accessibility requirements are included as part of any future rollout of MMC?
However, it is not just developers who want to use every inch of space for homes which are not accessible or easily adaptable. Not enough local authorities have targets in place for accessible homes. Last year, the housing association Habinteg analysed the accessible housing policies detailed in 263 of the 365 local plans across England. It found that, although 65% of the local planning authorities reviewed made reference to the lifetime homes standard or category 2, only 32% made a firm commitment to deliver a specific proportion of new homes to that standard, with just 18% committed to the category 3 standard.
We know that a review of the Building Regulations is being carried out. Will the Minister tell us about the timescale? We need category 2 of Part M made mandatory as soon as possible. Do we really need a long consultation about it? Of course, some property developers—not the noble Lord, Lord Borwick—will say that there is not much need for accessible and adaptable homes, but we know that there is a huge unmet need, so I urge the Government not to delay for another minute.
Lord Best (CB)
My Lords, I thank the Minister for his helpful introduction to this debate. I will forfeit my opportunity to offer him 10 ways for government to ensure 300,000 affordable, high-quality, well-designed homes a year. However, I recommend that he and all interested parties look out for the forthcoming reports from the Centre for Social Justice’s housing commission and from the Affordable Housing Commission organised by the Smith Institute and the Nationwide Foundation—I declare my interests as chair of these two commissions. I also declare interests as a vice-president of the LGA and the TCPA.
I want to use my few minutes to draw attention to the quite dramatically changed policy context in which we are now debating the construction of the new homes the nation needs. Over recent years there have been some quite fundamental, but largely unremarked, shifts in government housing policy, and I want to highlight and commend these important U-turns.
I have now counted over 20 significant reversals of housing policy over just the last three years or so. In essence, I detect the abandonment of a range of earlier policies which would diminish the social housing sector—the council and housing association sector—and would rely on a handful of volume housebuilders. Now, instead of that agenda—so familiar to those of us in your Lordships’ House who argued over the fateful Housing and Planning Act 2016—there are positive new measures to encourage, grow and expand social housing, while curbing the endlessly disappointing performance of the big housebuilders. In passing, I note equally the measures to redress the balance of power in the private rented sector from landlords to tenants, not least with last week’s very welcome announcement from the Secretary of State of greater security of tenure for renters.
Of particular relevance for today’s debate, the items from my long list of 20-plus policy reversals are these: first, the freedom for councils to borrow to build, in place of a tight cap that has prevented most local authorities building new homes; secondly, new grant funding for social rent—low-cost rentals—ending a virtual ban and the substitution of so-called affordable rents, which are not affordable to those on lower incomes; thirdly, dropping the flagship scheme to require councils to accept “starter homes” for sale in place of the previous planning obligations on housebuilders to ensure provision of low-cost rental homes; fourthly, pledging to close the “viability loophole” which has allowed housebuilders to renege on Section 106 planning obligations to provide affordable homes; fifthly, revival of the Government’s multibillion-pound loan guarantee scheme for housing association borrowing, which had been scrapped earlier; sixthly, dropping a controversial plan to put rents for specialist, supported housing on to a new basis that had stalled many developments for older people and others; seventhly, a full reversal of the imposition of a compulsory annual 1% real reduction in social housing rents—which has reduced the capacity of social landlords to develop new homes—and instead the substitution from next year of CPI-linked rent increases; eighthly, batting the idea of extending the right to buy to housing association tenants into the long grass and, more significantly, dropping the dreadful plan to make councils sell their best properties on the open market, when they fell vacant, to pay for the new right to buy discounts for those housing association tenants; ninthly, scrapping policies that make life tougher for social housing tenants, forcing social landlords to end long-term security of tenure and to raise rents for those who achieve improved earnings—“pay to stay”—and, in contrast, following the Grenfell Tower tragedy, promising measures to strengthen the regulation of social housing landlords and enhance the status of social housing tenants; and, finally, rather than putting increased faith in the major housebuilders, instead coming forward with at least four new constraints on them: deciding to create a new homes ombudsman to handle the numerous complaints from house buyers; outlawing appalling practices by housebuilders in selling leases with rip-off ground rents; requiring higher standards from housebuilders, not least to improve energy efficiency; and starting the phasing out of the multibillion-pound Help to Buy subsidies that have been so lucrative for the big housebuilders.
I see each of these turnarounds as a triumph of good sense and a credit to the relevant Secretaries of State and their Ministers. All of us can now build on the near-universal recognition that housing shortages and deficiencies will not be cured by volume housebuilders and “the market”. More, not less, government intervention —through both investment and regulation—is sensible, positive and necessary. I am not saying that the reorientation I have described means that everything is now sorted—sadly not. But what has changed is that so much housing policy is now facing in the right direction; what is needed now is for it to move forward further and faster in the direction now set. Government now has the opportunity to embrace further shifts in the same direction and accelerate progress—for example, with greater funding for social rent, with the adoption of Oliver Letwin’s recommendations for capturing land value, with more progress on garden towns, with changes to standards of accessibility and energy efficiency through Building Regulations and, yes, by promoting and incentivising modern methods of construction. If government sustains its significant shift in emphasis to more proactive governmental input, there will be new hope for the tens of thousands who need a better housing solution.
Lord Palmer of Childs Hill (LD)
My Lords, first, I thank the Minister for initiating the debate and setting out the Government’s plans in quite great detail. We need to be clear about the overriding philosophy of modern methods of construction. Is it our aim to build more homes quickly, more cheaply or to a high or higher standard? Is our aim to get people off the streets and out of temporary accommodation? I suggest that not everyone will or even wants to own their own home. As the noble Lord, Lord Best, said, many need to rent.
I see the reality in my family, with three adult grandchildren renting because they cannot see themselves able to purchase. There is a need for more rented accommodation and, as the noble Lord, Lord Best, rightly said, we need more social housing. It is good to come straight after him so I can cut all that bit out of my speech, because he dealt with so many aspects of how to increase social housing. Perhaps I could add that the construction of social rent homes has plummeted by 80% in the past 10 years. Shelter is calling for 3.1 million new such homes in the next 20 years. That equals 155,000 per annum, whereas only 6,463 were built in 2017-18.
My question to the Minister and to the House is: will the use of revolutionary technology build better-quality homes at record speed? Modular housebuilding is growing in the UK, but very slowly: 15,000 per annum are now factory built. Obviously, that of the noble Lord, Lord Patten, has not been built—but 15,000 have apparently been built elsewhere.
I was, however, perplexed to read that one developer using factory build reckons the lifespan of those properties to be 75 years. History has shown in my borough, the London Borough of Barnet, that estates of prefabs from the 1940s are not only still in use but highly valued by their occupants. I have also seen the use of factory builds for student accommodation at Middlesex University. I was impressed, when I saw this a few years ago, at how the modular units fitted together, so that each bathroom was a corner triangle which fitted back to back with the neighbouring units, thus simplifying the delivery of utilities. It was mind-boggling to see how simply having triangles of bathrooms fitting together could solve so many builders’ problems. Will the new methods produce more homes more quickly and to a high quality?
How can the Government force the larger developers not to sit on land banks and to release units only at a steady flow so as not to depress prices and profits? This is the problem at the heart of our housing crisis, which I last highlighted in this Chamber two and a half years ago. Have attitudes changed since then? A report in the past few days showed that housebuilders still sit on enough land to build well over 800,000 homes. The number of plots in the nine largest builders’ land banks has risen since our debate in November 2016, in which I spoke, to about 838,000. Those are plots on which they could build but have not built—and this is despite government reviews and policies.
In 2016 I pointed out in this Chamber that on a large site with planning permission, builders will rarely sell more than 150 units per annum. This enables them to sell at a price to delight their shareholders by not depressing the price of the properties they are selling. Is there truth in the assertion that the fault lies with the local authorities—as I have heard said this evening? In the local authority planning system it can take years to get planning permission, given the time it takes to hear applications and appeals. Is that the problem? If that is the case, what are the Government doing to rectify it? There is a problem with overall planning and with specific planning permissions? Or does the slowness in obtaining planning consent suit the large developers, which are happy to sit on land going up in value and are keeping high the value of developed homes? If this is the case, what are the Government doing to break the logjam?
Will modern forms of construction also provide more homes for rent and purchase, and will the Minister comment on some suggestions for government action, such as support for the UK’s modern methods of construction supply chain and funding for innovation, using research and development tax credits to encourage innovation and trial of new products and technologies? The noble Baroness, Lady Warwick, who is not in her place, mentioned standardisation. Various companies are building under the new methods of factory build, but are they consistent with each other? Is there standardisation? Otherwise, we will end up with systems that do not interlock, as with so many things in this country.
Will the new system develop new skills of factory building rather than bricks and mortar on site? Will it improve design quality? We are not looking for mass building at cheaper cost—“build ‘em high”, in the old Tesco format. We are talking about improving design quality. Will the Minister tell us whether the Government will encourage post-occupancy evaluation, to let the occupants tell us whether it is working? Finally—looking at the time—could the Government support a review to subdivide large sites to create more variety in the same area?
Lord Haselhurst (Con)
My Lords, let me say at the start that I do not claim to be an expert in the intricacies of housing supply. I would like to express my gratitude to the many people and organisations that supplied information to me ahead of this debate—even if justice cannot be done to it in a six-minute speech limit. However, at least I feel better informed.
I cannot really judge whether the reason for housing targets not being met is land supply, the planning system, outdated construction methods, the alleged perverse effects of stamp duty rates and Help to Buy schemes, or any other factor. All I know, and am deeply concerned about, is that there are many parts of the country where a housing shortage persists, and for 40 years I represented one of them in the other place.
I cut my political teeth on the notion of a property-owning democracy. Through experience, I have learned the need for a well-stocked rental sector. It has been a bitter disappointment to me that in the district of Uttlesford—the predominant housing authority in the constituency of Saffron Walden that I represented—there has hardly ever been a time when there were fewer than 1,000 names on the housing waiting list. The median house price in Uttlesford is £410,000; put another way, that is 12 times average earnings. More and more young people are being denied, despite the district council generally doing the right things: it has built council houses and entered partnerships with housing associations. I would like to instance the Hastoe Housing Association in particular, which has introduced many small schemes for shared ownership or subsidised rent in many of the villages of this predominantly rural constituency. Last year, 700 houses were built, of which around 250 were classified as affordable. That puts Uttlesford in line with the government target of 14,000 more dwellings by 2033.
Supply and demand, however, remain completely out of balance. The demand is fed by Uttlesford’s reputation as being one of the most desirable places in the country in which to live: its proximity to London makes it a tempting destination for people who want to move from an urban to a rural environment, and it has a robustly healthy local economy, with jobs aplenty. The need for more housing is obvious—except perhaps to people who already have the advantage of living in the district. Controversy has stalked every attempt by the council to find ways of satisfying the increasing demands of successive Governments. However, of Uttlesford’s 250 square mile extent, only 7% has been taken by housing to date. Some might have it that corn is giving way to concrete—but we are a long way from that.
It is understandable, I accept, that there is a desire on the part of homeowners and those in long-term rental accommodation to protect the status quo. But the hostility to new housing schemes has led to the formation of populist resistance groups which are clear as to what they are against but absolutely vague as to what they favour. It is deeply unfortunate that the supply of homes has become subject to a bitter political battle.
The resistance that has been stoked up stems from the failure of infrastructure to march hand in hand with housing construction. Fed with expectations, be they realistic or otherwise, that new communities will be blessed with roads, schools, medical centres, transport services, convenience stores, pubs and community centres, local hopes are regularly dashed. People who are promised better and receive worse harden their hearts towards government, local authorities and developers. Here, I find myself very interested in and sympathetic to the remarks made a few moments ago by my noble friend Lord Borwick.
I will cite some examples from Uttlesford. Flitch Green is a development on an old sugar beet factory site. The developers wanted more houses and kept putting in applications saying that these could be put on land that had been designated for playing fields. Gradually, the amenities were squeezed out to get more houses, and there was a continuous battle over that development. In Tudor Park, a new development in the town of Saffron Walden, the houses were not built to the best of standards and there were continuing complaints from the owners who moved in about the general amenities around, the bad finishing of pavements and—the final insult—that the green area meant for play and other purposes was left looking like a builders’ tip. In 1991, there was also the arrival of the third London airport at Stansted. Had this been accompanied by improvements in infrastructure, people might not have minded so much. But the railway service deteriorates; it does not get better.
I suggest that much has to be done if people are to become enthusiastic and persuaded that development can be carried out sensitively and with palpable benefits, perhaps even for members of their own family. I hope that, in his summing up tonight, my noble friend will ensure that the garden community concept will achieve that end.
The Earl of Lytton (CB)
My Lords, I declare my interest as a property professional and vice-president of the LGA and the National Association of Local Councils. I certainly welcome this debate and the introduction given by the Minister. After all, decent housing, along with education, health and access to justice, is something of a post-war birthright that we should respect.
Report after report, certainly since the beginning of 2016, has identified shortcomings in the construction and housebuilding sectors. I do not want to dwell too much on those, but traditional construction is certainly likely to be with us for some time, not least because we already have over 20 million houses that are built largely on traditional lines.
The sector is dominated by a few large players, and of course that has prompted suggestions of monopolistic characteristics. However, exploitative behaviour has been evident right across the sector, not just in directors’ bonuses bolstered by Help to Buy. Housing delivery remains complex, adversarial, long-winded, costly and uncertain. Unsurprisingly, that gives rise to sub-optimal outcomes, dissatisfied communities, poorly designed environments and disgracefully low-quality homes in some areas, and a range of complaints about defects in many more that are supposed to be good quality. Slow build rates, referred to by the noble Lord, Lord Palmer, and large allocation sites often dictate local supply and local pricing for years.
But there are well-designed housing developments and virtually fault-free homes in settings that give general satisfaction. It does not require new towns with long bedding-in timeframes or amorphous strategic sites, but rather, smaller, discrete adjuncts to settlements where people want to live and work and where there is some sense of community that best suits work/life balance, and environmental and green travel options. Lifetime homes, acceptable environments, low-maintenance design and robust technology should sit with adequate space standards in settings that are attractive, and I hope provided by a raft of small and medium-sized housebuilders who do not just produce standardised layouts.
There is nothing wrong with modular construction, as anyone who has inspected a Colt timber-framed house of the 1930s can attest. But modern ones are not as tolerant of DIY alterations or abuse, nor are they as easy to alter. So if that matters to people and what they expect of their homes, then rethink the design. There are problems with overprescriptive design when it comes to dealing with very high technological outcomes. Ours is a high-humidity island, and it may take many years for a problem with, for example, vapour barriers or the way components interact with each other to show up. So real-life testing of designs must, in my opinion, be absolutely exhaustive if we are to get lots of good life cycles.
More widely, we could certainly do more to decarbonise and harness renewable energy. On decarbonisation, using timber instead of cement and concrete is what I would be thinking of. Instead of having to change not just the bulb but the entire fitting and the housing—to use the old light fitting analogy—we need buildings, modern or otherwise, that last for decades and are extensively repairable and serviceable. Designing in potential for reuse and recycling, as well as durability, and reducing obsolescence, means a degree of harmonisation. Those factors, along with resilience to known risks caused by weathering and other deterioration, would serve to enhance homeowner and lender confidence. Meanwhile, there is absolutely no justification for sub-standard housing converted from unsuitable commercial buildings.
We have to address industry shortcomings. They were addressed in the Farmer report so I will not repeat them here, but there is a fragmentation of skills, an ageing workforce and a loss of experienced manpower—never mind things such as gender imbalance. I hope that modern apprenticeships will recognise that not every plumber, carpenter or electrician needs to have a higher education or, for that matter, is suited to academic endeavour.
Good design and durable outcomes also need competent professional skills, and we will need to refocus what we do to deal not only with traditional construction but with new forms. At present, we are cutting corners. The Building Research Establishment’s finding of poor thermal efficiency in many modern homes is something I still encounter in new housing today. Local government and housing associations should build more social housing. It will take time to create volume, though perhaps modular construction can help in that respect.
I agree with the Local Government Association that retaining right-to-buy receipts is essential. I despaired of the unfulfilled commitment in the Thatcher years to use receipts to build more social housing—only for a Labour Government in 2002 to pocket the accumulated fund for other purposes.
Ethical behaviour and corporate social responsibility must form part of what we do, and that means starting at the top. Nowhere is abusive behaviour better illustrated than in some modern ground rent practices, referred to earlier, and in poor construction quality. One change might be to attach some sort of more direct liability to house purchasers for the products that are produced or, for that matter, to social landlords who acquire blocks, so that it cannot be a question of hiding behind a construction warranty provided by somebody else. That might take things somewhat further than the new home ombudsman idea advocated so ably by my noble friend Lord Best, but it is worth thinking about.
Lord Bethell (Con)
My Lords, I thank the Minister for bringing this fascinating debate to the House and for speaking about the opportunity of using technology to bring huge benefits to housing construction. I pay tribute to my noble friend Lord Borwick and the noble Baroness, Lady Thomas, for their contributions on disability. I had not thought about speaking about it, and I rather wish I had because their testimony was very moving and apposite.
As a number of noble Lords have said, a huge amount has already been done on this area including the Farmer review, the 2017 housing White Paper, Oliver Letwin’s report and our report Off-site Manufacture for Construction: Building for Change, so I do not need to go through all that. As a relative newcomer, I felt completely persuaded by the huge volume of material showing that modular off-site manufacturing brings massive benefits to the industry in terms of cost, productivity, reliability, even creativity and, most of all, quality, and that is what I want to talk about. There are really powerful reasons to support this development.
However, one thing that struck me when reading around the subject is that when one looks at the long list of witnesses for each of the reports and the evidence submitted, one voice was not heard very often, that of the home buyer. That should ring a little bell, and I will come back to it in a second.
I pay tribute to the Government for their incredibly energetic approach to trying to sponsor this idea. It is terrific to see a Government at full pelt getting behind a big idea. A number of interventions to try to push the industry to adopt this new technology have been listed already, so I do not need to go through them all. I applaud this, but I sometimes worry about attempts by government to push industries to do things. There are a couple of things that I have personal experience of that I worry about. The Government’s commitment to a presumption in favour of off-site modular demand sets a great example, and it is good to see the Government put their money where their mouth is. It is too early to measure success, but I have been involved in an effort to try to get the Government to lease land to renewable energy projects in the same spirit of leadership, and it was not a hugely successful experiment. The projects really struggled to get decision-makers in government organisations with completely different priorities to adopt a commitment to renewable energy investment, and I worry that we might have a similar problem in this area. I applaud the £13 million for research and development, but I worry whether they will come up with the triangular bathrooms mentioned by the noble Lord, Lord Palmer. I thought they were fantastic.
However my main point is about the home owner, and I wonder whether instead of all this pushing there could be some way of pulling change in the way the industry approaches construction. The HomeOwners Alliance is a representative body of people who own homes. Its survey, which is very powerful, talks in detail about the dissatisfaction of purchasers of new homes with the quality of the products they have bought. Sixty-nine per cent of people have serious concerns about the quality. My noble friends Lord Haselhurst and Lord Patten told pretty typical stories of concerns about snagging. The recommendation of the Home Owners Alliance is a “snagging retention” to give time for snags and defects to be righted and, most importantly, to incentivise homebuilders to focus on getting the quality right in the first place. That is the important connection that I want to make. If modular manufacture really delivers the quality that it promises, maybe we can build into the home-purchasing process a really powerful incentive that puts the consumer at the centre of the decision-making and encourages manufacturers to build right the first time, rather than having to come back to deal with snags.
The HomeOwners Alliance recommends a retention of 2.5% of the value of the home. Personally I would go further. From my business career, I know that it is not unusual to have retentions of 5% or 10%. Of course, the homebuilders will not like that idea. They might find that it affects their cash flow and administratively they might struggle with it, although retentions are quite common in other industries. Surprisingly, Persimmon, the housebuilder, has already embraced the idea and has offered to put in place a 1.5% retention on new-build homes, although we are waiting to find out a few more details about its suggested plan.
Therefore, this is my recommendation. Instead of all the efforts listed in this debate to try to push the industry in a certain direction with supply-side regulations, can the Minister please consider demand-side reforms that will cost the Government nothing and make the best use of market-based pressures to enact reform? I suggest that the Government introduce a mandatory, consumer-friendly snagging retention regulation. This would act as a great big industry-sized nudge for homebuilders to embrace modern and more reliable methods of production that deliver the sorts of homes that do not need endless tweaks and costly, irritating snagging to get right. The beneficiary will be the modular building industry, which, as I think everyone here agrees, is ideally placed to meet these market conditions. Lastly, I urge the Minister to launch an immediate consultation into such a measure, to take a robust attitude to complaints from the building industry and to come down on the side of the poor home-owning consumer in this important matter.
Baroness Walmsley (LD)
My Lords, I shall focus on the word “sustainable” in the wording of the Motion, because I want to talk about two linked crises: the crisis of the housing shortage and the crisis of climate change.
The BEIS Select Committee looked into this on 12 March this year, taking evidence from representatives from Barratt, Persimmon and Melius Homes. The builders were asked what percentage of the houses they are building this year comply with the latest energy efficiency regulations. Barratt’s answer was 53%. The representative was asked, “Why only 53%?” He explained that the point at which you buy the land and get planning permission fixes the building regulations to which you must abide in perpetuity, so there are people still building to 2006 regulations.
It strikes me that that is a particular problem, given the phenomenon called land banking. It seems that if you buy some land, get planning permission and do some innocuous preparations, you can fix the regulations with which you have to comply, so you can bank your energy regulations as well as your land. That sounds like a good deal for the builders but a poor one for home buyers and the planet in an era when the standards of energy-efficiency regulations are rising. Surely this should change.
Public perception is that new properties will be substantially more energy efficient than older properties, in which case, the Select Committee asked, why did the Committee on Climate Change feel the need to point out that if builders actually built to the specification to which they should be building, consumers could save up to £260 per year on their energy bills? Are house buyers being misled into believing that their properties are more efficient than they are? The witnesses accepted that there is a performance gap between the energy performance certificate rating and the actual performance in use; this is something that the committee had dug into earlier. The witnesses made the point that homes that were designed to a B standard often turned out to be a C or D standard as built. It was put to the builders that this was mis-selling, similar to where someone buys a three-bedroomed house and it turns out to have only two bedrooms: they are being swindled. But, apparently, few buyers go back to the builder and complain that their energy bills are higher than expected. It seems that it is very difficult to make the comparison because of the complexity of the energy market. Do the Government plan to make it any easier for house buyers to check that they are getting what they paid for when they buy a new house?
Tools do exist for testing the thermal performance of the house at the point of sale. Indeed, I saw it done in my own house; I can say from my experience that I built a passive house and my heating bills are exactly within the range quoted by the architect and small builder. What is more, they checked this out again a year later to make sure the house was still performing—it is. The committee’s witnesses said they would be happy to be measured on this basis, so why do the regulations not insist that, instead of being based on a theoretical design, the EPC is issued on actual performance?
The Committee on Climate Change has stated that we need to decarbonise our homes by 2050. The builders were asked what percentage of the homes they built last year would need to be retrofitted to meet this ambition. The answer from Barratt and Persimmon was, “all of them”, since none was built to zero-carbon standards. But the small builder Melius Homes builds all its houses to this standard and still makes a profit.
Given that it could cost five times as much to retrofit a house to a zero-carbon standard than to build to that standard in the first place, we have one chance to get zero-carbon homes cheaply. The builders claimed that they are capable of building zero-carbon homes if that is what the Government want. However, the zero-carbon homes standard was scrapped. Can the Minister say why the Government are not reinstating it? The industry says it can do it, the planet needs it, so let us get on with it.
Cost is often raised as an issue. The committee asked about the extra cost of building to passive house standard and the reply was £10,000 to £12,000 per house. However, the climate change committee estimated £4,800 per home. It was agreed by the witnesses that this was probably ambitious but that, if it was at scale, perhaps it could be done. The committee then established that, at £10,000 per home extra, the total cost of building all Persimmon’s homes to zero-carbon standards would be £65 million per year, which happens to be only 10% of the amount paid to its senior leadership team last year. In other words, Persimmon could have built all the homes it built last year to zero-carbon standards for about 10% of what it paid the bosses. What will the Government do to ensure that scale builders put a little extra insulation into houses and a little less into the remuneration packages of their senior executives?
Finally, I would like to ask for some clarification about the powers of local authorities to grant planning permission only if the houses are built to zero-carbon standards. The Government have said that,
“local authorities are not restricted in their ability to require energy efficiency standards above Building Regulations”.
But some councillors are still confused and have been consulting the Passivhaus Trust on the matter. They point out that the planning system involves a number of considerations, including the three legs of sustainability: economic, environmental and social. They want to know whether they need to declare a local climate emergency in order to be allowed to give greater weight to the environmental leg in determining planning applications. They are of course very averse to judicial review. Can the Minister clarify this please?
Lord Shinkwin (Con)
My Lords, I will confine my remarks to disability access, because without it housing supply simply cannot be regarded as sustainable.
As the excellent report produced in 2016 by the ad hoc Select Committee of your Lordships’ House on the Equality Act 2010 and disabled people highlighted, demographics are heading in one direction. As my noble friend Lord Borwick and the noble Baroness, Lady Thomas of Winchester, mentioned, society is ageing and the incidence of disability is increasing. The question is, therefore, whether we have the accessible housing supply to meet the increased demand.
Sadly, the answer, as we have already heard, is that we do not. In fact, there is a crisis in accessible housing. Abode Impact, a respected organisation working in this field, has conducted the largest-ever survey of wheelchair users. It found,
“a chronic lack of wheelchair accessible homes”;
four in five are currently living in a home that fails to fully meet their needs as a wheelchair user; 91% have experienced barriers to accessing the private rented sector; and 62% said this was due to a lack of accessible properties. Incredibly, wheelchair users report having to be carried downstairs to leave their property and being turned away by estate agents after arriving in a wheelchair.
So the next question is surely whether we are at least planning to make the necessary provision. Again, the answer, if we look at the National Planning Policy Framework—which was revised as recently as February of this year—is no, despite its being supposedly centred on “sustainable development”. Indeed, paragraph 61 reads:
“Within this context, the size, type and tenure of housing needed for different groups in the community should be assessed and reflected in planning policies (including, but not limited to, those who require affordable housing, families with children … people with disabilities”—
the list goes on. However, that is it. The framework does not go into any further detail or communicate any sense of urgency.
Yet exactly two years ago, the Women and Equalities Select Committee in the other place recommended that,
“the Government amend the National Planning Policy Framework and the National Planning Practice Guidance to incorporate a dedicated section on access for disabled people and inclusive design for local planning authorities and decision-takers”.
This does not appear to have been done, and I would be grateful if the Minister could explain why.
Noble Lords may know that the Select Committee in the other place also recommended that, once the new guidance under the Neighbourhood Planning Bill —passed almost two years ago—is adopted, the Ministry of Housing, Communities and Local Government undertake an audit of local plans to identify those that do, or do not, meet that guidance. Where this audit reveals gaps in accessible housing policies, the Government must take action to press local authorities to amend their local plans in line with the new guidance as a matter of urgency. I ask the Minister: what is the status of that guidance? As of 8 April, when he provided a Written Answer to my noble friend Lady Cumberlege, Section 8(2) of the Neighbourhood Planning Act 2017 had still not even been commenced, despite the fact that the Act was passed, as I say, almost two years ago.
Surely, as the noble Baroness, Lady Thomas of Winchester, also suggested, there is an obvious solution. Indeed, it is already being used in London, where all new homes are built to Part M category 2 standards for “accessible and adaptable dwellings”—in other words, sustainable housing. Moreover, 10% of new housing in London is category 3—that is, wheelchair accessible.
As my noble friend Lord Borwick so powerfully and clearly demonstrated, there is a market to be tapped here. Abode Impact is launching the first accessible housing fund for London, targeting financial returns and social impact. The fund will purchase one-bedroom and two-bedroom new-build flats in outer London to be adapted for wheelchair users and located close to accessible public transport links.
In conclusion, if the Government are serious about marking next year’s 25th anniversary of the Disability Discrimination Act, how can they justify any further delay in publishing this essential guidance under the Neighbourhood Planning Act? Surely it should be published before the anniversary. I look forward to hearing what my noble friend has to say.
Baroness Watkins of Tavistock (CB)
I thank the Minister for bringing this debate relating to modern methods of construction, with a particular focus on housing. I declare my interests as outlined in the register, in particular my role as senior independent director at Southern Housing.
I am indebted to several briefings provided to me in preparation for my contribution. A former colleague, Stephen Trusler from Laing O’Rourke, provided me with information that commences with the following statement:
“Platform-Design for Manufacture and Assembly offers the opportunity to ‘TURBO-CHARGE’ capacity and widen productivity in the UK and will enable the UK’s construction sector to deliver modern solutions to the challenges the country now faces”.
The paper argues that there is an opportunity to improve sustainability through accurate, cost-efficient and time-efficient build; deliver high-quality, energy-efficient products; minimise risks of additional costs due to accuracy and quality of build; and improve productivity through high-tech design, delivering products less reliant on traditional on-site construction works. In current parlance, I ask noble Lords: what is not to like if all these benefits can be achieved?
Gwent’s new £350 million Grange University Hospital is being delivered by design for manufacture and assembly. The hospital team defined a set of 4,000 construction products, which were digitally engineered and tested off-site. If this 560-bed hospital can be delivered through modern practices of assembly using lean automation and quality-assurance systems, estimated to take only four years to complete, imagine what could be achieved in the residential housing sector.
Modern methods of construction should be a welcome approach to speeding up our housing supply, including modular units for homeless people living rough or in bed and breakfasts. To really embrace these modern methods, it will be necessary for the housebuilding industry to invest significantly in the changes needed to deliver innovation in construction techniques.
It is accepted that our housing market has been broken because we have not produced enough homes to keep up not only with population growth but with our changing demographics. Recent research showed that there are at least 1.8 million households that require access features or adaptations to their homes to live as independently as possible. It should surely be feasible to design homes through the new modern methods of construction that can be readily adapted as and when necessary.
I was going to talk about Lifetime Homes Standard category 2, but as this has been covered by other noble Lords I will say merely that if we accept the costs as outlined in the Government’s own impact assessment, building a category 2 home would cost just over £521 more in bill costs—with the net additional cost of space possibly making this rise to £1,400. An investment in such a unit, using a simple automated design process, would not only be economic but would dramatically enhance people’s lives, enabling faster discharge from healthcare facilities and early rehabilitation in people's own homes, as well as often keeping them out of care facilities.
I have barely touched on many of the issues provided in the excellent Library briefing, which clearly indicates that the residential construction industry could significantly boost housing supply using modern methods of construction. Yet industry requires assurances from the Government to invest in new facilities to produce the product and manufacturing tools that will allow accurate, repeatable, machine-readable product information to be used across the sector.
It will be necessary to develop industry-wide standards for the products produced by these new methods, and to include those standards associated with health and safety—particularly fire and flood regulations. Equally vital is the action needed to develop structured career pathways into and within the sector, including high-quality industry placements for students in school, further education and higher education. The current sector workforce will also need to be reskilled where appropriate, to support their ongoing employment and to ensure their retention in the construction industry.
In summary, I ask the Minister: will the Government support industry in its investment programmes, to ensure that the target for increasing the number of new homes can be achieved more quickly using modern processes than through traditional construction methods? I have spoken to many people in the industry who reaffirm evidence given to the Science and Technology Select Committee that the only way to meet the new government targets for delivering 300,000 additional homes per annum by the mid-2020s will be by embracing these new technologies.
Will the Government also commit to exploring options for the specifications and accreditation of products built off-site, in part to ensure that mortgages and insurance policies are readily available for purchasers and renters of these new housing products?
The Earl of Caithness (Con)
My Lords, I am grateful to my noble friend Lord Bourne for introducing the debate, and for the positive way in which he did so. I declare my interests, as in the register; in particular, I have been a land agent, an estate agent and a Minister for Housing. The noble Lord, Lord Best, told us of changes that had happened in the last three or four years. If one looks back to when I and my noble friend Lord Young—also on the Front Bench—were Ministers for Housing, times have changed quite considerably.
However, I have just finished sitting on your Lordships’ Rural Economy Committee. Our report is published on Saturday morning. One chapter is dedicated to housing in rural areas. I hope that the report will be in my noble friend’s red box for the weekend, as indeed I hope it will be in many Ministers’ boxes, because there is no doubt that rural areas have been treated in a grossly unfair way by successive Governments, and that needs to be put right—so my noble friend still has a lot of work to do.
Some of the evidence we received was startling. Chris Carr of the Federation of Master Builders told us that the top five constraints on the availability to deliver new homes were the lack of available and viable land, the planning system, a lack of developer finance, a shortage of skilled workers and the cost of 106 contributions. My noble friend Lord Borwick mentioned the 106 contributions as a cost, but I was surprised that my noble friend the Minister did not mention the lack of skilled workers when he opened the debate. I hope he will tackle that point when he comes to wind up.
Our evidence also showed that there is a much greater challenge related to having a supply of houses of the right types and tenures—including owner-occupied, private rented and affordable housing—in the right locations to support a population of all ages. We received evidence that the cost of rental can be up to 31% of a family’s income in rural areas—far higher than in urban areas. Although the population in rural areas is increasing, we were told that the working-age population in those areas is projected to decline by 75,000 between 2014 and 2038. The key to solving that problem is by ensuring viable, mixed communities in rural areas and building more affordable housing.
All too often now, young people are forced to leave the countryside and go into urban areas because of the cost of housing. This means that there will be more older people in rural areas. I strongly urge the Government to encourage all homes to be built to the Lifetime Homes Standard of accessibility, which serves people of all ages. It is no good having a subsection on that; it needs to be a firm requirement that that should be the construction. That was a recommendation of the Housing and Care for Older People All-Party Parliamentary Group report, in which the noble Lord, Lord Best, was very involved.
However, it is not just about the construction of houses; we often forget the people who live in the houses. I can say from my own experience that after my accident two or three years ago, I had to spend time in a rehab unit because I could not go home. My home was not fit for me to live in and I was blocking a bed. I think I am not the only person in this House who can say, “I am still blocking a bed”. My wife and I live in a house that is too big for us and we cannot find the right house to downsize into. A further problem is that of stamp duty. I suggest to my noble friend the Minister that he raises the matter of stamp duty with the Chancellor, because it would be one way to free up the market. I also suggest that any pensioner who moves into a new property in which they are going to live is excluded from stamp duty.
Planning is a hugely important issue and causes developers a lot of problems. It was originally designed to balance the many competing interests associated with land, but our planning system is broken. The Raynsford review has just been published. When will the Government reply to that? One of the recommendations of the review is to have a strong emphasis on sustainable development, with the important caveat that it will also focus on the health, safety and well-being of individuals and communities. I join others in asking my noble friend what he means by sustainable housing.
I want to ask my noble friend about the National Infrastructure Commission. Whether its projects are good or bad, they are not related to the current planning system, and this will pose huge problems. How is that going to tie in with local plans and neighbourhood plans, if there is a body with a different system imposing different rules from those of the Government?
I turn for the last time to sustainability. As my noble friend Lord Patten said, the sustainability of housing does not mean the sustainability of land. According to figures for the last four financial years, between 2013 and 2017 we lost 38,706 hectares of agricultural land. In addition, we lost 2,591 hectares of gardens—equivalent to 10 square miles. That is the size of Exeter and, for my noble friend’s benefit, it is about eight times the size of Aberystwyth. My noble friend promised me that he and the Government would challenge the Mayor of London on his proposal to take more garden land for housing. Can he tell me what he has done?
Lord Stunell (LD)
My Lords, it is a pleasure to contribute to this timely debate. I welcome the words of the Minister in introducing it and in giving us a good overview of what the Government intend to do. There have been some high-powered contributions to the debate and perhaps two key themes have come out of it. One is how we get the quantity of homes that we need and the other is how we get the quality. My noble friend Lady Thornhill made the pertinent point that if we want the quantity, we will have to invest more in social housing, which will deliver other benefits—social sustainability as well as the numbers. Some powerful points were made by a number of other noble Members of this Chamber, but I am sure that we were all impressed by the contributions made particularly by the noble Baroness, Lady Thomas, and the noble Lord, Lord Shinkwin, on accessibility, which is one more aspect of how we make homes sustainable.
I want to pick up a point introduced by my noble friend Lady Walmsley, about housing sustainability and climate change. It is a good moment to do so, with the Extinction Rebellion demonstrations this week and Greta Thunberg in the building challenging Members of Parliament. I hope that in his final words the Minister might rise above the departmental brief to say exactly how he sees MMC and the construction industry responding to the challenges set by Extinction Rebellion and the Government’s own target of an 80% reduction in carbon output by 2050, which they have now admitted is hardly within sight.
The reality is that 30% of the carbon emissions of this country come from construction and the built environment. Our homes produce twice as much carbon dioxide as our cars, yet we have the paradox whereby if you want to buy a zero-emission car, the Government will give you a £3,000 subsidy whereas if you want a zero-carbon house they will charge you 17.5% tax on the extra cost. When looking at how we tackle quality, perhaps the Minister could respond on that. If we halved domestic CO2 output, we could reduce the programme of power generation by the equivalent of three nuclear power stations—which would be very convenient given that it seems that they are reducing anyway.
What the Government have done so far is scrap the Green Deal and abandon the shift to zero-carbon homes. They have even left energy performance certificates to go completely unmonitored and rot on the vine. A response to a recent Parliamentary Question that I asked indicated that we do not even know what the energy performance of government buildings is; nor is there any system of recording or monitoring it. So there is plenty to be done.
The Minister will have read about Greta Thunberg’s accusation that British politicians have lied about climate change. I know that the Minister would never do that, and I hope that when he winds up the debate he will set out a bold vision of how we will use the construction boom, delivered through the commitment to build 300,000 homes a year, to move towards solving the problems of climate change.
Other noble Lords have pointed out that MMC is not an end but a means: it is a means to higher productivity, which is very much needed; it is a means of getting greater workforce diversity—not just women in the factories making the houses, but diversity of design and performance; it is a means of getting faster delivery of homes; and it is a means of getting more consistent quality of homes. Contributors to this debate have also pointed out that MMC has some problems. An important one is its reputation. The noble Earl, Lord Lytton, in particular, mentioned that, as did others. The Minister mentioned in his opening remarks discussions with the mortgage industry, the insurance industry and the financial sector about how they can rally round to give proper support; I hope he will be able to expand on that. I certainly look forward to seeing how it will happen.
However, the overwhelming problem for MMC is the inconsistency of financial support. The fact that there is no consistent timeline and programme for production means that the high first costs of MMC are a ridiculously high risk for many investors to take. I welcome what the Government have done with the construction industry strategy in setting aside money and seeing investment, but the noble Lord, Lord Patten, made the point that while he is supporting an enterprise that is building 2,000 homes in a factory, not one is yet on the ground. That is not a criticism—it takes time to get an off-site manufacturing system to a level where it can put houses on site consistently, and the history of policy in this country is that by the time you are ready to put the houses on the ground, the policy has changed at national level and very often you are left stranded.
So the Minister has made a bold and interesting start. He has talked some good talk but he has left unanswered some of the really big questions asked by other contributors to this debate and, I hope, by me. What is he going to do to give the construction industry and the housebuilding sector a long-term target, with a trajectory and timelines to deliver on climate change? What is going to be put in place to respond to the Extinction Rebellion protesters?
Lord Beecham (Lab)
My Lords, I refer to my interests as a local councillor seeking re-election next week and as an honorary vice-president of the Local Government Association. I join other noble Lords in congratulating the Minister and thanking him for giving us the opportunity to discuss this important area of policy, and for his clear interest in it and support for action.
Today’s debate, with its curiously worded title, reflects a long overdue intention on the part of the Government to address a deepening crisis over housing policy. Belatedly, the Government are recognising the need for more new homes, although their target of 300,000 new homes a year embodies a minimal role for local authorities, allowing only the most hard pressed to bid for £1 billion by 2021-22. As I have remarked on a number of occasions, in Newcastle, when I was first elected to the city council, we built 3,000 houses in 1967. The Government’s welcome announcement will provide an estimated 10,000 houses: that is not great when you look at the national need.
Why should councils’ contribution to meeting housing needs be restricted to this extent? Why, contrary to the view of the Treasury Select Committee, do the Government intend to maintain their cap on all other areas? The Government and their coalition predecessor have restricted the use of the proceeds of sales under right to buy such that in the last six years, while £3.5 billion in discounts have been shelled out, councils have been able to retain only one-third of the already reduced proceeds and find it increasingly difficult to provide much-needed social housing. So in 2017-18, of 160,000 new homes built in that year, only 1,730 were built by councils and 27,140 by housing associations. Forty per cent of former council properties are now owned not by the tenants who acquired them but by private landlords who rent them out at higher rates than council rents. What is the Government’s definition of affordability for both rented and newly built, owner-occupied properties? What view do they take of the kind of profits generated by large housebuilders such as Persimmon and the massive payment of £110 million to its chief executive, which is in itself enough to build 100 homes? How do the Government square that with the bedroom tax, which in Newcastle alone costs 3,000 households £2 million a year?
Moreover, why, when the Government have announced additional expenditure of £l billion, has the Treasury published plans to spend only £880,000? What conditions, if any, will they impose on the application of this funding? The Local Government Association points out that in the past five years, local authorities have lost enough properties to house the entire population of Oxford. How many more people do the Government estimate will now be housed by councils in the light of their changing policy?
One area that is proving problematic is the planning system, with departments struggling to find staff. Again according to the Local Government Association, that has given rise to £200 million being paid to subsidise the cost of applications. It is sometimes alleged that the planning system is delaying or obstructing much-needed housing development, but it should be remembered that last year, 90% of applications were approved. In 2016-17, councils gave permission to build more than 321,000 homes, and there are currently 430,000 approved homes waiting to be built, with 90% of applications being approved. The planning system has been criticised tonight—rather unfairly, if I may say so.
A couple of years ago, the Local Government Association found that taxpayers are subsidising the planning process for housebuilding by some £200 million a year. That comes at a time of unprecedented cuts in government funding for local councils, causing serious problems in the delivery of important local services, with this year’s overall funding gap of £3 billion due to rise to £8 billion by 2024-25. Will the Government review the position and allow a further increase in what may be charged for planning applications?
Of course, there are other pressing issues, not least rising figures of homelessness and the decanting of people to distant locations from where they currently live. In addition, we suffer all too frequently problems over housing asylum seekers and refugees without the provision of adequate support. What attempts has the department made to engage the Home Office, whose track record on this issue and the outsourcing required have demonstrably failed too many of these unfortunate people and the communities to which they have been sent?
One burgeoning area of housing development is the massive growth of student accommodation, some purpose-built and some replacing long-term residents of town and city houses and flats. Neither the students nor the developers pay council tax or business rates. The former is understandable, but the latter at least merits consideration. We have a rash of newly built student accommodation in and around Newcastle city centre; again, no business rates or any such rates derive from them. Have the Government given any thought to this issue? If not, will they look at it again?
As the long title of the debate and its many speeches illustrate, there is more to housing policy than numbers, vital though they are. We are well below European standards in terms of the size and energy efficiency of our housing stock—a matter to which I and other Members of your Lordships’ House have referred from time to time in this Chamber, and which has been raised in this debate.
The Grenfell tragedy is a stark reminder of the need to be alert to issues that could lead to major problems. What steps are the Government taking to ensure that the safety of residents is a prime duty of the builders and owners of homes, especially apartment blocks? What steps are they taking to ensure that leaseholders are not made liable to pay for the necessary precautionary steps of replacing vulnerable cladding and ensuring that other safety requirements are met? What assistance will be made available to local authorities to ensure that residents or employees are not left at risk in either private or publicly owned blocks, be they residential or used for other purposes?
Finally in this area, we need to keep under review the role of the private rented sector. Many private landlords live up to their responsibilities but, all too often, others neglect their obligations, fail to ensure that their properties are in good condition or act unlawfully when dealing with their tenants. Will the Government do more to encourage selective licensing of landlords and ensure that legal aid and advice are much more available, given that there are legal aid deserts for housing law problems?
On a more positive sign, I welcome moves to update the building industry in terms of design, especially in the areas relevant to climate change, home safety and, not least, adaptability. In that respect I suppose I declare a potential future interest in the light of people living longer and possibly needing more accommodation of that kind.
We have an issue with housing in this country. It is one that has gone on for a long time. The tone of the Minister’s speech elicited sympathy and support around the Chamber. I hope it marks a significant change in government policy across the whole range of housing issues. After all, we have too many people who are still homeless or still seeking decent permanent and affordable accommodation. We look forward to the Government developing and building on the useful but limited improvements in their policy that have been enunciated tonight. Across the House, we hope to see an increase in the number of affordable, good-quality housing in all tenures. In particular, I would argue—with the support of certainly some Members of your Lordships’ House—that the role of local authorities needs to be enhanced and promoted in achieving those objectives.
Lord Bourne of Aberystwyth
My Lords, I thank noble Lords across the Chamber for some notable contributions to an extremely important debate on many important areas of policy. It is certainly a subject to which I am very much committed. I will say at the outset that I will ensure that any points I miss in the relatively limited time I have left are picked up afterwards. I will write to noble Lords who have participated in the debate and leave a copy in the Library. I will also ensure that Mark Farmer receives a copy of the debate and I shall be keen to follow up points with him afterwards, which is important. I will also ensure that other government departments receive a copy of the debate, which has been very far-reaching.
I am certainly an idealist, but an idealist without illusions. That is the way I hope to respond to the debate. I am used to being called to account for issues relating to communities, local government and housing—that is fair enough—but one or two points were about the global challenge of climate change. I am always grateful to noble Lords who exaggerate my powers, but some of those matters are perhaps a bit more cosmic. I very much identify with the Greta Thunberg contribution; it is important that we listen to young people with that idealism and act accordingly. I was very pleased that Michael Gove responded very positively to what she said. If I may, I shall pick up some of those points later.
I shall deal with the contributions in the order in which they were made by noble Lords. Again, forgive me if I miss points; they will be picked up later by the team. The noble Baroness, Lady Thornhill, made a very positive contribution. I thank her very much for her support for many of the things that we are doing. She talked about tackling the big boys—and presumably, in a spirit of non-sexism, the big girls—and ensuring that the larger developers deliver. I think I have indicated before that we are looking closely at the big developers to ensure that they are giving value for public money and treating consumers properly. We still have concerns and we are watching them like hawks.
The noble Baroness mentioned the Building Research Establishment in Watford. I should also like to mention the very good and helpful work it does, and has done since 2005, on modern methods of construction. She mentioned the current work on modern methods of construction to help with climate change. For example, Specific, which is based in Swansea and is in receipt of government funding, is very much doing that. She also mentioned dementia-friendly housing and so on. The possibilities are considerable and it is important that we take them all on board. She also mentioned the skills shortage, which I did reference in my initial speech. Mark Farmer has reported on this, and we are acting on the earlier review. I will, if I may, expand on that in a letter.
I turn to my noble friend Lord Patten, who first of all challenged us on what examples of modern methods of construction homes can be seen. The noble Lord, Lord Stunell, also raised that issue. There are some modern methods of construction homes that can be seen, for example in Gateshead—the noble Lord, Lord Beecham, will probably be aware of those at the Gateshead Innovation Village—and in North Shields at Smith’s Dock. There are also some in Yorkshire at Derwenthorpe and they are, I think, being developed in Basildon, where Swan Housing has delivered some homes with housing association partners. Those are some specific examples, and I will give further details in the letter.
My noble friend Lord Patten also asked about the definition of “sustainability” in housing. It is in the National Planning Policy Framework, which gives quite a long definition and talks about the three overarching objectives—economic, social and environmental. Again, I will give further details of that in the letter.
I thank the noble Baroness, Lady Warwick, very much indeed for the positive points she made; I know that she comes with considerable experience as chair of the National Housing Federation. She talked quite rightly about the barriers to modern methods of construction, which we are addressing through the working group led by Mark Farmer, and, very importantly, the issues of the risk to buyers and the availability of money to borrow and so on. She was absolutely right on that. She also talked about the standardisation of some features—again, the working group is looking at that, and I accept its importance. She talked about the “drumbeat of demand”. That is a very good phrase, if I may say so, and it is important—without the demand, it is not much good putting resources here. We hope to tackle this through the work the group is doing.
My noble friend Lord Borwick talked about the challenge of homes having appropriate access and the London factor—not that there is a different standard, but in terms of the percentage of homes available. I understand the concern, and it will be looked at when we review Part M, which is due to start shortly. Part M is part of the Hackitt review of building regulations, and of the commitment post-Grenfell to look at accessibility. It is important to note, if I may say so to my noble friend Lord Shinkwin, that it is not just about planning; it is about building regulations, which are key to getting this right. The Building Regulations Advisory Committee is due to report shortly to the department on Part M, and I hope that we can respond positively. I thank the noble Baroness, Lady Thomas, very much for what she said about people at times being prisoners in their own homes; that is a very graphic description of what happens. She is right that some planning authorities take this issue more seriously than others; that is why the work on the building regulations is so important. I hope that helps her on the timescale, but I will try to expand on that in a letter as well.
I thank the noble Lord, Lord Best, who is really the eminence grise in this area, if I may say so. To have praise from him for what we are doing means a lot. I know the work that he has been doing, and I thank him for it. He talked about the triumph of good sense. The noble Baroness, Lady Thornhill, also talked about the importance of a growing consensus on many of these issues. I am very keen to establish that; it is the best way of moving things forward. There is a consensus in the House on many of these issues—not necessarily on everything, but certainly on the macro position. There may be differences on some of the micro, but if we can agree on the macro that will be a good start; maybe we can agree on some of the micro as well. I thank the noble Lord very much for what he said and the work he is doing. He will know that we are doing work on the Housing Ombudsman service, leaseholder reform and so on. There is a lot happening in the department. I am not sure I was terribly flattered by that being characterised as U-turns—touches on the tiller would certainly be a true description. I am very grateful for what he said.
I thank the noble Lord, Lord Palmer of Childs Hill, for the positive stance he took, and as another inhabitant of the borough of Barnet, I know that he is absolutely right that the MMC, which came of age after the war, is still very much intact in Barnet. That demonstrates how homes can be made durable, which is something we have to ensure with the new generation of modern methods of construction. He also talked about the large property developers and the aftercare that they provide—and, in one or two cases, sadly do not provide. As I say, we are looking at that. He asked about standardisation of products, which is important, and the working group is looking at that as well.
My noble friend Lord Haselhurst talked about his home area in the Saffron Walden constituency. The garden community that was approved in March 2019—in Uttlesford and in West Braintree, just over the border—will I am sure be of interest to him. From memory, that will have about 19,000 homes, and it will make a difference in what is clearly a lovely area. I do not want to add to the housing pressures on that area, as he and I have now both praised it and said how lovely it is. However, work is going on there. On housing infrastructure, work is certainly going on in Cambridgeshire; I am not quite sure whether there is a housing infrastructure bid with regard to Uttlesford, but I will try to pick that up later in a letter.
The noble Earl, Lord Lytton, also talked about the large providers, which seems to have been a common theme. I thank him very much for what he does and for his work in this area. He is absolutely right that we need to watch the large providers, and that we need to support the small and medium-sized enterprises, which, as he knows, we are seeking to do. He talked about decarbonisation as part of the delivery by MMC. In a way it is like spinning plates, keeping all these things in the air at once. The carbon challenge is one of the things that MMC can help us deliver on, as well as providing British jobs, providing housing more quickly, and responding to the sort of design that people need, so we need to do that. The noble Earl talked about construction skills as well; of course, I mentioned the Farmer report, which made some recommendations in that regard. The DfE has invested money in the ConstructionSkills council, which will help with that.
My noble friend Lord Bethell spoke about the importance of ensuring, in relation to disability, that we build homes for the future. It is true that that will affect all of us, our relations and our friends. We have to realise that this is a necessary ingredient, not a desirable one, and I hope that this will inform the review of Part M when that comes forward. He talked about the HomeOwners Alliance; I will have a look at that and take it back to the department with regard to the snagging retention—it certainly looks as though it is worth looking at. He will appreciate that I am certainly not in a position to make commitments on behalf of the Chancellor, but it looks like something we should be looking at, and I will certainly do that.
On the issue of carbon and climate change, as always, the noble Baroness, Lady Walmsley, brings her considerable experience in this area to the fore. There were some detailed questions there—I will write to her on some of the detailed points and I thank her very much for nodding in agreement to that. I agree with her very much on the importance of delivering on the climate change agenda. That was also touched on by the noble Lord, Lord Stunell, who has had experience in this department and will know of the need to reduce that 30% contribution to carbon that is generated by homes; we need to focus attention on the two areas of cars and homes, and we are seeking to do that. On that particular point on energy, we are seeking to tighten the energy efficiency rules shortly, which we committed to do. We have had a 30% improvement since 2010 and want to take that further, and I think that would have the support of the House.
The noble Baroness, Lady Walmsley, raised the issue of local government discretion on planning re sustainability. I am happy to meet her about this, but if she is talking to specific examples, perhaps those involved could write into the department with their particular circumstances. They will almost certainly vary from authority to authority, and I would not want to give a sweeping view here, but we will be keen to look at them and try to help. She also asked about the policy on zero-carbon homes. The Chancellor announced the future homes standard in the Spring Statement and committed to adopting it by 2025 but, again, I will give her more details in writing, if I may.
I have mentioned points that my noble friend Lord Shinkwin raised on the building regulations to come shortly as a consequence of the Hackitt review. I thank him very much for what he said from the heart about the importance of accessibility. That is absolutely right, and that is across the housing sector.
Once again, I thank the noble Baroness, Lady Watkins of Tavistock, for her positive tone about these measures helping with energy efficiency and improving productivity. As she said: what is not to like about this? I will have a close look at the university hospital’s digital progress to which she referred: that looks very interesting in this context. She also talked about the need to ensure that we have policy that will carry us forward. I have mentioned specific examples of money we have invested in south Wales. The Farmer working group is key to ensuring that that is more widely available, but workforce skills are also very important.
My noble friend Lord Caithness rightly talked about his career as a Minister, so he is very familiar with some of the challenges we face. I am sure that the report on the rural economy will, now that he has given his advertisement, be in my box, and I encourage my team to ensure that it is. I look forward very much to reading it. He talked about the five challenges of land and finance skills and Section 106. I mentioned skills, but I shall seek to enlarge on that in the written response that I make to Members. He also asked about the National Infrastructure Commission and the restriction on building on gardens. There is progress on which I shall update him in writing, if I may.
I thank the noble Lord, Lord Stunell, for his points on quality and quantity being the two challenges and the need for review of energy standards, which I have talked about, and financial support for MMC. I genuinely thank him very much for his welcome. As I said, we have examples on which I shall expand where we have MMC working in Gateshead, Tyneside, Basildon and Derwenthorpe. We hope to have many more in future.
The noble Lord, Lord Beecham, will know that I have great respect for what he does in this House, whatever our political differences. He is a public servant of long-standing, and it is worth marking the long period of his councillorship in Tyneside, where he has done much over the years with great distinction. I thank him for his contribution and for welcoming some of what we are doing. Understandably, he focused on some local government issues, although it is worth noting that there has been an increase in local government core spending in real terms this year, which was welcomed by the leader of the Local Government Association. To local government core spending, we can add spending on metro mayors, the stronger towns fund and many specific funds which increase the amount available in a local area. However, I appreciate that he is quite right that there is a challenge on homelessness. We have made some progress in the past year, although there is much still to do. I will enlarge on that, too, in the letter, if I may.
In conclusion, I thank noble Lords very much indeed for what has been, although delayed, a very important and useful debate for all of us. It has been very useful for the Government. I will ensure that points I have not mentioned are picked up and that we circulate what was an excellent debate very widely.