Housing: Availability and Affordability

Baroness Chisholm of Owlpen Excerpts

Thursday 12th October 2017 Lords Chamber

[Lord Stunell (LD)]

My Lords, I welcome this debate and thank the noble Lord, Lord Smith, for introducing it. There have been some very good contributions, not least from the noble Baroness, Lady Young, and my noble friend Lord Greaves. I am strongly tempted to follow some of the tracks they set out, but I want to pick out one or two specific points and try to take a more strategic look at some of the questions that we are facing.

First, I want to give credit to the Government. I am sure that they actually believe that we need 1 million homes; I am sure that they want 300,000 homes a year, as their manifesto stated—I have heard spokesmen over the years as diverse as Michael Gove, Grant Shapps, Gavin Barwell and of course the Minister say so repeatedly—but the fact is that it has not happened. I do not think that the Government do not get the problem that we need more homes: rather, they have not spotted the problem with the solutions that they are offering.

The most important problem, which never seems to get a proper airing, is that there is an absolute ceiling on the number of private homes which will be built by developers without subsidy. It has never exceeded 180,000 homes a year since 1945 and it has usually been significantly lower than that: you cannot get builders to build homes that they do not believe they can sell and they will not do it unless you pay them to do so. That has very little to do with planning. There are 600,000 or more planning permissions lying waiting to be built. It is much more to do with economics.

I remember, as a very junior Minister in the Department for Communities and Local Government, how much joy there was when planning permission was given for the Ebbsfleet development in Kent: 20,000 homes. Out went the press releases and the spads went wild in the media—“Another 20,000 homes for our glorious Government”. I was at the back saying, “Hang on a minute—how soon are we due to get these 20,000 homes in Ebbsfleet?” I do not know whether the Minister has the current number; I think we may have got up to 1,000 having been built so far: perhaps he can confirm that. The reason the other 19,000 have not been built despite the planning permission is that if they had been built, 19,000 empty homes would be sitting in Ebbsfleet without people buying them. We need to reflect on the fact that planning is not the bottleneck. Incidentally, I support my noble friend Lord Greaves in saying that if instead of 20,000 homes at Ebbsfleet there had been 200 sites with 100 homes on them we would have had far more homes built by now because we would have had small numbers on 200 sites rather than small numbers on one.

My second point is that affordability is very double-edged. Who actually wants cheaper homes? Do existing owners want cheaper homes? Do builders want cheaper homes? Do developers want cheaper homes? Will any party have a policy objective or a manifesto commitment to halve the value of your home? I do not think so. So the private sector will deliver what the private sector will deliver—and after that, someone else has to pay. If this Government or any Government want more houses, more homes, they have to pay.

The policy issue therefore is surely, what is the cheapest way of buying those extra homes? The Government have tried Help to Buy, which is a very good way of inflating house prices. It is, of course, a demand and not a supply-side issue and it was described quite correctly at the Tory conference as “economically illiterate” by Steve Norris. Help to Buy is not the way to go. Affordable rents have been explored—but, of course, as affordable rents become higher and higher, so the local housing allowance cost balloons as well. We now have a £30 billion LHA budget. The least central government cost looks therefore to be the lowest rent that can be managed—which would lead, of course, to a lower local housing allowance payment.

The Government followed that by putting a cap on housing association rents, which means they can no longer invest in building homes through that route. So some of these things have unintended consequences which totally defeat the purpose of the game and you come to the view very quickly that the way to go is to get local authorities to invest in council housing in the traditional way. It is not ideological; it is value for money. The Tory brand of competence and the efficient management of money may have taken a few knocks recently, but surely this point cannot have escaped them.

I make a further point about this. We talk about the housing pipeline; it is not a pipeline, it is a hosepipe. At the moment we have a model where the Government and successive Housing Ministers stand at the kitchen door like a five year-old, manipulating the tap to the hosepipe, and the construction industry stands at the far end—the business end—of the hosepipe, sometimes trying to direct an empty hose on wilting seedlings and sometimes looking down the pipe to see what is happening and getting a splash of water in its face. The fact is that we need steady, consistent investment in public sector housing in order to reach the targets we need.

Finally, I raise a different and more immediate point. Whether the target is 200,000, 250,000 or any number we care to choose, who exactly is going to build these houses? The biggest demand for homes, the most acute housing pressure, is in London and the south-east. Barratt gave evidence to the all-party group last Session that 54% of its workers in London working on its housing programme were from the EU 27. The RIBA reports that 25% of registered architects in London are from the EU 27. Estimates vary from trade to trade and function to function, but at least 30% of the construction force in London is from the EU 27—so what exactly is going to happen? Delivery of housing and of every other kind of infrastructure depends on that labour force, and I urgently say to the Government that they must give an assurance to those EU 27 workers, and to their successors, that they will be there to build the housing we need. Talk of targets and objectives—

[Baroness Chisholm of Owlpen (Con)]

My Lords, the noble Lord’s time is up, I am afraid.