Baroness Hollis of Heigham
Main Page: Baroness Hollis of Heigham (Labour - Life peer)Housing and Planning Bill
Baroness Hollis of Heigham Excerpts
Lord Horam
No, I would not, because, frankly, they have not done it and they would not. That is the dilemma that the Government are in: if you are really to make this work, I am afraid it is inevitable that you have to make it mandatory otherwise it will not happen. The question then is how you do that and how you translate it into more social housing.
Baroness Hollis of Heigham (Lab)
My Lords, we have heard some very powerful speeches. I certainly do not wish to repeat, to the boredom of the House, the points made very effectively by the noble Lords, Lord Kerslake and Lord Best, but I entirely agree that the sums do not stack up.
A few months ago, the Minister took the Cities and Local Government Devolution Act through this House very skilfully, patiently and responsively. If this proposal had been part of that Bill and produced by this side, I suggest that she would have told us three things. First, she would have said, as a former local authority leader herself, that in the name of localism the sales of local authority property should be determined by those who know best—the local authority itself. She would have used that language last summer and indeed often did so, and she was right.
If local authorities decide prudently, as I think they should, to scrutinise their property stock and where appropriate to churn it—as I have certainly done in the past, selling more expensive stuff and replacing it with more effective, appropriate and numerous properties that best fit local need—the second thing that the Minister would have said, following the noble Lord, Lord Best, is that that was exactly what local authorities do and that local authorities are best placed to make that decision. What works for London does not work for Norwich; even what works for Cambridge does not work for Norwich. To have this blanket approach is anti-localism, the spirit of the very Bill that she was persuasive in encouraging the House to support last summer.
Thirdly, the Minister would have said that if local authorities decide to churn their resources, selling larger and more valuable properties—in Cambridge the average council house is worth about £350,000—then they should determine how those resources are recycled and spent. They may decide to help to build for sale—I have done that in the past—and why not if that is what their local area needs? In the name of the localism Bill that the Minister took through the House, local authorities are best placed to make that decision and should do so, not have it imposed by central government—as, to some extent, the noble Lord, Lord Horam, was arguing.
The result is that the Government have two pressures in the Bill. First, they want to increase the supply of housing, and they are absolutely right: we need to increase the supply of housing, and I do not think there is any dispute between us on that. It would help the construction industry and would help to address the demographic problems that are coming up as our populations grow and age, and as we need perhaps different sorts of housing from the sort that we have. The second motivation for the Bill, beyond increasing the supply of housing, is to increase a particular tenure, which is home ownership, as fuelled in this case by right to buy. What the Minister has to accept, as was spelled out by the noble Lords, Lord Best, Lord Kerslake and Lord Horam, is that the two flatly contradict each other. If you use the money coming from right to buy to fuel home ownership, at local authority level you will not be able to replace the stock lost.
Take your pick. The Government have two objectives, which most of us share—I certainly do—but the mechanism that the Government have set up for the funding means that the attempts to increase the housing supply in this country, including affordable housing, are subverted, undermined and sabotaged by the method of funding right to buy from the sales of more valuable property. What they should be doing is saying to local authorities, “We will encourage you to do this if this is what you think your area needs. The first call on the profits and resources from that sale of more valuable property should be, in your judgment, how best to replace your local stock”. If there are surpluses, it may well be that local authorities can come to arrangements with housing associations to help them to increase their stock too. That is what we should be doing: finding a co-operative way forward, so that if we go down this path of churning stock—with which I have no problems at all—it should first be deployed to increase the housing stock and only secondly to increase home ownership. If you use this money to produce home ownership through right to buy, you will not replace the stock.
The Government have to consider what will determine their policy: what is best suited for the country or, I am afraid, an effort to appease Tory party policy. They do not have to do it in this way but they have that choice. If they want to increase housing supply, they have to find a different mechanism from the one they are proposing in the Bill of funding RTB discounts, because it will not work—the sums simply do not work. Many of us have crawled over these figures and we know that they cannot do what the Minister hopes: fund discounts, replacement stock and brownfield sites. That cannot be done unless the mechanisms are changed by the Government. The Minister will be well advised to listen to the comments not just of the Cross-Benchers but from Members on her own side such as the noble Lord, Lord Horam.
Lord Young of Cookham (Con)
My Lords, I will make a very brief contribution to this debate as we enter another controversial section of the Bill, which has at its root, as the noble Lord, Lord Kerslake, said, a section of the manifesto. He warned us to beware of manifesto fundamentalism. What he calls manifesto fundamentalism other people might call democracy—namely, delivering the commitments that one made during an election. If I was still in another place, going back less than a year, I would be slightly cautious about saying, “I’m very sorry but we’re not going to do what we said because that would make us guilty of manifesto fundamentalism”. Given the low esteem in which politicians are held, one has to be quite cautious before one abandons manifesto commitments. In this case, the manifesto was quite clear:
“We will fund the replacement of properties sold under the extended Right to Buy by requiring local authorities to manage their housing assets more efficiently, with the most expensive properties sold off and replaced as they fall vacant”.
That is a perfectly practical policy, although I understand from most of the contributions so far that it is fiendishly unpopular with local authorities. In fact, the policy has been softened a bit, as they do not have to sell the high-value assets; if they have other ways of meeting the levy, they can do that. As a former local councillor myself—
Baroness Hollis of Heigham
After 40% cuts more generally and 1% cuts on council rents in particular per year, coming up to 12%, to say that local authorities can find another way of doing this is utopian.
Lord Young of Cookham
I would not be surprised at all if some local authorities use the discretion under the Bill not to fund all the levy by selling off high-value assets. They may have other ways of meeting their obligations, so that is a welcome concession. Having said that, I understand the strong feelings of many who have served in local government—
Baroness Hollis of Heigham
Does the noble Lord agree that while his figure of a 20% discount may make perfectly good sense in terms of the finances for London, in cheaper areas outside the capital a discount of £77,000 or £80,000 can represent getting on for 40% of the value of the property?
The Earl of Lytton
The noble Baroness is absolutely right. There is a great temptation to look at this in terms of London and the south-east which is not a model that pertains everywhere else. Somewhere like Lincolnshire is not even out of what we would call the housing recession yet, or so little out of it that it makes no difference. When you get to the position where you are reinvesting, it must be noted that certain things remain stubbornly the same across the country; construction costs and normal finance costs remain stubbornly the same. The variables are land prices on the one hand and the exit price for the finished product on the other. It is clear to me that in some parts of the country the margin is perilously thin because we are not seeing housing development in those areas. Why is that? It is because there is no economic rationale to enable it to happen.
I do not wish to be drawn specifically on London because that draws me into an area in which I would not feel comfortable about voicing an opinion on, but as a piece of general geometry, the higher value parts of London and the south-east cannot be transposed to somewhere further afield which has a completely different model. One issue is the regional imbalance that has developed over the years under a number of different Administrations; I do not point a finger on this, but it is a fact that we have a serious regional imbalance. Yesterday I chaired a small meeting that included an Italian lady who is an expert in housing finance. I asked her whether the economic imbalance between, say, the north of Italy and the Mezzogiorno is worse than it is between the north and the south of this country. She replied, “Not a bit of it. It is recognised that there is a much more acute problem here in Britain than there is in Italy”. She went on to quote some figures that I did not understand, but I pass that on for what it is worth and I hope it answers the noble Baroness’s point.
Lord True
My Lords, I think the answer is yes.
I have listened with intense interest to the debate. I was not intending to intervene—I remind the House that I have interests as a leader of a London borough, and as a member of the leaders committee of London Councils—but, on looking at Clause 67(4), I point out that my local authority does not keep a housing revenue account. We are an exceptional authority, in that a former Liberal Democrat administration carried out a large-scale voluntary transfer, so we are entirely dependent on housing associations. We are not a housing authority. I became leader in a situation where a previous administration had transferred away our council stock.
It is with some diffidence that I intervene. I know that there is greater concern in London, as the noble Lord, Lord Tope, said, about some of the detailed impacts of these clauses and others, but I am aware that the Government and local authorities in the London area are having many discussions about how this will operate. I hope my noble friend will say that greater clarification is certainly needed before Report of such discussions and the details that will lie behind the Bill. Parliament really needs to have more insight into the details.
I wish to follow the comments of my noble friend Lord Porter about housing associations, although I would not perhaps put them in the characteristically sharp way that he did. I listened very carefully to the carefully scripted remarks of the noble Lord, Lord Best. I will look at his speech in Hansard tomorrow, but he appeared to say quite clearly, from a script, “Don’t look to the housing associations to make a contribution. We’re strapped for cash. We’ve got reserves, but we cannot afford to chip in, old boy, so it’s over to you”. Maybe I misinterpreted that, but I will look carefully at the record.
Of course, housing associations are vital and respected, and I welcome the partnerships that we have. Housing associations are going to the market and raising enormous amounts of money. One of my local associations raised some £100 million recently. At the same time, they are moving to separate from their close relationship—for many of them—with former local authorities. We were asked to relinquish our places on the local housing association board to facilitate the association’s financial advancement, which we were very happy to do in the broader interest of securing more finance for public resource and public investment in housing.
However, it is important that housing associations—I make no accusation in any particular way—remember that they own a public interest and must work with local authorities. They cannot be divorced from responding to the challenge that my noble friend Lord Porter put forward. It is important that we retain confidence that they are cognisant of their accountability locally. Looking at the amendment—I do not necessarily agree with it—how can we be sure that housing should be replaced in the same area? I was unable to be present at earlier discussions in Committee on this, but can I be guaranteed that my housing association will replace in my local authority area? By what accountability will that be delivered? I would like to hear the noble Lord, Lord Best, say, perhaps at a later stage, that housing associations will take all that into great consideration.
My noble friend Lord Horam talked about the need for a mandatory hammer, if you like, but with flexibility—talk softly but carry a big stick, as Teddy Roosevelt would have put it. I do not necessarily dissent from that. But my problem is that we are seeing a lot of negotiations going on, a lot of deals being cut, which, at the end of the day, we hope will respect local conditions and local authority. I want policy to be delivered by local conditions, not by the need to get figures for housing on a piece of paper in answer to a Written Parliamentary Question in the House of Commons. We want responsive, locally-led housing policy. So the more open those negotiations can be, the better. I do not like deals cut in quiet rooms with unelected officials, whether they are in City Hall or in the Treasury. So let us have a bit of flexibility and I am sure that my noble friend, by Report, will be able to shed a bit of light on what I hope will be the voluntary agreements that are emerging.
I want to cover one other point. The noble Lord, Lord Tope, spoke about London’s extraordinary diversity. Much of policy—this is implicit in the Bill, with the two-for-one and the one-for-one replacement—is dependent on and recognises a line on the map, which is the Greater London area boundary. I think that London is evolving in a strange way. Perhaps we are going back to the days when there was an LCC and an outer London. It may well be reflected in the way that votes are cast in the coming mayoral election. It is very difficult to define a single policy. I do not think that anyone in this House would say it would be easy to define a single policy for the whole of London, let alone the whole country. I worry about policy that is defined simply on the basis of a line on the map which is the edge of Greater London. There are travel-to-work areas. Look at the emerging Gatwick corridor. It might be quite legitimate to replace, even with a one-for-two policy. Is there anything wrong in replacing two houses just south of Sutton, if you like, or just outside the Sutton area, which could be for Sutton people, in the same travel-to-work area? I hope that that can be considered and that we will not allow a line on the map to dictate policy absolutely, particularly at the fringes of London.
Because of outer London’s changes and the high land values in certain places, we must look at new policies and new powers. It will have to be, in my submission, for local authorities to deal with some of the issues that arise. I will conclude with one example. In my own authority the Ministry of Defence has lately put up for sale a significant, large facility, Kneller Hall, which houses the Royal Military School of Music. It is very controversial. The rationale is money. The ministry says it wants to build houses, yes, but when probed, of course, it wants to build houses of maximum value for the Ministry of Defence and the Treasury. As I understand it—I have not had this confirmed—some of the land has already been sold to a developer before we are anywhere near a planning application. In those circumstances, do the Government not own a responsibility to play a part in this kind of policy?
The Government lecture local authorities—and we accept the responsibility—to do our best to provide affordable housing. But is there not, within the parameters of disposal of publicly-held property, a collective responsibility which the Government, government departments and government agencies should share, to put this aspect of public policy into their plans for disposals? I am straying a bit from the Bill—I was intending to bring it up in the planning stages of the Bill—so I do not expect the Minister to answer on that, but can we look, when we come to the planning area, at whether we could find ways of pressing public authorities more generally, through the planning process, to share some of the responsibilities that these clauses put upon local authorities?
Baroness Hollis of Heigham
Will the noble Lord expand on his first point, which concerned the situation of stock transfer authorities such as his own? I agreed with so much of what he said. Given that he has no high-value council property to enter into forced sales, as we have been discussing, to finance RTB for housing association tenants, his authority will, instead, be levied to fund it, in the absence of stock to sell. Has he made any estimate, in his budgets for the forthcoming year, of the scale of that levy and how it interacts with his ability to manage local authority finances?
Lord True
Clause 67(4) says that a determination may not be made in respect of a local housing authority that does not have a housing revenue account. So I think it would be better to ask the Minister, rather than a pitiful leader of a London authority, to clarify this point when she replies. But it is actually a detail in the larger question. My authority would be very happy to make any contribution towards housing. In fact, if the LSVT had not taken place, all our council housing would probably be high value in some of the places it used to be and the housing association that now sits on it, if that were us, would be having to sell off most of it.
Baroness Hollis of Heigham
Yet some of us have been assured, as my noble friend says, that Clause 68(3) was drafted precisely to cover those authorities with stock transfer. In my county of Norfolk, Norwich has retained its council stock, there is limited retention in Great Yarmouth and King’s Lynn, and the other four authorities transferred their stock into housing associations. Are we saying that authorities such as Norwich are not only supposed to fund the RTB discounts for housing association tenants in their immediate locality but are also, on top of that, to cross-fund all those stock-transfer authorities so that they do not contribute to the right-to-buy discounts of housing association authorities?
Clause 68(3)(b) says that the Secretary of State may,
“treat the housing as being likely to become vacant whenever it would have been likely to become vacant if it had not been disposed of”.
The whole point of that, we were assured—I am sure the Minister will clarify this for us—was precisely so that stock-transfer authorities were levied in lieu of the fact that they do not have stock to sell, which local authorities that retain their stock may be in a position to do.
Lord Kerslake
My Lords, there is a fairly simple explanation for this. An authority that has already transferred its stock, as the noble Lord, Lord True, has talked about, is in a good position, because it will not pay the levy. If, on the other hand, an authority would like, in the future, to transfer its stock, it will still pay the levy. I have an amendment later which seeks to remove that particular provision. It seems quite extraordinary that an authority cannot, in the future, transfer stock, but if it has transferred it, it will escape any levy. That seems to me to be an imbalance that we need to address.
Baroness Hollis of Heigham
I thank the noble Lord, Lord Kerslake, for that explanation. In that case, it means that there is going to be double the levy, not just one levy, for RTB for local authorities that have retained their stock—mainly city authorities. The cross-subsidy will come from those local authorities not just to fund RTB in their own district—we do not yet know how much redistribution there will be or on what geographical basis—but to cross-subsidise local authorities that transferred their stock five years ago, two years ago or 10 years ago. It is monstrous. You are asking those local authorities with retained stock to pay twice over for their own retained stock to fund the housing associations in their district council or unitary authority and to fund those which are not in their geographical area, are not part of their local authority and, frankly, have chosen to go down a different route.
Lord Porter of Spalding
My Lords, I hope nobody thinks that this is about one type of council cross-subsidising another type of council. This money will go nowhere near councils. That is what is wrong with this Bill: it takes money from councils and gives it to not-councils. Councils that have already transferred their stock cannot be levied because they do not have the HRA, as the noble Lord, Lord Kerslake, has already said. And, perversely, from an LGA perspective, if they choose to transfer in the future, they will still be levied. But this is not about transferring money from one council to another. Indeed, until we know whether the sale of high-value assets really will take place and what the final definition of “high value” ends up being, councils with stock may well not pay any levy even though they still have their housing stock, because they may not have any housing units in their HRA account that sit in that top third of value.
Baroness Hollis of Heigham
But councils with retained stock—and that stock is not coming forward as fast as government would wish—will have a levy in view until their own vacant stock is forcibly sold. That levy has to come from somewhere. Why on earth should some local authorities be expected to fund RTB discounts out of their money when other local authorities are not? What is the basic fairness in that? I absolutely take the noble Lord’s point that this is a redistribution from some local authorities but it means that those with retained stock will have to pay double the size of the levy or double the number of sales to make good the fact that a very large proportion of more rural district councils do not have any retained stock.
Lord Best
My Lords, the noble Lord, Lord Porter, and the noble Baroness, Lady Hollis, are in agreement on this. They both oppose the fact that this levy will be solely on those authorities that have retained stock and a housing revenue account, and that it will be a very large sum of money—£4.5 billion per annum on those councils that have retained their stock, and nothing on those councils that have transferred their stock. The noble Lord, Lord True, can read my script at his leisure. He felt I was saying that housing associations should not contribute but councils should. I am absolutely not saying that councils should carry the burden of the right-to-buy discounts for housing association tenants, as he thought that I might be. I am saying that neither councils nor housing associations should pay for this new policy and that we should see new investment, which is what we need to replace homes that are lost, and to build new homes. We need new investment.
I happen to know a bit about the Richmond Housing Partnership, which is the body to which the stock of Richmond has been transferred. It is a really excellent example of a housing association that has received the council stock and is doing extremely important things to build more homes. It is doing exactly the right thing. It would be a terrible shame if, instead of councils or the Government paying for these discounts, that organisation were taxed with a levy—that would be very detrimental to the interests of Richmond—and had to pay for the right-to-buy sales. It is making some serious economies at the moment. It is having to make efficiency gains on a big scale because its rents have been reduced due to welfare reform pressures. Nevertheless, it is doing a great job. It would be a very big shame if the idea gained any momentum at all today that housing associations were the cash cow from which could be extracted the resources to pay the £4.5 billion per annum. That would simply take resources out of the development programme for the very people for whom we need to build the new homes of tomorrow.
Baroness Bakewell of Hardington Mandeville
Could the noble Baroness say whether this will take into account regional and area variations in the price of properties?
Baroness Hollis of Heigham
Can the Minister also tell us whether all this information—and as a result, the Government’s estimate of the size of the levy and the contribution to be made by local authorities, according to their turnover and so on—will be available before we get to Report?
Baroness Williams of Trafford
My Lords, what is absolutely certain is that this is precisely what we will be consulting local authorities on. That is why both the conversations in your Lordships’ House and those with local authorities will be so important in making these determinations.
Baroness Williams of Trafford
The most important part of this is that discussions with your Lordships and local authorities will inform the regulations.
Baroness Hollis of Heigham
If the Government are placing crucial policy decisions beyond the possibility of amendment in this House, because instead of being embedded in primary legislation they are going to be carried by SIs, any attempt to amend them in whatever form will produce synthetic outrage down the other end, and we will be told we should accept them whether we like it or not. This will not do. I absolutely understand that the Minister cannot be happy at the position in which she has been placed: she is essentially being asked to bring forward framework legislation, yet again, in which the heavy lifting will be carried out by SIs, which this House—which is supposed to scrutinise those SIs—cannot touch. Issues which could have been amendable in the appropriate way in primary legislation will be put beyond our reach.
Lord Campbell-Savours
That will put some of us in a very difficult position. Some of us always refuse to vote on fatal Motions, but we will have no option but to do so because of the whole way this Bill has been handled.
Baroness Williams of Trafford
If I could just conclude, the noble Baroness can then intervene.
We are making changes in the interests of fairness to bring rent increases in the social sector back in line with those in the private rented sector. Housing associations and local authorities have already proved themselves more than capable of responding to the change.
Baroness Hollis of Heigham
My Lords, it would be helpful if the Minister, when she made the statement about the reduction in rents to the benefit of housing association and local authority tenants, had accepted that three-quarters of that money will go back to the Chancellor in reduced housing benefit. This is not a “helping tenants to afford their rents” policy; it is about reducing the housing benefit bill.
On a separate point, I know the Minister is trying to be helpful about the information we will no doubt get, but will we have all this key detailed information—the result of the consultation—before we get to Report, so that we do not have to rely on the statutory instrument proposal for stuff that should be in the Bill?
Baroness Williams of Trafford
My Lords, regarding whether the Chancellor benefits, my point is that this will be of benefit to tenants if their rents reduce. It will make a difference to a lot of tenants.
The noble Lord, Lord Horam, asked why we do not raise the local authority borrowing cap so that councils may borrow more. This was mentioned time and again during the consultation process leading up to the local government finance settlement. We listened to the authorities and £221 million of additional borrowing was allocated to 36 councils in England. That will support around 3,000 new affordable homes.
The noble Lord, Lord Kerslake, asked whether right-to-acquire tenants would have the right to buy under the voluntary deal. Minimum eligibility has yet to be determined for the main voluntary right-to-buy scheme, but we are currently working closely with the NHF and housing associations on the implementation of the agreement. For the pilot, it has been set at a minimum of 10 years, as the noble Lord will know.
The noble Lord, Lord Tope, asked what “high value” will be set at, which is a very pertinent question. Will it be at market price? I am aware, as noble Lords have pointed out, that it is important for the legislation but has yet to be set. The definition will be informed by the data that I have talked about, which we are collecting from local authorities and the market value survey. Although we have had some information on house prices and local authority stock across the country, we felt it was important to update this information as it will be pivotal to establishing how much individual authorities will have to pay. As noble Lords will know, the definition of high value will be set out in regulations—I hear a groan going up across the House as I speak. We are currently giving careful consideration to the fairest and best way to set that definition. In doing so, to address the point made by the noble Baroness, Lady Bakewell, we will have regard to factors such as property size and geographic location. I genuinely welcome any further thoughts that noble Lords may have on this point.
The noble Earl, Lord Lytton, talked about investment in social housing being short term. We are doubling our investment in housing over this Parliament to more than £20 billion over the next five years. This is the largest housing programme by any Government since the 1970s. Under it, there will be 100,000 affordable homes to rent and 400,000 affordable homes.
The noble Lord, Lord Tope, talked about this as a levy, a tax that does not relate to the actual sale of high-value vacant stock. Local authorities prefer the use of a formula to determine payment to basing payments on actual sales. It will give local authorities greater certainty and predictability, which will help them better to manage their finances, and it will provide greater flexibility for them to choose what property they sell to make the payments.
The noble Lord, Lord Shipley, talked about his red line issue. This is part of our wider efforts to help anyone who works hard and wants to get on the property ladder to do so. I understand his concern over the links between the two policies, but it is important to remember that receipts from these sales will be used to fund the building of more homes by housing associations and local authorities, to increase overall housing supply all over the country, so that we reduce the regional imbalance of housing supply—an issue raised by the noble Earl, Lord Lytton.
Baroness Williams of Trafford
I understand what the noble Lord says, and if there is particular need in an area for a specific type of housing, it is within the local authority’s gift to issue the money, as opposed to selling the property. The whole point is about increasing the housing stock across different tenures and different parts of the country.
Finally, to address a point made by the noble Baroness, Lady Hollis, about stock transfer, the policy will affect the 165 councils that own housing and operate a housing revenue account—the noble Lord, Lord Kerslake, helped here, and he is absolutely correct.
Baroness Hollis of Heigham
Am I right to say that those 165 local authorities will be cross-subsidising not only the right to buy on their own patch but the right to buy in the other 300 or so housing authorities in the country?