Housing: Affordability

Baroness Stowell of Beeston Excerpts

Wednesday 22nd January 2014 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Stowell of Beeston) (Con)]

My Lords, I am grateful to the noble Baroness, Lady Ford, for securing this debate. As she says, the question of how best to meet our housing needs is one of the most significant facing the nation today. I am very conscious, through listening to the contributions today, just how great the expertise and experience is among noble Lords. I am grateful to the noble Baroness, Lady Ford, and the noble Lord, Lord Whitty, for acknowledging that as a country we have failed to build enough homes for decades.

This is not a new issue but it was made worse by the financial crisis of 2008, with housebuilding collapsing to the lowest peacetime levels since the 1920s by the time the previous Government left office. It is important to stress that the collapse in building led to the construction industry suffering greatly in the aftermath of the crash. It is not surprising that it has taken time for the smaller construction companies in particular to respond to the return to growth and for us to get back a position where the industry has both the capacity and the confidence to respond. Housebuilding is now back to 2007 levels but that has not happened by accident. The Government have taken the necessary steps to tackle the situation and turn things around.

Before I go into greater detail on affordable housing, I will talk more generally about overall housing supply. I acknowledge the points made by the noble Baroness, Lady Andrews, and my noble friend Lord Borwick. We have reformed the planning system: we have simplified it and handed responsibility to local authorities to set their own housing requirements. The framework is clear that local authorities should plan to meet their full housing needs for both market and affordable housing. My noble friend Lord Borwick made quite a detailed point about greater flexibility; he was kind enough to give me advance notice of that and I will continue that dialogue with him outside the Chamber.

We are also providing significant finance for projects that cannot proceed without it and we are helping buyers who can afford mortgage payments but cannot afford the sorts of sums now necessary for a deposit. We are making progress but of course we still have a way to go. At this point I will respond to the topic—different noble Lords describe it in different ways: some people call them garden cities, some call them new towns—raised by the noble Baronesses, Lady Ford and Lady Andrews, my noble friends Lord Horam and Lord Taylor, and the noble Lord, Lord Sawyer.

The previous Government pledged what they described as 10 “eco-towns” but of course none of those was built. This Government are clear about our approach, which is to support locally led development through the large sites programme, which aims to unblock barriers to delivery of such sites through partnership working, provision of capacity funding to local authorities and access to capital funding through the £474 million local infrastructure fund. Under this programme, some success to date has led to 69,000 new homes already being “unlocked” in places such as Cranbrook, Sherford and Wokingham. In the Autumn Statement we committed a further £1 billion to the local infrastructure fund to support communities in delivering their housing aspirations over the next six years, and we will be publishing a prospectus inviting local areas to come forward with bids this spring.

To be clear, we most definitely support increasing the supply of homes but this must be locally led. In response to the noble Baroness, Lady Andrews, we have no plans to impose new developments on communities and, contrary to recent reports in the press, we have not been working on secret plans to build new towns in Yalding, Gerrards Cross or any other areas. I noted what the noble Baroness, Lady Ford, said about the Olympic Park. That has clearly been a great success but it is very different in its concept because it was built to serve the Olympics and its national importance justifies the greater involvement through the major infrastructure regime in a way that we do not believe the residential development does.

Let me turn specifically to affordable housing. We need more affordable housing. It is worth pointing out, particularly in response to the points made by the noble Lord, Lord McKenzie, that more council housing has been built in the first three years of this Government than in the 13 years of the previous Labour Government. But council housing is only a small part of the overall picture. Almost £20 billion of public and private funding is being invested in the Affordable Homes Programme over the four years to 2015. This will deliver 170,000 homes, nearly 100,000 of which have already been completed. These homes are being provided where they are most needed and in a range of areas. I say in response to the right reverend Prelate the Bishop of Ripon and Leeds that around half the affordable homes provided in 2011-12 were in rural communities. He is right to identify that need and we are responding to it.

From 2015, another £23 billion will be invested to deliver 165,000 more affordable homes by 2018. The Homes & Communities Agency will publish the prospectus for this latest programme shortly, inviting bids for funding to deliver that affordable housing outside London. As a result of all this work, we will achieve the fastest rate of affordable housebuilding for at least 20 years. Not only did the previous Government build very little but they oversaw the shrinking of the stock of social housing by 420,000 homes. My noble friend Lord Shipley mentioned Right to Buy and the one for one programme. I understand the point that he makes, but it is worth emphasising that that policy of replacing homes sold under Right to Buy is something that no other Government have done.

However, increasing supply in time of difficult economic conditions means that we have to look at different ways to attract investment. Our affordable housing guarantees programme lets housing associations use a government guarantee to secure private investment at more competitive rates. As part of this, we recently agreed a new deal with the European Investment Bank which will release £500 million to deliver up to 4,300 homes. We also announced the first eight housing associations to receive funding through the guarantee programme.

We believe that councils also have a role to play in building homes and have announced an independent review of councils’ role in housing supply. As has been acknowledged by noble Lords today, we have already increased the amount which councils can borrow to build homes in collaboration with housing associations.

Important points on this were raised by the noble Lord, Lord Whitty, both today and in a debate that we had last week on the local government finance settlement, and by my noble friend Lord Shipley. The noble Lord, Lord Whitty, spoke last week about ensuring that councils are able to take advantage of some of those housing guarantees so that they are part of the route to increasing supply—the right reverend Prelate also referred to this today. The noble Lord felt that local authorities were barred from being able to take advantage of some of these joint ventures and the source of funding. That is not true. Some councils are already doing just that, and are working with partners, housing associations and developers in joint ventures on housing for sale, private rentals and sub-market rentals. In the new scheme announced at the Autumn Statement to which I have just referred, we expect to see partnership working with housing associations through those joint ventures.

On the increase in the borrowing level, it is important that we do not underestimate the dramatic effect of the Government’s self-financing reforms. The point is not just this recent increase in the amount of borrowing but the way we have now made it possible for 165 council landlords to do this, with new freedom to plan their housing businesses for the benefit of their tenants and local communities. They now have that £2.8 billion borrowing headroom and the possibility of planning longer term than they were ever able to in the past.

Clearly, this is about not just supply but also making best use of existing stock. Social housing is one of our most precious resources. That is why we have introduced much greater flexibility into the system so that social landlords can make the best use of their holdings. Councils now offer shorter fixed-term tenancies as well as the traditional lifetime offer, meaning that they can better respond to families’ changing circumstances. Councils also now have much greater freedom to decide who qualifies for social housing.

The noble Lord, Lord Best, referred to the Hanover@50 report. I am not familiar with it but will make myself so in light of his raising it today.

Increasing supply is, as we have all acknowledged, the most important way to maintain affordable rates of rent. Our affordable housing programmes provide hundreds of thousands of homes at sub-market rents. There is much to do to tackle the national shortage of affordable housing. Not only do this Government have a comprehensive plan to turn this situation around but our plan is working. Working together with housing associations, councils and housebuilders, we are overcoming the problems we inherited and are set to deliver the homes the nation needs to house everyone properly in future.