Autumn Statement 2023

Baroness Thornhill Excerpts

Wednesday 29th November 2023 Lords Chamber

[Baroness Thornhill (LD)]

My Lords, amid such a body of economic expertise and experience, I intend to focus simply on some of the main headline-grabbing announcements on housing in the Autumn Statement. Interestingly, I will echo some of the thread of criticism made by many noble Lords.

Despite the rise in universal credit, pensions and the national living wage, the welcome big announcement, for those of us involved in housing, was the unfreezing of the local housing allowance to restore it to the 30th percentile. With homelessness at a record high, rising rents and a cost of living crisis, unfreezing housing benefits to cover the bottom third of local rents is an essential lifeline to keep people in their homes. But—and there has to be a but—it is still not restored to the 50th percentile, which was the benchmark in 2010, and, regrettably, it will not come into play until next April. It is nearly December. Surely the Government realise that this will leave many families facing an uncertain cold winter, with many facing the threat of eviction and subsequent homelessness, or spending their Christmas in one-room temporary accommodation—a grim situation for the most vulnerable. Will the Government reconsider and bring this decision forward?

The additional sting in the tail is that this rise is for one year only and will be frozen again from 2025, when the whole depressing cycle will start again. These delayed starts and later freezes are no way to run either a benefits or a housing system. Meanwhile, the increases in the local housing allowance, and benefits in general, will also bring more people within the scope of the benefits cap. Although that was increased last year, it has been frozen this year. Do we see a pattern? It is still way below what it was 10 years ago.

We also see in this Autumn Statement clever examples of smoke and mirrors—or, as the previous speaker said, sleights of hand. Take the amounts of money given to the extension of the affordable homes guarantee scheme: a £3 billion extension—good news. But these are loans to housing associations to allow them to build more affordable homes for rent. All good—but a loan compensates only partially for the lack of enough real new money being put into a system already creaking under the costs of decarbonisation, building safety, spiralling material and labour costs, and all the other factors significantly squeezing associations’ budgets. As they are the main providers of affordable and social homes, it is important that we recognise the precarious financial situation of some of the sector.

The social housing regulator has recently announced the downgrading of “a couple of dozen” associations over their financial viability, with the lower V2 assessment becoming “the new normal”. That reflects the economic reality for the sector. But the consequence of this harsh reality is that many have had to reduce their building and development aspirations, or put them on hold completely. This is a very poor state of affairs when the need for social homes has never been greater.

The Minister will rightly say that there is some new money. But take the third round of the local authority housing fund. It is hoped that £450 million will provide 2,400 new homes. Interestingly, the criteria for this fund have been tweaked to include use for temporary accommodation and housing Afghan refugees. Both those groups need secure permanent accommodation, but there are already more than 100,000 families in temporary accommodation, and about 21,000 Afghans have been resettled under different schemes and a further 1,054 entered the UK in the first three months of this year, requiring homes. It must be recognised that this has put real constraints on council budgets. Put quite bluntly, in areas of high-cost housing, properties are simply not there at an affordable price. Councils are now in the invidious position of competing with ordinary citizens to find homes to rent for their groups, putting more pressure on an already overheated market, with soaring rental prices.

Add to this the increasing waiting lists for social housing and, according to the most recent English Housing Survey, some 750,000 families living in overcrowded conditions—sleeping in hallways and living rooms, and sharing beds with parents or siblings. It is not an exaggeration to say that this money, however welcome, is a drop in the ocean.

There were also interesting headline announcements on planning. One was that there would be a new premium planning incentive, whereby local planning authorities would be able to recover the costs of major business applications, in return for guaranteed faster timelines. That will undoubtedly help cash-strapped councils, and hopefully speed up applications—but, given that only 15% of planning applications currently come from such businesses, it will be helpful but merely a plaster on the wound.

The fear is that council officers will concentrate on those cash-earning applications, while the vast majority of applications will be placed in the pile labelled, “To be dealt with as and when we can”. Given the serious recruitment issues that the sector faces, this will be a tough challenge. The Autumn Statement promises a pot of money for additional planning officers, but there are simply not enough trained planning officers in the system to make a difference in the short term. The bodies are simply not out there, and many go straight to work for the housebuilders, because—guess what—they can get significantly more money by doing so. Importantly, as with all the areas in development construction, the industry skills shortage is acute. This is probably the most significant barrier to speeding up planning applications and improving build-out rates. We need a longer-term training and recruitment strategy across all the skills within the construction industry and its supply chains. Never has the need been more urgent.

UK Economy: Growth, Inflation and Productivity

Baroness Thornhill Excerpts

Thursday 29th June 2023 Lords Chamber

[Baroness Thornhill (LD)]

My Lords, I add my thanks to the noble Lord, Lord Eatwell, for securing this important and timely debate. Although I am not an economist nor a financial expert—but feel very much that I am surrounded by them today—I do know housing and am going to focus on the contribution that housing and construction bring to our economy and the housing impact of the current financial crisis on millions of households.

In the longer term, the construction industry can and should be part of the solution to the economic crisis and low levels of productivity. We know we need more homes, though it seems that the nimbys have gone bananas—“build absolutely nothing anywhere near anybody”—and the yimbys’ voice is not being heard loudly enough. It is devastating that progress made in recent years, though still short of the much mentioned 300,000 homes a year, has been slammed into reverse by recent ministerial announcements and proposed changes to the planning framework and the National Planning Policy Framework.

Building homes supports local jobs and apprenticeships, generates billions in economic activity, provides investment for much-needed affordable homes and improvements to local infrastructure, not to mention billions in tax and millions in council tax. More employment means more money cycling through local communities, as well as opportunities for regional growth. The real need is for homes for social rent. Last year, 29,000 were demolished or lost under right-to-buy sales, yet fewer than 7,000 were built as replacements. A nationwide programme would surely kick-start the economy—if only.

In the meantime, millions of people are forced to live in poor-quality, prohibitively expensive private rentals, or are stuck in temporary accommodation or sleeping on the streets. All of these are increasing. Private rents are up; the latest figures from Zoopla see rental inflation running in double digits for the 15th consecutive month. Rents are growing faster than average earnings; rental costs as a proportion of earnings have reached their highest for a decade. Of course, it is the lowest paid, as ever, who are the worst off. Crisis reports from its findings that the poorest 10% of households are spending more than they earn on just rent, food and energy. That is clearly unsustainable.

After the low-waged, who is hurting the most? According to the Institute for Fiscal Studies it is the under-40s and those in London who have been bashed hardest by the mortgage-rise tsunami that is hitting Britain. It estimates that some 1.4 million mortgage holders will see their payments rise by at least 20%. Given that many have borrowed to their maximum, due to an unprecedented period of low interest rates which lulled everyone, especially the mortgage lenders, into lending and therefore borrowing much more, that could mean increases of several hundred pounds a month. Very few people have that kind of headroom in their disposable income simply to absorb these costs.

As a further blow to the economy, the latest figures on GDP growth from the ONS show that monthly construction output is falling. The greatest decrease is in private house repair and maintenance and in new build work, such as extensions and conservatories. That seems to be the first inkling that home owners are putting on hold any repairs or home improvements while times are uncertain. This will surely create a domino effect on employment and jobs and productivity in the sector.

We have not heard much about those in shared ownership agreements, who are seeing both their rents and mortgage payments simultaneously go up by 10%—that is not uncommon. It is worth noting that one person’s rent is another person’s mortgage—usually the landlord’s. They too face the same cost of living and mortgage rises, and are choosing either to sell up or to pass them on to their tenants, so those in the private rented sector are suffering considerably.

The average rent in the UK has risen by 11% across all tenures, with rent in the private rented sector rising much higher. Would the Government consider at least unfreezing the local housing allowance, which leaves renters facing an increasing gap between housing benefit and their actual rent? Given that we have yet to see the much-promised end of no-fault evictions, would the Government consider an eviction freeze under certain circumstances, as was seen during the pandemic? The Government have ruled out—rightly, in my view—a rent freeze for the private rented sector, but they have felt happy to impose one on the affordable housing providers. That helps tenants a little, as theirs is a much lower rent anyway, but not the associations whose finances are already challenging.

Perhaps the Minister can assure us that the Prime Minister, in his talks with mortgage lenders, will seek reassurances from them that the stress and affordability tests introduced after the 2008 crash will be stuck to, so that those in arrears will not have their homes repossessed. That would prevent the domino effect that that would then have on an already stretched system, with cash-strapped councils picking up the evicted and the homeless.

For now, the message from the Bank of England—and possibly from the Government—is clear: it is prepared to sacrifice the housing market to bring down inflation. However, there is a very fine line between tackling inflation and pushing people into the red and out of their homes. That has a cost too. What are the Government’s short-term plans for those in immediate crisis? What is the longer-term game plan to get us building, at scale and volume, those much-needed homes?

VAT: Building Repairs and Maintenance

Baroness Thornhill Excerpts

Wednesday 19th April 2023 Lords Chamber

[Baroness Penn (Con)]

I will always be happy to meet my noble friend and a deputation that he brings with him. I am not sure whether I will be able to persuade him of the Government’s view on this matter, but we agree on the importance of support for heritage properties. In addition to the support I previously referenced, DCMS provided £285 million for heritage in 2021-22, including £162 million to Historic England. We also have our heritage high-streets programme running until March next year and have extended the listed places of worship scheme until March 2025.

[Baroness Thornhill (LD)]

My Lords, as most registered providers of social housing cannot reclaim VAT, they are reluctant to buy VAT-elected land and resort to an inefficient process known as “golden brick” to address the conflict between themselves and the developers. There are many such conflicts and unintended consequences across the construction industry. With such a broken system, is it not time for a full review? Will the Government at least consider allowing registered providers to claim back VAT on land built for social housing?

[Baroness Penn (Con)]

On the noble Baroness’s specific point, if I may I will write to her with the details because I do not have them to hand at the moment.

Queen’s Speech

Baroness Thornhill Excerpts

Wednesday 25th May 2016 Lords Chamber

[Baroness Thornhill (LD)]

My Lords, I declare an interest as the directly elected mayor of Watford and a deputy chair of the LGA.

Local authorities are seeing an unprecedented rise in homelessness—according to Shelter, a rise of 33% since 2010 in people accepted as homeless by councils, the main cause being eviction from a private sector tenancy. In my own authority, the number of households in temporary accommodation has quadrupled in five years. So it is not surprising that there are concerned responses to the teasing trailers in the gracious Speech and from the Department for Communities and Local Government saying that there will be upcoming measures to work with local authorities, homelessness organisations and across government departments to consider options, including legislation, to prevent more households becoming homeless. It is also rumoured that the current legal duty will be extended to include more people and that council intervention will be earlier in the process, as has been legislated for in Wales, and that this will form part of the life chances strategy. Amen to that. Who would not agree that prevention is better than cure? It could even in the longer term be cheaper, and certainly more effective, in reducing the emotional damage and the social costs to families of the current system. I get the rhetoric and I applaud its intention. I agree with the principle to abolish the invidious division between priority and so-called non-priority needs, as mentioned by the noble Lord, Lord Young. The rhetoric is admirable but, without a full working knowledge of what the reality means and will actually cost in practice, good intentions will turn into empty gestures.

At the moment, councils in England provide what you might call a gatekeeper model for dealing with applicants for homeless housing. Many councils see only the very needy and the most desperate getting help, support and advice and being housed. Most councils see people at the point of no return, when they turn up in the customer service centre with their bags. They are the tip of the housing crisis iceberg. Then, the battle really begins. It can often feel as if the main objective from the council officer’s perspective is to get rid of them if at all possible. That may sound cruel and inhumane, but it is because they know there is often literally nowhere to put them.

I used to get the weekly figures of families we had deemed to be homeless—that is, they had got through our first gate. In our medium-sized town, if the figure got beyond 50 I started to worry, as it meant we were going to have to put families in bed and breakfast accommodation, which for obvious reasons we used to pride ourselves on never using. Call me a total softie, but I wept when faced with the reality that B&B was now going to be used all the time for the foreseeable future, and for a longer time per family, as we contracted with hotels and landlords for even more temporary accommodation in the face of ever rising numbers. Now, a hotel room in Watford is a less bad option than accommodation miles away. With over 250 people regularly in temporary accommodation, it is now our top priority. The average stay has increased from a few months to between one and two years, depending on the size of property needed. The demonstrable reduction in social and affordable units over the last few years has made the wait even longer. The developers’ newly given power to challenge local authorities over the provision of social housing has impacted significantly on our number of homes.

The challenge of actually finding somewhere the local authority can afford to house families has driven us and others to look beyond our boundaries. Yes, I know that that has serious consequences; I have met and spoken with the families. However, with London boroughs housing their homeless in Watford and offering incentives to landlords that we cannot possibly match, a pernicious, vicious circle is created in which desperate families and cash-strapped local authorities are both trapped.

The next battle is the question of whether the families are intentionally homeless—in other words, does the council have a legal duty to house them? This is a nasty, intrusive process, with private lives and bank balances being picked over in order to avoid accepting that responsibility as officers are tasked with sharing out an increasingly scarce resource, making extremely painful decisions that impact on people in possibly the most troubled circumstances of their lives.

We are firefighting a crisis that is fuelled by one major factor: there are just not enough social and affordable homes in many parts of the country. In Wales, where the culture appears to have changed due to this type of legislation, there are certainly lessons to be learned, but evidentially, there is not the same shortage of homes as there is in England, particularly in the south-east. I fear that this new legislation alone will not produce the homes that are vitally needed, and I regret that the measures in the recent Housing and Planning Bill will do little to change the situation at that end of the market. To extend councils’ obligations and duties to support, advise and house an even wider pool of people simply through legislation, however desirable, will not on its own, under current circumstances, find them either a bed for the night or a home for life. I wish it were otherwise.