Housing and Planning Bill
Debate between Lord Beecham and Lord Horam
Lord Horam
That is the problem that produces the large discounts necessary to make the scheme work. The noble Lord has re-emphasised this in his remarks.
The other way of tackling this, which we have dealt with on previous days in our debates, is for the person who buys the house to pay back some of the discount they got in the initial phase over a period of 10 or 20 years or over whatever period. That may seem to many people also to be a fair way of reducing the cost and making a reasonable deal.
I shall put two other thoughts into the debate because I appreciate that we are dealing with the fundamentals of this issue at this stage. First, the Government would be wise to be as flexible as they can be in the way they negotiate with local councils in doing the deals in this area. Therefore the Bill should be as flexible as possible. Much of this will end up in a bargain between the local authority, the Government and the Department for Communities and Local Government, the details of which we cannot anticipate and do not know at this stage. The Government would be wise to write the Bill and the regulations so that they are as wide as possible to allow for local circumstances because, as the noble Lord, Lord Kerslake, pointed out, facts will change with the housing situation we are in. It is developing very rapidly. The noble Lord, Lord Campbell-Savours, made the point that house prices are increasing very rapidly in London and the situation may change even over a year. Maximum flexibility in what the Government expect from local authorities is required.
Secondly—and this may be outwith the scope of the Minister today, as I appreciate that it is really a matter for the Treasury more than Ministers of his department—the Government should think about raising the cap on local authority borrowing for housing. The way the cap works at the moment is ridiculous. It disadvantages housing investment by comparison with, for example, cycle lanes, leisure centres and things of that kind. It completely distorts the way we look at local authority funding, and that cannot be right in the present situation. It puts a cap on what local authorities can do. My understanding from some of the figuring that has been done, for example in the paper by Capital Economics for Shelter in 2014, is that local authorities could spend up to £7 billion a year more on housing if the cap on their borrowing powers was raised. I am well aware that that immediately gets into the problem we have also been wrestling with about how you define that method of dealing with the problem and at the same time keep the Government’s commitments on debt and deficit.
Looking at the paper which Capital Economics did in conjunction with KPMG and others I see that there are many ways in which the financing could be arranged so that, although the debt might increase, the deficit would not. There are ways around the situation in which the Chancellor finds himself in which he could still help with housebuilding. As the noble Lord, Lord Best, said, Professor Wren-Lewis, a distinguished economist from Oxford, and many others have already pointed out that now is the perfect time to invest in housing. As this is capital investment as opposed to current spending, it would be received very well by capital markets around the world. Whatever method you chose publicly to account for this, I do not believe that you would have a thumbs down from the capital markets. On the contrary, they may see it as an extremely sensible thing to do. Indeed, many of the larger financial organisations in the world—the IMF, the OECD et cetera—are calling for this sort of investment to boost growth at this time. There is a way of making the underlying philosophy and underlying mechanisms in the Bill work, but they will require a lot of flexibility and imagination on the behalf of the Government.
Lord Beecham (Lab)
I remind the noble Lord that I knew him before he changed his views and the first of his parties. I strongly endorse the latter part of his speech but is it not really the case that, instead of imposing a mandatory scheme of local authorities, the Government should give local authorities the right to sell and encourage them to do so? It is the mandatory element across all councils in all circumstances that is surely one of the difficulties. Would he agree?
Housing and Planning Bill
Debate between Lord Beecham and Lord Horam
Lord Horam (Con)
My Lords, it is very good to hear from the victor of 1983, if I may call the noble Lord that. It is also good to hear from my noble friend Lady Redfern, who speaks with the authority of a local authority leader.
I was rather disappointed by the rather gloomy tone taken by the noble Lord, Lord Beecham, and the noble Baroness, Lady Royall, earlier in the debate. Indeed, the noble Lord was uncharacteristically doom-laden. I know that the spirits of everyone who comes from Newcastle are entirely determined by the results of Newcastle United over the weekend, so from that point of view I can well understand his excessive gloom. As a supporter of Manchester United, I feel for him. What also worried me was a tone in his remarks which indicated so little trust in housing associations. I was there at the beginning of housing associations back in the 1970s, when I was chairman of a housing association called Circle 33, which is now part of the Circle Housing Group—I have nothing to declare, because I was directly involved in it a long time ago. However, I remember vividly the social concern which drove housing associations. Indeed, their critique was very much to deal with tenants and people who needed affordable housing at reasonable rates in a different and better way than local authorities dealt with them. Very often in Islington, where Circle 33 had its main operations, the local authority just turfed people out of areas and shoved them into quite different parts of London or the borough without any nem con.
Lord Beecham
Perhaps the noble Lord would take it from me that it is not housing associations that I do not trust but the Government.
Lord Horam
I am sorry, but from the noble Lord’s remarks I felt that he showed a lack of trust in the motivation of housing associations. All the things he had down in his long list, which was almost Uncle Tom Cobbleigh and all—or perhaps the proverbial kitchen sink, which is rather more appropriate in the circumstances—would almost inevitably be taken into account by housing associations given the social concern they have at their call. Indeed, the noble Lord, Lord Best, pointed out that Hastoe, for example, has already ruled out having the right to buy in rural areas because it operates in rural areas. I understand these concerns—clearly, they are very real. For example, we understand the problems associated with supported housing units, co-operative housing, rural settlements and regeneration schemes in large urban areas. These are all real issues, which the House is absolutely right to draw to the Government’s attention. However, they are also absolutely the things that housing associations themselves are concerned with. Indeed, I cannot imagine a housing association which would not take them into account when deciding whether the right to buy was appropriate in particular circumstances. Therefore although I understand the concerns expressed by the Labour Party and its spokesman today, and the Liberal Democrats, they have been excessively gloomy on this.
Housing and Planning Bill
Debate between Lord Beecham and Lord Horam
Lord Horam (Con)
Can we come back to the amendment for a moment? It is on how the housing association spends the money it gets from selling a house. With the best will in the world, I am afraid that the amendment in the name of the noble Lord, Lord Kennedy, presents a problem. He knows London very well, as do I. The fact is that it is more or less impossible to replace a house sold in, say, Westminster with another house—certainly two houses, but even one house—in Westminster. It is simply impossible to do that in London, and nor is it necessary, because people who have lived in Westminster do not necessarily need to live in Westminster. They can live in Kensington, Surbiton, Lewisham or Bromley for all we know. The distances are not that great.
I do not know whether the noble Lord heard—he probably did—the very interesting evidence given by Philippa Roe, the leader of Westminster Council, at the hearings in the other place. She was saying that it is absolutely impossible to have a like-for-like replacement within a similar London borough. It cannot be done, because of density and because of cost, but you do need to do something in London. Clearly, we would be in favour of something in London, but she was hoping, in her evidence, that some sort of mechanism would be established between, say, a rich central London borough such as Westminster and, I will not say a poor outer London borough such as Lewisham, but another London borough, whereby they could agree a housing policy between them which would make sense by way of some sort of replacement in a cheaper area. They could thereby get very good value for money; they could get not only one but two or three houses for the price of one sold in Westminster or Kensington. So I think the noble Lord is barking up the wrong tree, if I may say so, in this particular aspect of his amendment, though I agree with what he was saying about tenure.
Lord Beecham (Lab)
The problem with that is that you end up with a borough entirely of owner-occupied houses. In other words, you have a single tenure and it is one which effectively excludes people on modest incomes who cannot afford to buy. The suggestion that the noble Lord effectively makes is that we export those people to outer London somewhere.
Lord Horam
This is what ordinary people who do not have access to social housing have to do. If they have a job in Westminster they cannot actually afford to live in Westminster. We are putting people who have been in social housing in the same position as the ordinary person who does not have access to social housing.
Lord Beecham
That means that everybody is excluded from certain parts of the city; we lose a mix. I do not think it is a very good justification to say that because one group is unfortunately unable to do it, the rest must also be unable to do it. My daughter lives in Islington, which has been transformed now, as so many other boroughs have, with very high prices. Really, the city is being hollowed out, because people on ordinary incomes—teachers, police officers, street cleaners—cannot afford to buy or to rent these days. We are effectively creating a monoculture of better-off people in the heart of the city. That does not strike me as all that great—people will effectively have to move out, with the kids changing schools and all the rest. This is potentially a very disruptive process.
Lord Horam
It is not quite as brutal as the noble Lord says: there is already quite a mix in London. There is a much better mix in London, for example, than in, say, Paris or New York. All right, the mix may be somewhat lessened if we go down this path—I accept that. None the less, Philippa Roe was saying that she will make special allowance in her housing allocation for people who, for example, have to work in the local hospitals in Westminster. Clearly, you have to make some allowance in your housing policy for key workers and so forth, who you need in your borough. They will still keep doing that; there will still be a mix. The mix might be slightly different from what it is now, but there will still be a mix.