Affordable Housing

Lord Best Excerpts

Thursday 25th June 2015 Lords Chamber

[Lord Best (CB)]

My Lords, I am grateful to the noble Lord, Lord Whitty, for instigating this debate and for his powerful opening speech. I declare my interest as president of the Local Government Association and various housing interests as on the register.

I thank this House for decisively rejecting the proposed extension of the right to buy to housing associations by a huge majority vote—in 1983. That decision, by a largely Conservative House of Lords, has been of enormous importance over the last 32 years. Had the vote gone the other way, something over a third of these affordable homes would have been sold by now, assuming similar figures to those for sales in the council sector.

Over these three decades, literally hundreds of thousands of families have had the benefit of affordable rented homes which they would have been denied. The housing associations have been able to borrow extensively against all their property assets and, with blood, sweat and tears—illustrated by the noble Lord, Lord Campbell-Savours—extensively borrow against those assets and develop new homes without the fear that all their hard work could be short lived because their properties must be sold.

Now it seems that this House will be asked again to consider a right to buy for housing association tenants when the housing Bill reaches us. Will we be asked to accept exactly the same proposal as was so heartily rejected last time?

There are some changes today compared with the position in 1983. The terms for the council right to buy have become much more generous, with bigger discounts—up to £104,000 per property in London and up to £77,000 elsewhere—and a shorter period of time to qualify: just three years’ residence. This time, it is suggested that funding to pay for the discounts be raised by compelling local authorities to sell their most valuable council homes when they become vacant; this means selling off still more affordable housing. In addition, today, because of the much larger size of the housing association sector, the cost of the discounts will be massively more than in the 1980s: the National Housing Federation estimates the total at some £11.5 billion over the next few years.

What could be the justification for bringing back this extraordinarily costly mechanism for helping a relatively small number of currently well-housed households to become owner-occupiers? It cannot be to increase the number of home owners, since the same money could assist three times as many aspiring potential first-time buyers in other ways—for example, by building 660,000 new shared-ownership homes for those desperate for a first home.

When the House of Lords debated the rather less damaging proposition in 1983, two issues were stressed. First, housing associations, as charities, as independent bodies, were not creatures of the state which could simply be ordered to sell their assets. Today, the added danger of accepting that housing associations have become de facto public bodies is that their borrowing—with some £60 billion outstanding in private sector loans—and all their future borrowing, increases public sector debt. That undermines hopes of eradicating the deficit and suddenly caps and limits all future borrowing on which their building programmes depend.

The receipt of government subsidies in the past has not changed the status of these independent bodies any more than it does for private landlords. Lump sum grants to housing associations followed by relatively low rents thereafter—in London, for example, they are at about a third of full market rents—cost the Government less over time than covering private sector rents for those on housing benefit. Yet few would argue for private landlords being subject to a right to buy.

The other argument against the extension of right to buy that was advanced back in the 1980s was that the nation needed to keep the hard-won affordable rented homes provided by housing associations and add more, not sell them off. This consideration is so much more pertinent today. Now, there really is a desperate shortage of homes that are affordable for those on average incomes and below.

I am strongly in support of the Government’s manifesto pledge to achieve an additional—note, additional—275,000 affordable homes over the lifetime of this Parliament. This output may not quite keep pace with growing demand but it is a respectable staging post to a more ambitious programme. The trouble is that this important manifesto commitment will be impossible to fulfil if, while the 275,000 homes are being added, a similar or even larger number of affordable homes is being lost for ever under the new RTB proposals and the forced sale by councils of their best homes when they fall vacant—trying to fill the bath with the plug out. One manifesto commitment is being sabotaged by another. We cannot vote for both. One has to go and, to me, the choice is easy: we need to be rid of the extraordinarily extravagant RTB idea. If your Lordships agree then I believe that, in 30 years’ time, our successors will bless us for retaining this precious stock of affordable homes for the next generation.