Older People’s Housing Taskforce
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The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Lord Khan of Burnley) (Lab)
My Lords, the Government are thankful to the chair of the task force, Professor Julienne Meyer, and all its members for producing such a comprehensive, detailed and well-researched report. I recognise the importance of improving housing choices for older people, and I thank the noble Lord, Lord Best, for all he does on this issue. We are committed to taking action on older people’s housing and will consider this issue as we develop our long-term housing strategy.
Lord Best (CB)
I thank the Minister for that positive response, and I congratulate Professor Julienne Meyer and her task force on a really good report. Have the Minister and his Government paid particular attention to at least three of the key recommendations from this report, such as that 10% of all affordable housing should be for older people, that planners should require a percentage of all major developments to be for older people, and that stamp duty should be exempt where an older person is downsizing, rightsizing, making way for and releasing a home for a family elsewhere?
Lord Khan of Burnley (Lab)
My Lords, I recognise how important the right housing arrangements are in supporting people to live independently and well. The Government will set out details of new investment to succeed the 2021 to 2026 affordable homes programme at the spending review. The National Planning Policy Framework outlines that local authorities should assess the housing needs of different groups, including older people, and reflect this in their local plans. We have strengthened the National Planning Policy Framework to encourage the delivery of mixed-tenure development. For most of those looking to downsize, the stamp duty due on the new property will be small. Stamp duty is an important source of revenue to provide essential services, and the Government have no further plans for relief for those looking to downsize.
Homes: Existing Communities
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Lord Best (CB)
My Lords, I thank the noble Lord, Lord Wolfson of Aspley Guise, for his very stimulating speech and for initiating this debate. I want to pursue the question of who is going to deliver the quality and quantity of the homes we need, whether that is exactly 1.5 million over five years or any other target. Is it likely that the current system, which involves the vast majority of new homes being built by a handful of so-called volume housebuilders, will produce what is really needed, at the right quality, in the right locations, with the engagement of the surrounding communities?
The current system depends upon private developers bringing forward their own propositions for the market they believe to be most profitable. They will build out at the speed that suits them without having to reduce their prices. Moreover, having paid eye-watering sums for the land, as the noble Lord, Lord Wolfson, noted, developers frequently argue that they cannot achieve their yardstick profit of 20% unless they reduce the contributions they previously promised in cash or kind.
In the Letwin review of 2018, an alternative model was proposed, that of development corporations created by local authorities, but at arm’s length, which could acquire the land at a price that reflects the reality that obligations to the wider community are not negotiable. Quality place-making—the green spaces, the schools, doctors’ surgeries, sustainable drainage and the rest—would all be spelled out in a masterplan. Individual sites can be parcelled out to, yes, the major housebuilders, but also to the SME builders, housing associations, providers of student accommodation, older people’s housing and more. Then, instead of the development dragging on for decades, the build-out rate would be hugely accelerated by the mix of uses all being constructed at the same time. The previous Government’s Levelling-up and Regeneration Act 2023 paved the way for the creation of the development corporations that could act in this way, perhaps based on combined authorities and combined county authorities.
Use of compulsory purchase powers to buy sites where values cannot be agreed represents an integral part of the equation. Some have argued that this requires further legislation because, since the Land Compensation Act 1961, speculative “hope value”—the unfettered market price devoid of any obligations—can be used to justify a huge price tag. Others maintain that a valuation that fully reflects the public-good ingredients can now be used. Can the Minister shed any light on the current legal position in respect of CPO powers for land acquisition?
The opening up of grey-belt opportunities presents a special chance for private, but not for profit and publicly accountable, development corporations to step in and undertake high-quality development without the current dependency on the volume housebuilder. Will the Minister comment on the idea of support for the setting-up of new development corporations, perhaps through Homes England start-up grants? Let us take back control of housebuilding.
New Homes
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Baroness Taylor of Stevenage (Lab)
The noble Baroness is quite right about the stuck sites but, in spite of the very difficult Budget round this year, the Government have put £500 million more into affordable housing. That takes the total for affordable housing up to about £3 billion. Homes England is working through its programme of how it is going to support the delivery of those affordable homes. I am sure that support for registered providers will form part of that.
Lord Best (CB)
My Lords, does the Minister agree that it would be very unwise to rely on the oligopoly of volume housebuilders to produce all the homes that we need? Has the time come and are the Government now ready to promote the model of the development corporation? It is an arm’s-length body controlled by local authorities which buys the land. It then has a master plan and parcels out the sites—yes, to the volume housebuilders, but also to housing associations and those building for students and older people and the SME builders. Is not that model now really necessary rather than reliance on those major volume housebuilders?
Baroness Taylor of Stevenage (Lab)
I am sure the noble Lord is aware of my great passion for development corporations and the way that they work. It is true that we are encouraging Homes England to break down the great big contracts it had been issuing more, so that there is more opportunity for smaller developers to take those on. As well as that, we recognise the very challenging conditions that SME housebuilders have faced to deliver homes in recent times. They are essential to our housebuilding targets, build out quickly, train the workforce and are embedded in local communities. We will announce further support for SMEs next year, but this breaking down of the great big development organisations is key to delivering the homes we need in the places that people want them.
Housing Supply and Homelessness
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Lord Best (CB)
My Lords, I am grateful to the noble Baroness, Lady Warwick of Undercliffe, for introducing this debate so brilliantly. I am also looking forward to hearing from the most reverend Primate the Archbishop of Canterbury, who has been a consistent champion on behalf of the homeless and the badly housed.
There is likely to be almost universal agreement in this debate on the need for a huge increase in genuinely affordable, secure accommodation. I am only the fourth speaker, but I find that I will be repeating what has already been said. Perhaps that shows a unanimity of view on the urgency of the situation.
We have heard the figures for homelessness and temporary accommodation; I give special thanks to Crisis for its comprehensive briefing. We know of the impossibly long waiting lists for social rented housing. The Government want the housing associations and councils to build far more new homes, but there is an urgent need for investment in the existing social housing stock. The Grenfell tragedy has highlighted the necessity to spend billions on remediating unsafe buildings. We now have the Social Housing (Regulation) Act, with Awaab’s law, which requires cold and mouldy properties to be treated quickly. It is backed up by an enlarged role for the Housing Ombudsman, so the social housing sector has turned its attention to the need to address its backlog of maintenance and major repairs.
Meanwhile, we see the impact of inflation on building costs, land costs and interest rates. All this means that we are unlikely to build nearly enough new homes to meet the pressing demands. A quick calculation of the proportion of the 1.5 million homes the Government hope to see built during this Parliament suggests that less than 10% of those new homes will be affordable for those on average incomes or below.
So what can be done to dramatically and rapidly increase output of social rented accommodation, at a time when public funds are so scarce? I will suggest three potential ways forward. There has been no pre-discussion of this, but I find that space for two of my three has already been taken by the noble Lord, Lord Young of Cookham. I will expound my three.
First, it seems quite possible that the huge expense of the land for development may, in future, be reduced where the uplift in value can be captured for the public good; if necessary, backed by compulsory purchase powers. Where land is bought by local authority arm’s-length development corporations—not least those established for the new generation of new towns and urban extensions—a comprehensive master plan can parcel out sites to a range of private and social developers, achieving quality place-making as well as higher levels of social renting.
Secondly, we have failed nationally to recognise the opportunities as well as the obligations from demographic change. By building specifically for older people, as noted in last week’s Older People’s Housing Taskforce report, significant financial benefits can be achieved. On the one hand, more suitable accommodation for older people pays its way in postponing or preventing hospital admissions, delayed hospital discharges, home-care costs and moves into residential care; on the other hand, each new home for an older person is likely to achieve two for one by releasing a family home for the next generation. This secures the precious asset of a social rented family home at no cost, while better serving the needs of an older person.
Thirdly, a shortcut is needed to secure accommodation for those forced to accept highly unsatisfactory temporary accommodation, and to address the crippling costs of this temporary accommodation for local authorities. An answer lies in channelling funds to the acquisition and modernisation of the private rented properties where landlords want to exit the market, not least under new pressure from the Renters’ Rights Bill coming down the track. The Government could incentivise the outgoing landlords to sell to a social landlord through exemption of capital gains tax. Stamp duty does not work so well because it is paid by the purchaser, and the social landlords will not be paying stamp duty, but capital gains tax presents a real opportunity. This approach, as advocated by the Affordable Housing Commission, represents “Back to the Future” for housing associations, whose main output in the 1960s and 1970s was in buying and improving street properties. It means investing in property rather than paying private landlords exorbitant rents for low-quality, short-term use: bricks, not benefits.
I hope the Minister can comment on these three ways of getting a bigger bang for the public buck: capturing land value; addressing unsuitable, underoccupied housing for older people; and, once again, purchasing and upgrading unsatisfactory private rented housing. Now I am honoured to hand over to the most reverend Primate the Archbishop of Canterbury, and I pay tribute to the leadership and inspiration he has demonstrated in relation to the housing crisis.
Landlords: Long-term Rentals
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Baroness Taylor of Stevenage (Lab)
I agree with the noble Lord that we need more long-term lets— I think I made that very clear—but there is no evidence of an exodus from the market. A study from the UK Collaborative Centre for Housing Evidence looked at whether regulation and tax changes over the past 25 years in the UK and internationally had affected private rented sector supply. The report concludes that there is no evidence that that has had an impact. In fact, the PRS has doubled in size since 2002 and is now the second largest housing tenure, with over 11 million people living in the private rented sector.
Lord Best (CB)
My Lords, rather than incentives for reluctant landlords, could the Minister say whether the Government are considering incentives to landlords who want to exit the market to sell to the social housing landlords who can modernise the properties and let them long term on a secure basis at affordable rents to people who will not be able to afford the private rented sector?
Baroness Taylor of Stevenage (Lab)
I could not agree more with the noble Lord that for some people in the housing market, the only affordable housing is social rented. The Chancellor set out in the Budget that we will make an immediate one-year cash injection of £500 million into the current affordable homes programme. I can confirm that that can be used to purchase property on the private market. That will support the delivery of up to 5,000 new social and affordable homes. In addition, at the multiyear spending review next year, we will set out details of new investment to succeed the 2021 to 2026 affordable homes programme. That will deliver a mix of homes for sub-market rent and home ownership, with a particular focus on delivering homes for social rent. I hope our Deputy Prime Minister’s promise to deliver a revolution in the delivery of social homes will come to fruition.
Grenfell Tower Inquiry Report
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Lord Best (CB)
My Lords, I thank the Minister for introducing this debate so helpfully. I am delighted to follow the noble Baroness, Lady Thornhill, and the noble Baroness, Lady Sanderson—to whom I pay a special tribute for all her hard work on behalf of the Grenfell residents over several years.
The Grenfell tragedy continues to have powerful consequences. It revealed truths that had been hidden for years about the nation’s construction industry and its housing provision. No more painful way of bringing these deficiencies to light could be imagined. But the legacy of Grenfell can and must be new and better systems that fundamentally change the way the nation provides the buildings and, in particular, the homes we need.
Attention has rightly focused primarily on aspects of the construction process the Grenfell inquiry has shown to have been deeply flawed on numerous levels. However, I will highlight a different aspect—one where I believe the campaigners of Grenfell United have been instrumental in securing important reform of lasting wider significance. The issue here is the management of social housing; that is, council and housing association homes. Fundamental reform to the regulation of social housing management has been introduced as a consequence of the pressures following the terrible fire, embodied in the Social Housing (Regulation) Act 2023. Changes continue to materialise from the pipeline of measures introduced by the Act.
The Grenfell inquiry report documents the highly unsatisfactory relationship that existed between the body responsible for the day-to-day management of the council’s housing in the Royal Borough of Kensington and Chelsea—its so-called tenant management organisation—and the residents themselves, the consumers and customers. A poisonous atmosphere and deep mistrust characterised this relationship. It is clear that the views of the residents, their insider knowledge and understanding, and their warnings about safety were all largely ignored and dismissed by the managing body. Poor organisational behaviour and a lack of accountability and transparency compounded the hostile and negative relationships between the tenant management organisation and the tenants themselves.
Grenfell United, the residents’ campaigning body, with support from Shelter, pressed for changes to regulation and consumer protection across the social housing sector. With the awful experience of the consequences when a social landlord fails to listen to residents’ views, Grenfell United shone a spotlight on the need for social housing landlords to be held to account, to adhere to proper standards and, where things were not working out, for new regulatory mechanisms to sort matters out. As a direct result of the tenacious efforts of the Grenfell residents, the Social Housing (Regulation) Act 2023 introduced a change of direction for the regulator whereby the setting and regulating of consumer standards is now a priority for the regulator, alongside the previous priorities of financial viability and governance.
As the Grenfell Tower Inquiry report notes, the 2023 Act
“enables the Regulator of Social Housing to play a more active role”
in the management of social housing,
“setting appropriate standards”,
requires information to be made available
“both to tenants and the regulator”,
and enforces good practice.
A central aspect of the shift in emphasis embodied in the 2023 Act relates to the way the regulator operates. The Grenfell United advocates felt that the oversight role of the regulator necessitated regular inspections—actual visits—to the social housing landlords, seeing and hearing first-hand how relationships were working out and how well the housing management was being performed. Grenfell United argued that if face-to-face contact had been made with the tenant management organisation, the regulator would have heard the voice of residents; the true position would have become clear to the regulator; and, who knows, the Grenfell tragedy coming down the line might have been foreseen and some action taken. An inspections regime means a changed approach from one of receiving written material from the landlords and forming a judgment at a distance.
Of course, however, physical inspections mean extra staff and extra expense. The Government of the day had hesitations about including a requirement in the Bill for the regulator to inspect periodically. So this was not part of the original Bill. I had the honour of tabling and championing an amendment to the Bill to insert an inspections duty into the legislation. We were blessed with a Minister in the Lords—the noble Baroness, Lady Scott of Bybrook—who has supported the Grenfell United representatives consistently over many years. She backed the case and brought forward a government amendment to embrace mine. As a result, today a regular inspection regime is up and running.
Last week, I met the Regulator of Social Housing, Fiona MacGregor, and her chief of regulatory engagement, Kate Dodsworth. I was delighted to hear that inspections are now a central component in the implementation of the Social Housing (Regulation) Act’s intentions and are proving an invaluable mechanism in raising standards. The Grenfell inquiry has been able to conclude that with regard to the management of social housing
“we do not consider it necessary to make any additional recommendations in relation to the matters that we have uncovered”.
This conclusion by Sir Martin Moore-Bick and his panel is a testimony to the persistence of Grenfell United and, I must say, to the House of Lords for improving government legislation, greatly assisted by Ministers in both Houses willing to listen.
In conclusion, I must ask about a related concern which has also been raised by others. The concern relates to another aspect in the shift of culture of social landlords that presses them to raise their housing management standards. This, as the Minister mentioned, covers the role of the regulator in ensuring good standards of competence and conduct by insisting on the managers of social housing receiving relevant training and obtaining professional qualifications for the tasks they perform. Thanks to another last-minute amendment to the Social Housing (Regulation) Act, the Secretary of State now has the power to introduce this obligation on social landlords, and for the social housing regulator to enforce it: all good stuff. However, we are yet to see details of the mandatory qualifications or hear about a timetable for the housing associations and councils to take action. When will these details be announced?
Finally, I reiterate my congratulations to the Grenfell United team, who have made such a difference to the way that social housing is managed and regulated. Hundreds of thousands of residents in this sector will benefit for years to come from the tenacity and passion of this small but highly effective group.
Social Housing: Awaab’s Law
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Lord Khan of Burnley (Lab)
The consultation on Awaab’s law in the social rented sector invited views on the costs of the policy. The department has considered those views and will publish an updated impact assessment alongside the government response to the consultation. As we set out in our manifesto, we recognise that councils and housing associations need support to build their capacity and make a greater contribution to an affordable housing supply. We will set out our plans at the next fiscal event, to give councils and housing associations the rent stability they need to borrow and to invest in both new and existing homes.
Lord Best (CB)
My Lords, the Government are right to bring some pressure to bear on the housing associations and councils to get their properties up to scratch; it is essential if we are to prevent any more incidents like the death of poor little Awaab Ishak in his damp, cold and mouldy home. But those housing associations and councils need income to keep their stock in good nick, and that means not having reductions, caps and constraints on the rental income that they receive. Can the Government assure us that rents will be allowed to rise in line with costs and not be the subject of the constraints which have kept the income down and therefore the level of repairs and major improvements at a level that is unacceptable?
Lord Khan of Burnley (Lab)
I thank the noble Lord for his question and pay tribute to the excellent work he has done in this area for a number of years. To reassure him, as proposed in the consultation, Awaab’s law includes a provision for social landlords to defend themselves against legal action if they have taken all reasonable steps to comply with requirements but it has not been possible for reasons beyond their control. There is no plan by the Government to have any rent controls.
Social Housebuilding
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Baroness Taylor of Stevenage (Lab)
At the risk of repeating my noble friend Lord Livermore, the content of the Budget is of course a matter for the Chancellor of the Exchequer. However, the package we announced in July included flexibility in the current affordable homes programme to help with delivery and extended the 2021-26 affordable homes programme. We have been clear that we will bring forward details of future government investment in social and affordable housing at the spending review. We know how important it is to enable providers to plan for the future as they help to deliver the biggest increase in affordable housing in a generation.
Lord Best (CB)
My Lords, I congratulate the Government on the priority it is giving to new housebuilding for social rent, but we are still losing more homes each year than we are building, mostly because of right to buy. Some 2 million homes have been sold so far and 40% are now in the hands of private landlords, who are letting homes at rents two or three times higher than at which they would have been let as council properties. Would the Minister accept either or both recommendations from the Devon Housing Commission, which I have been chairing? The first is that the level of discount should be set by the local authority and not at the national level, where 70% discounts are available, which is not good value for the taxpayer. The second is around whether 100% of the proceeds from sales of right to buy should be allocated to new housing that replaces that which has been lost.
Baroness Taylor of Stevenage (Lab)
I am grateful to the noble Lord, Lord Best, for his work with the Devon Housing Commission; I have been very interested to read about its work. The Government believe it is right that long-standing social tenants should retain the right to purchase their property at reasonable discounts, and so we will not be ending the right-to-buy scheme. However, many of the homes sold since 2012 have not been replaced and, as our manifesto said, the Government are reviewing the increased right-to-buy discounts, introduced in 2012. We will bring forward more details and secondary legislation to implement changes later this year. We will also review right to buy more widely, including looking at eligibility criteria and, in particular, protections for newly built social housing. We will bring forward a consultation on that shortly.
Housing: Modern Methods of Construction
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Lord Best (CB)
My Lords, as a member of the Built Environment Committee under the able chairmanship of the noble Lord, Lord Moylan, which investigated this matter, I thank the noble Lord, Lord Carrington of Fulham, for introducing this debate so helpfully. Deploying modern methods of construction is obviously the way forward, yet the industry has recently been characterised by a succession of business failures and even bankruptcies. Can we still expect the modern methods of construction sector to fulfil its clear potential?
I suggest three prerequisites for success. First, the MMC industry needs a more certain and consistent pipeline of orders. The important stipulation of Homes England and the GLA that a proportion of the affordable homes they fund must be built using MMC techniques needs to be refined to provide greater certainty for the manufacturers. Will the Government’s agencies be more specific as to the appropriate categories of MMC—and, indeed, the systems that have the lowest embedded carbon emissions, such as prefabricated timber frame construction?
Secondly, to comply with the new future homes standard, developers and social landlords will be propelled into using prefabricated homes, because of the greater precision achieved in factory settings. Will the Government be firm in ensuring enforcement of the new standards that will inevitably mean more use of MMC? Thirdly, will the new Skills England give priority to workforce skills for MMC in its much-needed reforms of apprenticeships and training for the construction industry?
With attention to these issues, modern methods of construction can indeed make possible the quantity and quality of new homes this country desperately needs.
Building Homes
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Baroness Taylor of Stevenage (Lab)
I thank the noble Lord for his comments and question. The point is that, without growing the economy, as we need to do, we will not be able to afford any of the public services that we need. That is the first priority of this Government. But we have an immediate housing crisis, so we will do what we can to solve it now, and develop things further as we begin to create the economic growth we need to solve it. But it is not just a problem of government funding; we need to create that affordable housing. The noble Lord will be as aware as I am that it has been more and more difficult to deliver the social and affordable housing that we need through things like Section 106 agreements and other forms of planning gain, so we will need to assist with that as well. But it is a priority that we tackle the homelessness crisis now and we start on the journey of improving the housing supply, because that is the only long-term way to solve the housing crisis in this country. It will take some time to develop the economic background to do that fully, but we can make a start right now.
Lord Best (CB)
My Lords, this is my first opportunity to welcome the Minister to her role. We are very lucky to have someone in your Lordships’ House who has a real understanding of these issues, with her years of experience on the front line of local government. I also greatly welcome the Government’s commitment to easing the real crisis that faces so many people under the age of 40 who need a secure, decent home and not only cannot buy one but cannot find an available, affordable rented home either. Things are desperate, and the Government’s mission is enormously encouraging.
Last week, in the debate on the King’s Speech, I listed seven suggestions for achieving success on the planning side—points for the planning and infrastructure Bill—and I can now put a tick against a number of those. I am delighted with the Government’s ambitions, starting with the long-term housing strategy, which is good news, but there remain some items on which I would be grateful for some further commentary by the noble Baroness the Minister.
First, in terms of restocking the hugely depleted planning departments, will the Government allow local authorities to cover the full cost of an effective, speedy, local planning service by charging fees to the developers that cover all the costs?
Secondly, I have not heard quite as much as I had hoped about the opportunities to use new development corporations with simplified compulsory purchase powers to capture the uplift in land values by acquiring strategic sites, not just for new towns but on a much wider scale. These local authority-owned but arm’s-length bodies, advocated by Sir Oliver Letwin in his seminal report previously, could implement a proper master plan. They could install the infrastructure and parcel out sites to SME builders—who used to account for 40% of new homes, but now barely reach 9%—to housing associations, to providers of housing for older people and so on, amid properly planned green spaces, schools and facilities. These development corporations would help us end the nation’s unhealthy dependence on a handful of volume housebuilders that have consistently let us down on quantity, quality, speed of output and numbers of affordable homes.
I heartily welcome the Deputy Prime Minister’s Statement. Can the Minister give me any words of encouragement that these two issues will receive due attention in the weeks ahead?
Baroness Taylor of Stevenage (Lab)
I thank the noble Lord, Lord Best, not just for his question but for his long-term championing of housing in this Chamber. I look forward to working with him, particularly on the provision of some of the specialist housing which I know is of great interest to him.
In terms of restocking—or should it be restaffing?—planning departments, there are plans to allow full cost recovery on residential applications, which is one part in the detail of the Statement today and is really encouraging. We have plans to increase the number of planners. I know that planners take a long time to train and are experts in what they do, so it is not an overnight job, but we are determined to strengthen planning departments, which are responsible for the whole of this process.
On development corporations, further announcements are coming forward tomorrow on the issue of new towns, but I take the noble Lord’s point on the wider aspects of development corporations. With his permission, I will take that back, give it some further consideration and respond to him in writing. But I think he will be interested to hear the announcements on new towns tomorrow.