Housing Supply and Homelessness

Lord Hollick Excerpts

Thursday 5th December 2024 Lords Chamber

[Lord Hollick (Lab)]

My Lords, I congratulate my noble friend Lady Warwick on initiating this debate and making such a powerful speech, ranging across the complex issues that we have heard about. The noble Lord, Lord Bird, reminded me of the terrible situation that homeless families are in and how difficult it is to recover from that. I also thank the most reverend Primate for his powerful speech. His words will be much missed in this House.

I turn to a rather more prosaic matter, which is the supply of housing. We have failed over the past 15 years to build enough houses. In fact, as the statistics explained earlier show, it goes back many decades. The Government’s commitment to build 1.5 million houses over the next five years has been widely welcomed, but is it achievable? Within that commitment, can the downward trend in homes available for social rent be reversed to help the less well-off and the homeless? In 2016, the Economic Affairs Committee of this House’s report Building More Homes proposed that 300,000 homes be built each year, with the majority being available for social housing. It was a cross-party committee including the noble Lord, Lord Forsyth, and others. It also recommended that a combination of local authorities, housing associations and private developers should finance and develop those houses.

The report highlighted the challenges in achieving that target. The first was the need for significant improvement in the planning resources of local authorities, which had become seriously depleted. The second barrier was the marked reduction in capacity of the housebuilding industry over the previous five years. Large firms continued to thrive, but medium-sized and smaller firms were much thinner on the ground, reduced by retirement, financing problems and a reduction in the supply of skilled labour. In the seven years since that report, housebuilding fell well short of that 300,000 target and, although the data is patchy, the numbers of new homes built for social rent show that there has been a marked downward trend. In 2022-23, only 700 new social rent homes were built. Private providers added around 5,200, which was offset by the loss of 4,500 to the right-to-buy scheme. During those seven years, planning resources have continued to shrivel, and finance, particularly for SME builders, has become much less available.

The Financial Services Regulation Committee recently heard that the risk weighting on capital imposed by regulators on lenders wishing to provide to SME housebuilders is far higher than that required for mortgage lending. Unsurprisingly, the provision of mortgage finance has grown apace, benefiting from strong competition, but 60% of the supply for SME housebuilders now has to be found from private resources. That is clear evidence of market failure; the banks are unable to provide it. The supply of skilled labour has reduced, with a failure to boost training and the return of many eastern European tradespeople to their homelands.

In her recent Mansion House speech, the Chancellor made it clear that she wanted to see regulators adopting a more pro-growth culture. If that call is to be heeded, it would enable us to reduce the risk weighting for those smaller SME builders, which obviously would increase the supply of affordable finance and housing.

Planning departments remain seriously underresourced and are unable to progress applications of all kinds in a timely way. The Government recently set up a new expert delivery group to accelerate the building of homes stuck in the planning system. The expert group should consider setting up regional task forces, comprising experienced planners to support local planning authorities to expedite planning approvals. Housebuilders and developers would, I feel sure, provide funding and help to find professionals to support these task forces.

A key responsibility in strengthening the planning system will be to achieve a significant increase in the supply of homes available at social rents. Planning departments must be firm in their resolve to use their powers to ensure that planning consents for home developments include the highest possible number of homes for social rent. This will be helped by the Chancellor’s announcement of £500 million in new funding for the affordable homes programme, increasing it to over £3.1 billion. This Government’s actions to date and their decision to set up mandatory local housing targets and introduce reforms to right to buy to protect the social housing stock, taken together, give confidence that the ambitious target may be realistic and achievable.