Housing and Planning Bill

Lord Kerslake Excerpts

Tuesday 26th January 2016 Lords Chamber

[Lord Kerslake (CB)]

My Lords, I congratulate the noble Baroness on an excellent maiden speech. It is a pleasure to follow such a distinguished servant—I use that word advisedly—of local government. I first met Dorothy, the noble Baroness, Lady Thornhill, when she took me round—irony of ironies—a social housing scheme connected to Watford Football Club, the Hornets. Her passion, warmth and commitment absolutely shone out on that day. I think she has been too modest about her achievements. Elected in 2002, she was the first ever directly elected Liberal Democrat mayor. She was also the first ever directly elected woman mayor. She succeeded again in 2006, taking more than 50% of the vote on the first count, and was elected again in 2010, making her only the second elected mayor to achieve this. She will bring great wisdom and experience to this House and we look forward to hearing from her in the future.

Turning to the main debate, first, I declare my interest as chair of Peabody, chair of the London Housing Commission and president of the Local Government Association. There was common agreement among the political parties during the election about the urgent need to build more homes. Housing completions are running at just half the number we need to meet what this country requires. In London the situation can be described only as a crisis, with prices to buy or rent moving out of the reach of ordinary Londoners. The Bill should therefore have been the perfect opportunity for the new Government to tackle this crisis head-on.

There are indeed some very welcome measures in the Bill; for example, the proposals to tackle rogue landlords and speed up compulsory purchase. However, the most significant impact of the Bill is to promote one form of tenure, home ownership, at the expense of another, social rented housing. Taken with other measures being proposed by the Government, the only reasonable conclusion is that social housing is being written out of the script. This effectively ends the post-war consensus on housing and the extremely successful partnership with housing associations begun in the 1980s. To deliver this change, the Government are taking extensive centralising powers that entirely cut across their localist philosophy. But perhaps most concerning of all, I have real doubts about whether they will actually deliver the new homes of all types that this country so badly needs. As one major and very respected housebuilder said to me recently, where is the additionality in all this?

I will start with the extension of right to buy to housing associations, which I spoke about in my maiden speech in June. The voluntary understanding between the Government and the housing association movement will give welcome flexibility for them to decide which of their properties are made available for purchase. In the case of Peabody, we will have the discretion to exempt 10,000 or so properties that were built without the benefit of government grant, so that much is welcome. However, what many people have lost sight of is that the bill for these discounts will not be picked up by the Government—who, after all, are promoting the policy—but by local authorities. They in turn will be required to sell off their higher-value properties as they become vacant in order to fund this. A formula-based deduction will be made to their budgets which will leave them with little or no choice but to sell. Shelter has calculated that this will cost them £1.2 billion a year and require the sale of 113,000 council homes.

It is important to say that high-value council properties are typically in high-value areas. This is how we deliver mixed-income, mixed-tenure neighbourhoods and not the mono-tenure estates that people were so concerned about in the past. They are also, by the way, typically the larger three or four-bedroomed homes, which any local authority leader will tell you are the ones most in demand. The Government say that the intention is to replace these one for one. But if we examine the Bill, apart from the reference to London, nothing in it creates a duty for local authorities to do so. Even if they are able to replace one for one, it is very unlikely to be in the same area because those are the very areas where the land is hardest to find. Neither are they likely to be socially rented. The net effect over time is that higher-value areas will be denuded of social housing, first through voluntary sale by housing associations and then through forced sale by local authorities.

We do not yet know the way in which the formula will work. That is one of the many details in the regulations that we have not seen. However we know, as others have said, that some places will be severely affected including some rural areas, which I am sure that the noble Lord, Lord Best, will talk about later. For the avoidance of doubt, this policy has little or nothing to do with the efficient management of stock. It is, first and foremost, a revenue-generating exercise to cover the very considerable cost of housing association right-to-buy discounts. The Treasury had a point when it resisted this in the past. Indeed—and this is quite incredible—should a local authority subsequently decide to transfer all its stock to a housing association, it will still have to pay this levy. Even with the forced council house sales, there is a real doubt whether the receipts generated will adequately meet the cost of the proposals. Indeed, the independent study by the Chartered Institute of Housing demonstrated pretty clearly that they will not. It is hard to think of any other policy where we start on that policy knowing that the sums do not add up. Something will have to give. I think that the House is entitled, before Committee stage, to a full and detailed analysis of the numbers.

The second issue that I want to raise is that of starter homes. When this came forward prior to the election, to me it looked like a welcome if ambitious plan to provide an additional source of supply. Starter homes will now, however, be deemed affordable even though, as others have said, this will require a deposit of £97,000 and income of £77,000 in London. Crucially, starter homes will replace social housing in schemes so they will not be “in addition to” but “instead of”. The Secretary of State will have considerable powers to dictate the number of starter homes that local authorities will build, even down to individual schemes. To state the obvious here, this is a complete denial of localism. As the Local Government Association has rightly said, it should be down to individual local councils to make the decisions on the right mix of housing for their areas. What is the point otherwise of a local needs assessment and a local plan?

The third and final issue I want to raise is the impact of the Bill on social housing in general. Let me summarise that impact. For existing social tenants, there will be fewer opportunities to transfer into larger properties as they become vacant. Grants to support the building of new social housing will largely end in 2018, after the current programme is completed. If tenants’ household income exceeds £40,000 in London or £30,000 outside the capital, they will be required as council tenants to pay market or near-market rents, wiping out completely any benefit that they might have got from the 1% rent reductions. If they are a new council tenant, the local authority will be required—required is the point here—to give them a fixed-term tenancy of between two and five years, instead of a permanent one. What was a discretionary power, introduced barely three years ago, will become a mandatory requirement. The message that this gives to social housing tenants about their future and how they are seen by the Government could not be clearer. Social housing has fallen from being the home to more than a third of the population in the 1980s to just 16% now. With the proposals in the Bill, that figure seems certain to fall still further, with a corresponding rise in rents and reduced tenure.

I finish my speech where I started. Will the Bill deliver the new houses that we so desperately need? To rest our entire plans on private build for sale risks repeating the mistakes of the past. When the financial crisis hit in 2007, private sector housebuilding fell off a cliff. The only houses getting built were social houses. Putting all our eggs in the sales basket leaves us much more vulnerable to any future downturn, just at the point when the economy is looking less favourable.

I sympathise with Ministers struggling to make sense of some ill-thought-out and ideological proposals that found their way into the Conservative Party manifesto. To coin a phrase, “I wouldn’t have started from here”. However, while properly respecting those manifesto commitments, as we must do, there is considerable scope for Members on all sides of this House to work together to improve the Bill. To do this, we need two things. First, we urgently need to see the detail of what is proposed in the secondary legislation. Secondly, we need Ministers to be genuinely open to change.

[Viscount Younger of Leckie (Con)]

My Lords, I apologise for interrupting but it might be helpful for the House to be reminded that there is a guideline time for speeches. If Back-Bench speeches are kept to around six minutes on this Second Reading, the House might be able to rise at around 10 pm.