Housing: Young People

Debate between Lord Lilley and Lord Shipley

Thursday 14th March 2024 Lords Chamber

[Lord Shipley (LD)]

My Lords, I pay tribute to the enormous contribution that the noble Lord, Lord Young of Cookham, has made to the cause of housing over so many years. I jotted down a number of things that he said, and I will mention the top three in order of importance.

First, watch the Treasury like a hawk. For issues such as how you convert the very high amount paid to the private rented sector in housing benefit to construct homes for social rent, which would be a much better use of the money and increase the housing supply, that kind of debate needs to be had with the Treasury. Secondly, the best way to help younger buyers is to help older buyers—that is so true, for this should not become an intergenerational issue. Thirdly, we need more planners. That is quite clear. It must be done through enabling local planning authorities to charge and set their own fees. The noble Lord will remember the debates we had on the then levelling-up Bill, when the Government gave a little ground but nothing like enough to deliver what is needed.

A number of things have been said about net immigration by two or three noble Lords. What is being said is a misconception, because our housing problem has been developing over 30 years and the increase in immigration to its current level is comparatively recent. There is much published evidence to show that, over the last 30 years, we have built around 2 million homes too few. There has been a spike in net immigration figures in the last couple of years, one of the key reasons for which is the fact that the Government insist on counting overseas students in them. Many of those overseas students—

[Lord Lilley (Con)]

They also count them when they go out. So, if they come in and go out, they account for zero in total.

[Lord Shipley (LD)]

The noble Lord is absolutely correct, but the Government, through deliberate policy over the last few years, have been increasing the number of overseas students. The result is that there are more coming in than going out. Statistically, the number is currently in decline, as we were told in a debate a few days ago, so I think he needs to take a slightly longer-term view. As the noble Baroness, Lady Valentine, said, many of those students are in the student accommodation units that have proliferated in many of our university towns and cities. When we debate housing, we need to be a little more measured about what the cause and effect actually are.

A key reason why the population is rising is that people are living longer. Another reason why we need more houses is that our housing stock is poorer than those of a number of other countries. We absolutely have to increase the supply overall, as the noble Lord, Lord Best, said. I am not sure whether the Centre for Cities estimate that we have a deficit of 4.3 million homes is right—it may be.

This debate is about the first-time buyer. I remember owning my own home at the age of 25. My wife and I bought our first home on a 95% mortgage, worth 2.5 times my income. Many more young people were able to buy or to secure rented accommodation at an affordable price in those days. That is what this debate is about: in recent years, the number of young adults who own their own home has fallen. As we have heard, more young adults are living at home. Too many are priced out of ownership and into the high rents of the private rented sector, because investment in social housing has been so low. Had those homes been properly replaced between the Government’s decision to sell council homes and now, we would have many more homes than we currently do.

Housing has become so expensive at a time when incomes are under greater stress. The number of first-time buyers fell to a 10-year low in 2023, partly due to the cost of mortgages. I find these facts disturbing. It is particularly disturbing when you realise that the people who are suffering most are those young people who are not graduates. A lot of research evidence has been published on this. We have to increase the supply side, and in that the noble Lord, Lord Best, is absolutely correct.

The Government have tried a number of initiatives that we should support. I think we need more long-term, fixed-rate mortgages and more gradual home ownership schemes, and not just for new build. It is a worry that last week’s Budget lacked so much real substance on housing. It did not address the basic problem of high house prices caused by high land costs leading to insufficient supply. We have had this shortfall in new homes being built year after year, with the Government counting conversions from business premises to homes as new homes. These are often flats and quite small. The real problem is the need for more homes that families can use.

There has been a lot of discussion around brownfield sites. I have believed for a long time that we have to move to a brownfield presumption. I am quite content with the views of the Secretary of State on that matter. Lichfields says that 1.6 million homes could be unlocked on brownfield sites. Homes England has just published its plans for the next five years and it is really good that its top key performance indicator is the amount of brownfield land reclaimed. However, are there enough brownfield sites? The Northern Housing Consortium said in a report published two weeks ago that there is an 82% shortfall of brownfield capacity in the north of England. If the Centre for Cities is correct that we need more than 4 million new homes and Lichfields is correct that only 1.6 million can go on to brownfield sites, there is a gap which can be filled only by better planning, proper housing supply policies and faster building on the brownfield sites that we can build on.

I see much to recommend the proposal that we should move towards a rules-based system. I am very taken by the report from the Competition and Markets Authority which recommended a streamlining of the planning system, with more homes built and more homes that are genuinely affordable. The regulator has called for significant intervention, which I welcome.

However, I am very surprised to learn that nearly half of local planning authorities lack a five-year housing supply; of the 72 northern local planning authorities, 23 have no five-year housing supply. As a number of noble Lords did, I listened on the “Today” programme this morning to the experience of a community-led housing initiative in Bristol which plans to have 100 units of 100% affordable housing. It has been months in the planning system, unable to get its applications through. One application had a six-month wait simply to get a case officer. The solution is exactly what the noble Lord, Lord Young of Cookham, said: let local authorities set their own planning fees. The solution of going straight to the inspectorate is not adequate.

In conclusion, a number of noble Lords have said that we need more small construction companies. Post Covid, this really matters. We cannot just rely on the big housebuilders. The small construction companies are building only 15% of homes today; they used to build 40% before the housing crash. If Homes England could look at how it gets smaller construction companies back into the market, it would help enormously with solving some of the problems of first-time buyers.