Housing and Planning Bill

Debate between Lord McKenzie of Luton and Lord Best

Tuesday 8th March 2016 Lords Chamber

[Lord McKenzie of Luton (Lab)]

My Lords, perhaps I may add just marginally to the Minister’s burden in that regard. I want to pick up on some of the rationale that has been advanced for the voluntary deal, which does not seem to me to be fair. We are calling it a voluntary deal but of course it is underpinned by a mandatory portable discount—so how voluntary is that? For once in my life I must take exception to what the noble Lord, Lord Best, said. He pointed out that this is different from the 1980s because housing associations are getting paid the full value for the property, but in the next sentence he said that this has nothing to do with housing associations because they have not lobbied in any way for councils to pick up the tab.

I accept that there is no formal link, but when housing associations made their judgments, they must have known full well that the tab was going to be picked up by local authorities. It was already a manifesto commitment, and indeed the briefing note sent to us by the Minister stated that this measure—the high-value local authority housing provision—was announced as part of the Conservative Party manifesto where it stated that local authorities would be required to,

“manage their housing assets more efficiently, with the most expensive properties sold off and replaced as they fall vacant”,

in order to help fund the extension of right to buy to housing associations. It was clear that that was the intent and therefore, with respect, the housing associations must have known that the hit was going to fall on local authorities.

I accept that it was a difficult judgment and that they were between a rock and a hard place and trying to carve the best way through. But we ought to be straight on the rationale for this. The result of that voluntary association is that local authorities will have to sell off more high-value housing than they otherwise would, because that is how housing associations will be kept whole.

[Lord Best]

Perhaps the noble Lord will give way on that point. I think it is fair to say that the National Housing Federation also made clear its public opposition to the way in which these discounts were to be funded. There may be common cause here on the way in which they are to be funded—including with the noble Lord, Lord Porter.

Welfare Reform and Work Bill

Debate between Lord McKenzie of Luton and Lord Best

Tuesday 12th January 2016 Lords Chamber

[Lord McKenzie of Luton]

My Lords, Amendment 107 calls for certain types of property to be excepted from the provisions of the rent reduction scheme. It was assumed when it was drafted that it would have the same effect as Amendment 109 in the name of the noble Lord, Lord Best, and others. I acknowledge that Amendment 109 seems to have garnered a broader range of support and doubtless this has much to do with the credibility of the person whose name is at the top of it as well as the substance of the drafting.

The scope of this exception is built on the coverage of the regulations which widen the protection from the benefit cap. It is intended to include supported housing where the landlord is of a specified type and provides, or causes to be provided, care support or supervision to claimants; supported accommodation where the landlord is a specified third or social sector provider and care, support or supervision is provided to residents; third and social sector refuges, including local authority refuges where a claimant is accommodated because they are fleeing domestic violence; and local authority hostels providing care, support or supervision.

The Government’s briefing note on these clauses indicates that they are minded to align exceptions to the policy with exemptions that apply to the rent policy set out in the rent standard guidance. We would support this as far as it goes as its coverage would include PFI schemes, temporary social housing and short-life leasing schemes for the homeless, residential and nursing homes, student homes and key worker accommodation. Perhaps the Minister will confirm that this is still the intent and say why, therefore, more could not be put in the Bill.

Despite this, it is considered that the specialised supported housing definition included in the rent standard is too limited. The guidance itself has indicated that interpretation has not been without difficulty. For example, it says that the exemption from social rent requirements of specialised support in housing is usually limited to those properties developed in partnership with local authorities or the health service and which satisfy all of the following criteria. The scheme should offer a high level of support for clients; no or negligible public subsidy should have been received; and the scheme should have been commissioned in line with local health and social services or supporting people strategies and priorities. I paraphrase.

Adopting the definitions in the housing benefit and universal credit regulations—which is what this amendment and the amendment of the noble Lord, Lord Best, do—will provide a wide enough basis for an exemption from Clause 21. The reason we need a comprehensive exception from the policy in this respect has been abundantly clear from the range of submissions we have received. As the submission from Homeless Link sets out, the type of accommodation we are referring to—let us call it supported housing—caters for a wide range of tenants with specific needs requiring various degrees of support. It points out that this provision is generally more expensive to build, manage and maintain. The fear is that the rent reduction measure will lead to a loss of existing supported housing schemes, with fewer schemes being developed in the future. Those who bear the brunt will be the homeless, those with mental health problems, people fleeing domestic violence, those with learning disabilities and those with drug and alcohol problems. Denying them the chance of decent accommodation and care and support will only push the costs elsewhere in the public sector as well as impairing the life chances of those whose quality of life is under challenge.

We have been presented with examples of projects that will fall by the wayside, including from Riverside, with a third of its supported housing schemes being at risk; St Mungo’s, with a cumulative four-year loss of projected income of £4 million; and the YMCA, with the potential end to a housing project for 170 16 to 17 year-olds. Indeed, Riverside has set out a range of stark facts. It states that early Riverside projections indicate the impact of the rent decrease policy will be a reduction in income in excess of 16% over four years, a cumulative total of almost £100 million, which it says will reduce its operating margins by 9.5%. Riverside owns and manages around 4,600 units of supported housing. Housing associations as a whole manage 105,000 units of supported housing, which is 3.7% of all stock managed. The level of savings forgone, it is suggested, as a result of an exception for supported housing, would be modest.

Having moved this amendment, I hope it puts us on the same page as the noble Lord, Lord Best. I look forward to hearing from him to see whether we can forge a common position. I beg to move.

[Lord Best (CB)]

My Lords, I speak to Amendment 109, which covers the same issue as Amendment 107, moved by the noble Lord, Lord McKenzie of Luton. Of course I entirely support that amendment, which was so well presented by the noble Lord. In both cases the amendments look for an exclusion from the proposed 12% rent cuts for supported housing as defined in housing benefit and universal credit regulations. I am grateful to the noble Lords, Lord Kerslake and Lord Shipley, and the right reverend Prelate the Bishop of Rochester for supporting this amendment, and to the noble Lord, Lord Horam, who spoke earlier in favour of exceptions and exclusions for cases of this kind. I also offer sincere thanks to Members from all sides of the House who signed a letter to the Times, co-ordinated by the National Housing Federation just before Christmas, expressing the hope that the Government would give favourable consideration to the case we are making today.

The specialist housing organisations that fall within this definition—such as St Mungo’s Broadway, the YMCA and many small charities—would suffer a major blow from the 12% reduction in income from their rents. These are the organisations on the very front line, providing supported housing for those with mental health, drug and alcohol problems, homeless people, care leavers, those fleeing domestic violence, as well as veterans and older people needing care and support.

The vulnerable people these charities support inevitably require higher spending than for general-needs renting. The charities working for them operate on the margins of viability and can easily be pushed over the edge. As well as supported housing being provided by specialist bodies, many of the larger housing associations have been keen to include schemes of this kind within their wider stock, but these social businesses cannot absorb loss-making projects. It is very hard for them to sustain this specialist provision if supported housing becomes a financial liability.

Management costs are not the only ingredient that means supported housing must have higher rents than the norm. There are higher maintenance costs due to the higher turnover of tenants, greater wear and tear, more voids between lettings, more arrears, and even significantly higher insurance premiums. Yet without these housing schemes it is certain that a lot of people will suffer the most acute deprivation, including living out on the streets. Moreover, the wider impact on society from neglecting their needs will be immense. The Homes and Communities Agency found that supported housing work produced a net positive financial benefit of some £640 million—more than six times the savings that the Government would obtain from cutting rents by the fourth year of this rent-cutting policy.

The accommodation covered by the amendment has already been given special status in respect of the new benefit cap and exemption from the so-called bedroom tax. Therefore it seems entirely consistent to exclude these hostels and specified accommodation schemes from the requirement for rent cuts. The Government have stated that it might be possible for an organisation which could face extinction as a result of the rent reductions to apply for a waiver from this requirement. However, there are two flaws in this approach to solving the problem now facing housing.

First, the specialist charities requesting a waiver face ongoing uncertainty and an unknown, potentially bureaucratic and time-consuming process to decide the somewhat extreme question of whether they will become insolvent rather than just be completely undermined by losing so much income. Secondly, the waiver route does not address the issue of supported housing provided within their wider role by larger housing associations that do not face financial ruin but which are likely to pull back from pursuing this kind of accommodation if rent cuts render supported housing loss-making.

If an association with wider objectives has to improve its financial viability by closing its supported housing schemes, the effect will be just as bad as forcing a small charity out of business. This is where we get into the issues raised by the Minister on the difference between exempting organisations by providing a waiver if they look like they are going bust because of the rent reductions, and excluding categories of housing—the category in this case being supported housing.

I know that the last thing the Government want is to undermine housing provision for those in the most acute need, with all the extra expenditure for the NHS, social care, the justice system and the rest which would follow. I believe that the Government already have a concession of this kind in mind, but confirmation of the position by the Minister is needed urgently because the process for a rent reduction on 1 April, with the sending out of thousands of notices to tenants and local authority housing departments, which will be very hard to rescind, must begin at the end of this month.

I must conclude with a footnote, albeit a rather important one. The Government are also planning to introduce another constraint: a cap on housing benefit for council and housing association tenants at the same level as for tenants of private landlords; that is, at the local housing allowance level. This ceiling is not a problem for the great majority of housing association properties since their rents are lower than in the private rented sector. The noble Baroness, Lady Hollis, suggested that they are something like 40% to 50% lower. But, of course, rents for supported housing—the kind of housing that private landlords do not provide—are obviously much higher.

For example, a homeless project for people with mental health and/or drug and alcohol issues is currently charging £119 per week, but the relevant local housing allowance maximum for an ordinary one-bedroom flat is £84 per week, so the new cap at LHA levels would mean a loss of £35 per week per flat for the project. A purpose-built autism scheme for enabling people to move out of institutional care would face a shortfall of £90 per week per flat, even though the scheme saves huge sums compared with the costs of leaving people in the institutional setting.

Selective Licensing of Houses (Additional Conditions) (England) Order 2015

Debate between Lord McKenzie of Luton and Lord Best

Monday 23rd March 2015 Grand Committee

[Lord Best (CB)]

My Lords, I wish to raise a number of points about what is, in essence, an important initiative from the Government for improving conditions in the private rented sector. I declare interests as president of the Local Government Association and as chairman of the Council of the Property Ombudsman. I am grateful to Shelter and Crisis for their briefings, and am also drawing on some years of chairing the Private Rented Sector Policy Forum for representatives of both tenants and landlords.

The positive intention of this statutory instrument is to make it easier for local authorities to designate areas for selective licensing. Once designated, through the requirement for landlords to obtain a licence, the local authority can exercise some regulatory controls through advice and accreditation of landlords and a weeding out of those who are not “fit and proper persons”. With the extraordinary growth of the sector—which has increasingly meant replacing the purchase of properties by first-time buyers with purchase by buy-to-let landlords—it follows that some regulation of the PRS is needed.

Any of your Lordships who watched the recent “Panorama” programme about Britain’s acute housing problems will have witnessed the scenes of overcrowding, “beds in sheds”, high rents and abysmal conditions in parts of the private rented sector. Some intervention seems overdue to introduce proper standards and to weed out the exploitation to be found in what is obviously a minority of cases, but a minority that is truly terrible for the tenants involved and can ruin the credibility and reputation of the whole sector.

The problem has been that local authorities, even where existing powers should lead to intervention, have not had the resources to act. Selective licensing can buttress existing powers and, through the charging of a fee, can raise the money needed to pay for enforcement of the necessary measures. This statutory instrument helps councils wishing to go for selective licensing by sanctioning this regulatory route not just in places where there is low demand for housing and where anti-social behaviour is rife but where there are high levels of properties in poor condition or high levels of inward migration, social deprivation or crime.

I commend this policy of broadening the reach of selective licensing. However, at the same time, the Government are introducing a new restriction on the use of licensing: only in exceptional circumstances, it seems, where the Secretary of State permits it, will the local authority be able to use selective licensing to embrace more than a fifth of its area or more than a fifth of its rented properties. This would prevent the use of licensing to cover at least four-fifths of privately rented properties. The purpose of this restriction, as I understand it, is to save decent landlords the burden of form-filling and, in particular, of paying a licence fee, which could be £100 per property per annum. I want to explore whether this “one-fifth only” rule is sensible.

The CLG Select Committee did indeed find in 2013 that the process of licensing could be bureaucratic and tedious. It is hoped that a simplification of procedures is now to be expected. However, the committee also concluded that local authorities should be given more discretion over decisions on when and where licensing should be implemented.

My objections to the 20% limit are as follows. First, should it not be for councils themselves to decide on the extent of the licensing that they need? I am not sure how, in this age of devolution and localism, central government can decide which places—which streets—most need the extra protection that licensing can bring.

Secondly, councils that want to implement an authority-wide regime and not one covering just a fifth of their territory argue that unsatisfactory—indeed, unsavoury—landlords may be operating in any part of their area. The new restriction would deny councils the tools to sort out the rogues, wherever they are. After all, houses in multiple occupation—HMOs—are subject to licensing anywhere in a local authority’s area, not just in a specified one-fifth thereof.

Thirdly, economies of scale are important for a project such as this. If enforcement is to be effective, and it is not cheap, the more landlords involved the better. The Newham success story shows what can be done—I joined that borough’s enforcement team on one of its dawn raids recently at the invitation of the mayor, Sir Robin Wales—if licensing covers a whole borough, and therefore a large number of landlords. At £100 a property, significant resources can then be raised. If only a fifth of properties were to be involved, the cost to landlords would have to be much higher and/or the service would be much less effective. I note that Newham has completed well over 2,000 enforcement visits, taken dozens of landlords to court and refused licences for some notorious landlords with scores of properties, all because it has had the resources to do so.

Fourthly, I note that the DCLG’s impact assessment stresses the financial burden on landlords of this annual fee but, of course, other industries pay for their own regulation. Set against a rent of perhaps £15,000 a year in Newham, a £100 fee does not sound excessive. The suggestion that landlords will simply pass on the cost to tenants does not sound like good economic sense. It assumes that these landlords are not currently charging the maximum rent the market will bear and that they have the scope for increasing rents further. There seems to be no evidence that where councils are using selective licensing, rents have been raised accordingly. The local housing allowance would certainly not be increased for this purpose. Moreover, I presume that landlords are able to offset licence fees against tax, just like the costs of gas safety inspections or agents’ fees.

Fifthly and finally, the real impact is surely not the relatively modest annual fee but the effects of licensing on raising standards in the PRS. The fee is not money down the drain. It pays for a service, making the worst landlords fulfil their obligations. Not only do tenants benefit from the improved performance but other landlords benefit because licensing helps to drive out unfair competition from those who do not play by the rules. The Newham experience shows how the police, Home Office and Her Majesty’s Revenue & Customs can all be helped, thereby saving the taxpayer money under a number of other headings.

So I congratulate the Government on opening up more opportunities for selective licensing, strengthening the hand of local authorities to exercise greater regulatory influence over the private rented sector in their areas. However, I see the somewhat arbitrary restriction of licensing to just a fifth of areas or properties as a mistake that will unnecessarily undermine this opportunity to enhance the standards and reputation of the sector. A fallback power for the Secretary of State to intervene if a maverick local authority behaves in an eccentric way is understandable, but not a blanket blocking of local authority plans to improve tenants’ lives in this way. I am glad to hear that an impact assessment will take place in 18 months but, in the mean time, can the Minister reassure us that the Government will use their powers only to curb the autonomy of local government in extreme cases? The net effect of this statutory instrument is otherwise one good step forward but two steps back.

[Lord McKenzie of Luton (Lab)]

My Lords, I thank the Minister for his introduction to this order. I particularly welcome the contribution that we have just heard from the noble Lord, Lord Best, pretty much all of which we agree with.

The order itself is to be welcomed but we know that it comes attached to an administrative change to the general approval regime which will significantly curtail the opportunity to introduce selective licensing. From 1 April, local authorities will have to seek confirmation from the Secretary of State for a selective licensing scheme which covers more than 20% of their geographical area or will affect more than 20% of the privately rented homes in the local authority area. This is yet another centralising, controlling proposition from the Government, who continue to espouse the cause of localism but too often act in a contrary manner.

However, we support the arrangements for selective licensing; indeed, they were introduced under legislation of the previous Labour Government. The intent is to focus on those who show no interest in managing their properties properly, often letting to anti-social tenants who cause havoc for the local community. Licensing is a means of seeking to ensure that landlords are fit and proper persons. Can the Minister confirm that a local authority cannot simply designate an area on a whim? In particular, local authorities are currently required to consult those likely to be affected by designation and consider any representations made. Nor, if we are correct in our understanding, can the licence conditions be open-ended; they must relate to residential use of the property. Although authorities have a degree of discretion to set the precise conditions of the licence, they must include certain mandatory conditions, including the requirement to produce a “gas safe” certificate each year, keep electrical appliances and furniture in a safe condition, and keep smoke alarms in proper working order. Why on earth would the Government wish to weaken these requirements?

These matters need to be considered in the context of what is happening more generally in the private rented sector. One in five now lives in the PRS, including 1.5 million families with children, but we know that a third of the homes in the PRS do not meet decent home standards. We need to drive up standards by introducing a national register of landlords, which will make it easier for local authorities to introduce licensing schemes and ensure that tough sanctions are in place.

It is argued by the Government that selective licensing is not supposed to be a blanket arrangement, but does the Minister not accept that being more selective would be aided if there were a national register? From the information in the impact assessment, only a handful of local authorities have introduced authority-wide schemes to date—Newham, Barking and Dagenham, Enfield, Liverpool and Waltham Forest—although others are exploring the possibility. Can the Minister say specifically what problems have actually arisen in those boroughs? From the evidence we heard from the noble Lord, Lord Best, it seems that Newham, far from being a problem, has actually been a success and that progress is being made in tackling bad landlords. What evidence is there that landlords are not absorbing the cost of licensing?

It is suggested that borough-wide selective licensing can deter investors. RBS’s position is cited, but is not the whole rationale for licensing to improve areas, encourage better management of stock and tackle anti-social behaviour? Is it not the case that individual authorities are best placed to judge the impact on the extent of licensing in their areas? Why on earth would they wish to do something to impair the prospect of more investment in their housing? So far as the new thresholds are concerned, what analysis underpins the Government’s 20%/20% approach? What evidence backs up that requirement?

It is suggested that the Government will issue guidance—indeed, the Minister has confirmed that—advising local authorities to focus their efforts, in the first instance, on just the 10% most deprived local super output areas across the country. This would significantly reduce the number of PRS properties covered by a licensing scheme; one can see the tabulation at the end of the impact assessment. The Government’s emphasis seems to consider the landlord in priority to the tenants and the community.

I have one further point. Option 1 in the impact assessment sets out whether approval would be granted in schemes larger than 20%, and states that,

“local authorities must be able to demonstrate the scheme is enforceable and fully resourced”.

How will that judgment be made? Does this not mean that the most deprived areas, which are likely to have the greatest need for licensing, will struggle the most to resource that requirement? Where is the fairness in all that?

Deregulation Bill

Debate between Lord McKenzie of Luton and Lord Best

Thursday 30th October 2014 Grand Committee

[Lord McKenzie of Luton (Lab)]

My Lords, this is a modest amendment that requires a report to each House of Parliament to set out the effects of the policy of reducing the qualifying period for eligibility for the right to buy from five to three years. In particular, it seeks information on the impact of this reduction on the numbers of affordable council houses that have replaced those sold. While this amendment focuses on replacement on a like-for-like basis, I acknowledge that the Government’s commitment relates to a one-for-one replacement.

As I made clear at Second Reading, we believe that people should have the right to own a home, and have come to support the right-to-buy programme as one mechanism to facilitate this. We are considering these issues when home ownership has declined to its lowest level in 30 years, and when we have a housing crisis in the UK because for decades we have failed to build sufficient homes to meet demand. The consequences of this are now being widely felt by millions of working people who are unable to afford the house that they want, and their children and grandchildren face the prospect of never being able to do so.

As Michael Lyons stressed in his latest report, building more homes is not just about home ownership. There is a need to provide homes for social and affordable rent so that those on the lowest incomes can have a decent home, too. His report specifically identified that local authorities should have a key role in commissioning and building social housing, and acknowledged the continuing commitment of housing associations to this end. Of course, the sale of a council house does not of itself add to or diminish the stock of housing in the UK, but how the proceeds of sale are applied and the extent to which that adds to the housing stock are of crucial importance. These things need to be considered in the near and longer term. Evidence provided to the Lyons commission suggested that about one-third of the properties sold under the right to buy are now privately rented, many at rent levels above applicable housing benefit levels.

In seeking this report, we are looking to hold the Government to account for the commitment made when their reinvigorated right-to-buy programme was introduced. The Solicitor-General in the other place,

“guaranteed, for the first time ever, that receipts from additional local authority sales—that is, sales above the level forecast prior to the change—would be used to help to fund new homes for affordable rent, on a one-for-one basis”.—[Official Report, Commons, Deregulation Bill Committee, 6/3/14; col. 276.]

This commitment applies to the reinvigorated programme generally, not just to changes in this clause, and requires some decoding. It is accepted that it is one-for-one, not like-for-like, and it would appear—perhaps the Minister can confirm this—that it is based on the Government’s analysis at national level that, should it have the relevant proceeds, and with the application of those receipts limited always to 30% of the cost of new provision, a one-for-one test could nationally be satisfied. Can the Minister throw any light on the distributional aspects of this approach and the extent to which the allowance works only because of a mismatch between locations where proceeds arise and where they can be reinvested? What assumptions have the Government made about the type of properties sold and those replaced? Because the right-to-buy proceeds could be applied to only 30% of the cost of replacement provision, local authorities will be expected to borrow the balance and fund from affordable rents. They have to sign agreements with the Government to this effect, so how many councils have entered into such agreements with the Government or the HCA? How many have not? Are the Government aware of any councils that would be precluded from undertaking such an agreement because of their borrowing cap? What is the Government’s definition of affordable rents for this purpose? Has any estimate been made of the additional housing benefit or universal credit cost that will arise from the requirement to charge such rents to benefit from the replacement arrangements?

One of the difficulties in all this is how to be clear about the baseline—the forecast level of sales prior to the reinvigorated programme. Is it correct that the baseline is set in terms of revenues garnered, not units sold, so that the Treasury always gets its money first? Will the Minister provide an analysis, year by year, of the baseline so that there can be some clarity as to the additionality that should provide the Government’s one-for-one commitment? It is understood that the Government’s guarantee does not extend to tenants accessing the preserved right to buy for those council homes that transferred into housing association ownership. The National Housing Federation briefing asserts that because housing associations entered into agreements about the split of proceeds of sale before the reinvigorated programme, they receive only a small proportion of the sale proceeds, with the lion’s share going to local authorities and not always used for housing. It says that 92% of housing associations that it surveyed declared that they would not be able to replace homes sold via the preserved right to buy. What plan do the Government have to facilitate replacement of homes sold by housing associations in that manner?

The National Housing Federation has given us figures for 2012-13, stating that 5,944 local authority homes were sold but that only 3,634 new homes had been started to replace them. For that and the subsequent year, how many homes have been sold and what are the related proceeds? How many of those have been treated as attributable to the reinvigorated process, and therefore how much is available for replacement homes?

Three other amendments focused on resources for social housing are grouped with this one, and I shall outline our position on them when they have been spoken to.

This is an important issue. Given the Government’s change in policy we need at least in these circumstances to review what is happening, hence the requirement for a report. I beg to move.

[Lord Best (CB)]

My Lords, I propose a cluster of three new clauses in the group, all concerned with the desperate problem of this country’s acute shortage of homes that are affordable to those on average incomes and below. Amendment 40 relates to right-to-buy discounts and seeks not to undermine these arrangements but to make them more productive. Amendment 41 seeks to apply more of the receipts from right-to-buy sales to the provision of new homes. Amendment 42 attempts to enable councils to borrow prudentially more funds to increase housing supply.

These proposed new clauses do not represent earth-shattering proposals that will solve the nation’s acute housing problems. Other more dramatic changes are needed to achieve really significant results, but this trio of amendments would enable councils to play a bigger role once again in meeting this country’s crying need for more and more affordable new homes.

I declare my interest as president of the Local Government Association. I am grateful to the LGA for preparing these amendments and, as always, for valuable briefings.

Clause 29 endeavours to make the right to buy more attractive by reducing the time from five to three years that a tenant has to live in a council property before being able to buy at a big discount. Discounts can be as much as 70% of value, so tenants can buy a home for 30% of what it is worth, subject to maximum discounts of an index-linked £100,000, now £102,700, in London and £75,000, now £77,000, elsewhere. These nationally set figures are very much back-of-the-envelope stuff. They do not recognise that the housing market outside London is not uniform. Levels of demand and house prices in Bradford and Burnley are not as the same as in Bedford or Brighton. Indeed, house prices are not even the same across London.

Amendment 40 would mean councils setting their own discount levels, based on local markets. It would place a maximum 60% on discounts. It would avoid giving away publicly owned assets on extravagant terms. It localises decision-making, in keeping with the Government’s general disposition towards the devolution of responsibility to local government.

Critics of the amendment could worry that some local authorities, which believe that the right to buy has already removed too many properties from their stock of affordable homes, will reduce discounts to the point where no one wants to buy. Some councils will certainly point out that a large proportion of RTB sales lead to the first buyer selling on to buy-to-let landlords. Sadly, this can mean the same previously rented home being re-let at twice the earlier rent, often increasing the housing benefit. Worse, the private tenants may be people requiring intensive housing management and support, which is not available from the private landlord. In extreme cases, I hear of families evicted by the council for anti-social behaviour returning to the estate, into former right-to-buy properties, costing the taxpayer twice as much, but without the restraints on behaviour that could be exerted for council tenants.

There are also the problems for the purchasers themselves. Those buying flats can discover a few years down the line that they must pay large sums towards major repairs and replacements of lifts, external cladding, roofs and so on, turning their asset into a liability.

Amendment 40 puts these arguments to one side and avoids the accusation that it could be used to undermine right-to-buy sales. It would require discounts to continue at levels that will still attract buyers. It would stop local authorities being forced to spend more than is necessary to encourage sales, and would prevent unwise tenants being tempted by the sheer scale of the discount from making an unwise purchase. It would substitute localised decision-making on an issue that requires local knowledge, for the distant regulation of RTB discounts by Whitehall.

Amendment 41 follows from that. It would seek to capture 100% of the sale proceeds—admittedly after they have been greatly depleted by the discount—to be recycled for local housing purposes. The importance of this measure is not hard to see. At present, the Treasury takes a 25% slice of proceeds from right-to-buy sales. Last year, from a total £877 million, the Treasury took £237 million. If that extra money had been recycled into the housing revenue account and used for new homes, it would have made a very helpful difference at the local level. Councils which have done the sums have estimated that they could have improved their housebuilding performance by some 30%.

Infrastructure Bill [HL]

Debate between Lord McKenzie of Luton and Lord Best

Thursday 10th July 2014 Grand Committee

[Lord Best]

I agree entirely. The noble Lord, Lord McKenzie, was very supportive but had some doubts. It was important to hear the plans that are now being formulated by the Labour Party. I know that Sir Michael Lyons’s review is due out fairly soon. I think that will be a creative and important contribution to the debate. The noble Lord, Lord McKenzie, made the point that long-term consensus is going to be essential and we have to work our way towards that, even though he has some reservations about this particular approach.

I thank the noble Baroness, Lady Stowell, very much for her response and for underlining the Government’s commitment to increasing supply, which is the essence of this. My suggestion is by no means a silver bullet, that is for sure. Loans, guarantees, et cetera, are all good; it is whether or not the volume that we need is going to be achieved by the measures that are currently there. With regard to reliance on local plans—remembering that you have no duty as a local authority to meet the needs of your neighbours or of the nation—your local plan must relate to the requirements of your own locality, and that may not encourage you to believe that a very major development is within your remit.

I take the point entirely that the pre-application process adds another year or so to the whole, so in total from beginning to end, with the 28 days from the Secretary of State at the beginning, one may well reach three years. But believe you me, three years for a major development is a triumph in relation to the time that we now must wait to get things done.

This is a proposal for a Bill, not a proposal in itself.

[Lord McKenzie of Luton]

How does the noble Lord see the issue of the use of the infrastructure planning regime for garden cities and new towns, given the scale of what they entail—very big developments over the longer period? The TCPA thought that the infrastructure planning process did not really suit that. That is why I thought we almost had three situations. There is the local authority with its usual planning role and responsibilities for housing. There are new town development corporations with the much needed mega-expansions. My reservations were about the extent to which intermediate positions would be best dealt with by the infrastructure planning regime or by some other route.

[Lord Best]

I am sure that that distinction is exactly right. A development corporation need not necessarily go for 15,000 homes, which I believe is the target for Ebbsfleet, the first of these new garden cities. We are looking here at the more modest proposals; ones that are none the less enormous in relation to the place. It may well be that the development corporation model works just as well with a master plan for 1,500 homes as it does for 15,000 and the opportunities that that brings with it, requiring something in between the mega and the everyday that can be encompassed within the local plan.

The amendment is a proposal for a Bill within a year of this Bill becoming an Act. That would give an opportunity for that Bill to take forward all the detailed aspects of this, things such as who exercises compulsory purchase powers in these circumstances or whether one requires a national policy statement as for other aspects of infrastructure that would go with this measure. That is all to play for. At this stage, I thank all those who joined in and beg leave to withdraw the amendment.

--- Later in debate ---

[Lord Best]

My Lords, I declare the interest that I did not need to declare in my previous amendment, which is that I am president of the Local Government Association, which supports both these amendments. I see them as complementary to our earlier debate on nationally significant infrastructure projects.

I very much hope that wherever a local authority wants to get on with it and do these things, we should give it every possible encouragement. I hope that these amendments are both acceptable to the Minister but would just add that it is likely that housing associations would play a very significant role in the development corporations. Many local authorities will not themselves be undertaking development on such a scale, and co-operation and partnership with housing associations will also be incredibly important in making the development corporations work.

[Lord McKenzie of Luton]

My Lords, we are happy to support these amendments. I say only, in relation to the proposal to have one local authority elected member, that the key thing is not so much status on a board and voting rights but the imperative of engaging with the local authority. That is probably behind the amendments, which I am happy to support.

--- Later in debate ---

[Lord Best]

I will not prolong the debate late on a Thursday, but I add my support to this amendment and note again that the LGA is keen on it. The major housebuilders have moved up from building 46% of the nation’s housing to building 70%. We are becoming incredibly dependent on a handful of very large housebuilders and we need to get back to having the SMEs, the small and medium-sized housebuilders, getting back into business. Many were wiped out during the credit crunch, the recession, and we need them back again. This is a way of ensuring that they can come back, because what they lack is the opportunity to get their hands on land. This is made easy for them by the use of the custom-build technique and this amendment would help in that process. In Germany, they build something over 40% of all their housing on this basis of land being assembled and housebuilders building sometimes a single house but sometimes several houses on the plots that are made available.

There is a slightly sinister aspect to the bringing back of the SME housebuilders, which is the notion that the smaller housebuilders and those developing smaller sites—smaller housebuilders and smaller sites often go closely together, because the big players do not want to deal with small sites—would not in future have a requirement for the provision of affordable housing attached to the consent. It is a government concept, which has yet to be enshrined in any way but is subject to consultation, that sites with perhaps fewer than 10 homes would not be required to have any affordable housing within the mix. One might think that with 10 homes that does not much matter, but in rural areas nearly all the village schemes for affordable housing for local people are of fewer than 10 homes. Something like 70% of all rural schemes are of fewer than 10 homes. The thought that this will help small housebuilders to do more is misguided.

It is the land, which is the subject of this amendment, which is preventing the small players doing the kind of housebuilding they used to do. They cannot get their hands on sites. It is not that they need to have special concessions and reduce the amount of affordable housing that they build, just as it is not the case that smaller schemes should have the requirements removed from them for sustainable housing for the move towards carbon neutrality by 2016. This amendment seeks to bring back those small and medium-sized housebuilders. Those amendments which seek ways of lowering standards or of removing the requirement for affordability are missing the point. It is this one which would help bring back those housebuilders in such a way that we do not make any sacrifices in terms of quality.

[Lord McKenzie of Luton]

My Lords, I am happy to support this amendment and I support the points made by the noble Lord, Lord Best. Doubtless, the Government will make reference to their custom-build fund, which was announced a couple of weeks ago. As for our plans for custom build, we support an actual requirement on local authorities to include a higher proportion of small sites in their five-year land supply, in order to boost small and custom build, and to guarantee access to public land for smaller firms and custom builders. As I think I said before, to make sure that we give people the chance to sign up to a waiting list for custom build, co-operative homes or community land, trust projects with local people have been the priority. We are certainly supportive of custom build, but we await with some trepidation the outcome of the Section 106 consultation for smaller sites.

Growth and Infrastructure Bill

Debate between Lord McKenzie of Luton and Lord Best

Wednesday 27th February 2013 Lords Chamber

[Lord McKenzie of Luton]

My Lords, the intent of the amendment would be to restrict the application of the provisions relating to modification or discharge of affordable housing requirements to those that were agreed prior to Royal Assent. That amendment was tabled by the noble Lord, Lord Best, in Committee, and I am delighted that he has added his name to it today. I should make it clear that this is not an attempt to usurp his role in this; nobody knows the issues better than the noble Lord, but I was not sure whether he would bring it back.

If these provisions concerning renegotiation of Section 106 agreements are not to be removed from the Bill, they must be constrained. We will come on to sunset clauses shortly, but we should note that the Government’s proposition is only one small step from where the Bill now stands. In Committee, we acknowledged the significant contribution that Section 106 agreements have made to this country’s need for affordable housing. We have noted that local authorities have existing powers to renegotiate Section 106 agreements and that many are using these. We remain sceptical about the need for these new powers. However, notwithstanding these concerns, on the basis of the Government’s own logic, there is no need for the rights in the Bill to carry on for ever. If the rationale for Clause 6 is that developers entered into Section 106 affordable housing obligations when economic times were better, is it the Government’s position that things will continue to get worse?

If the clause is to be brought to an end in three years, unless the Government are expecting a further downturn in this period, it should not stand in its current form. When we debated this in Committee, the Government argued that there was continuing uncertainty in the market. That may be the case, but presumably the Minister is not arguing for a risk-free platform for developers. Clause 6 was, we understand, supposed to address the substantial change in market circumstances fuelled by the global financial crisis of 2008. Applicants should not agree to Section 106 agreements that they consider will render their development unviable. The use of viability appraisals in negotiations is becoming increasingly common.

We have added our names to Amendment 28 which, as we have heard, would introduce a sunset clause bringing to an end the provisions relating to the modification of affordable housing obligations after three years. Given that very new affordable housing requirements are unlikely to be able to make successful applications, this would generally mean a practical cut-off point of obligations entered into by about 2014. So far as the Government’s version of a sunset clause is concerned, this does not move us much further than the Bill, which already gives the power to the Secretary of State by order to repeal Sections 106BA and 106BB of the Town and Country Planning Act 1990. The Government’s version of a sunset clause, while repealing those sections at the end of April 2016, also gives the power to the Secretary of State by order to substitute a later date. In effect, there is no clear end date to these provisions. Therefore, we will look to the Government to explain in detail, when they speak to these provisions, why the firm date of April 2016 is not sufficient. If we are not satisfied, we reserve the right to return to this matter at Third Reading. I beg to move.

[Lord Best]

My Lords, I have added my name to Amendment 22, which was prepared by the Local Government Association. I am grateful to the noble Lord, Lord McKenzie, for introducing this amendment and explaining its purpose and value. My overarching concern is that the intention of Clause 6, which is to see stalled development up and running swiftly, will not materialise without substantial changes to this clause. Indeed, the knowledge that central government may overrule legal agreements between local government and house builders may encourage exactly the wrong response from some elements in the housebuilding industry, and this measure could backfire.

The Clause 6 procedure offers relief for house builders where they have paid too much for a site and now wish to be excused from their obligations to provide affordable housing. Amendment 22 would mean that only agreements already made could be addressed by going down this Clause 6 route. The practice of developers speculatively outbidding others—including housing associations keen to buy a site and fulfil the affordable housing obligations on it—would not be perpetuated into the future. It would no longer be possible for developers to say, “Let us gamble on house prices rising, but if they do not do so, we can go to the Planning Inspectorate and secure a release from our Section 106 agreement”.

In my most charitable moments, I can feel some sympathy for the small builder who is unable to work on a swings-and-roundabouts basis of some highly profitable and some less profitable site purchases and who unwisely paid too much for a site at the height of the boom some four years ago. The bigger house builders are currently doing very well. Persimmon and Bovis have just reported huge increases in profits of more than 50% and more than 60% respectively. Some smaller developers, however, may have been caught out in 2008 or 2009, thinking house prices would rise inexorably when they have been pretty flat outside London and the hot spots. Nevertheless, surely we do not want to encourage continuing speculation on the basis that, from now on, the state will bail out those who bite off more than they can chew. Any developer entering into a Section 106 negotiation at the current time is clearly doing so with their eyes open to the economic realities of the day. These negotiations make use of viability appraisals and the signal must go out to house builders that they can no longer sign agreements in the expectation that they will not really be necessary to honour those agreements because central government’s planning inspectors will set aside their obligations if the developers can show that they will not make a profit of 20% or so.

This amendment draws a line under state intervention in these Section 106 agreements from the date that the Bill becomes an Act. I strongly support it. Alternative amendments for a sunset clause three years hence seem to miss the point. It is now that we want people to get busy and get started on sites that they own and are currently stalled. Every time a local agreement to produce more affordable housing is set aside, households on low incomes waiting for a home are forced to wait longer. We should ensure that this happens on only the rarest occasions. I strongly support an amendment that would stop the perpetuation of the opportunity for developers to renege on agreements that they have signed with local authorities from henceforth.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, I turn again to the tardiness of the criteria. The noble Baroness may have been able to look at them over lunch; I was dealing with the consultation responses, which arrived on my desk this morning. Having said that, we need to study the guidance and reserve our right to deal with any residual issues on Report. I was not going to move this amendment, but I did not want to leave hanging the two important amendments tabled by the noble Lord, Lord Best. The purpose of Amendment 25 is to say that it should not just be left to guidance; there should be a process and a statutory instrument that deals with viability issues, given its importance. I will be happy to reserve judgment on that once I have had the opportunity to study in detail what was issued to us late last night. On that basis, I beg to move.

[Lord Best]

Have we reached my amendments? No? I did not think that I had missed my cue.

Growth and Infrastructure Bill

Debate between Lord McKenzie of Luton and Lord Best

Monday 28th January 2013 Lords Chamber

[Lord Best]

My Lords, I support the noble Lords, Lord Tope and Lord Jenkin, and pledge the Local Government Association’s support. Is its support stronger than that of London Councils? It is equal to that from London Councils.

I talked at Second Reading about the growing national housing deficit. I was trying to get into common parlance the idea that, every year, we are building up a bigger and bigger deficit. We are adding another 100,000 homes a year to the deficit that we already have because we are building at least 100,000 less than we should. We must do something dramatic to try to turn the deficit into a positive.

Local authorities are sitting on assets against which they could borrow. A lot of housing associations have run out of space to borrow any more, and they have used up the opportunity to borrow against the properties that they own. Many local authorities have plenty of headroom to borrow more against that security. This is prudential borrowing that will be repaid out of rents. It is not frightening to overseas investors and bankers to see another £7.4 billion, which is the amount estimated by the report Let’s Get Building, produced by John Perry from the Chartered Institute of Housing. Over a period of five years, £7.4 billion is not enough to frighten the horses but it would produce 12,000 homes a year—60,000 homes in all. That is about 5% of what we need each year, but it is about 10% more than we currently provide. That is one relatively dramatic way in which, without any subsidy, we could get at least a few thousand more homes built every year.

I chaired a commission for the LGA and the Department for Communities and Local Government called Easing Housing Shortages: The Role of Local Authorities, which sent me around to see what local authorities had been doing. Were they up to it? Did they have any sites on which they could develop? They were using what was called local authority new-build funding, and I saw how councils can demolish those garages on the end of the site and put in 14 bungalows, perhaps, for elderly people, who can then move out of underoccupied council housing into those bungalows, thereby releasing 14 family houses on the council estate. It is creative action; the land is already there; the garages do not get used any more; it is a place where people congregate for nefarious purposes—everyone is delighted to see the development. Local authorities could get on with schemes of this kind up and down the land. I support this amendment.

[Lord McKenzie of Luton]

My Lords, this proposed new clause is the same as that which my colleagues moved in Committee in another place by way of a probing amendment. It has been very powerfully moved by the now traditional triumvirate of the noble Lords, Lord Tope, Lord Jenkin and Lord Best—a powerful group indeed. In the Commons, I am bound to say, it did not elicit much information, and drew a rather aggressive diatribe from the Minister—something to do with Labour and borrowing. Thank goodness we have a Minister at this end with whom we can have a measured and sensible discussion. We have an innate sympathy with this amendment, and would like to use the opportunity to press the Minister on some particular issues.

First, perhaps we can ask something that has been touched upon by the noble Lords, Lord Tope and Lord Jenkin; and if reported hints from senior Treasury officials at the time of the Autumn Statement that the Government were considering at least relaxing the cap are true and under active consideration, it may save us some time. I hope that they are, but perhaps the Minister can tell us whether they are.

I will also make it very clear that we accept that in the interests of macroeconomic management the Government are entitled to have powers to limit the amount of money borrowed by local authorities. In fact, the Labour Government legislated to that effect in 2003, and that power extends to setting limits on individual councils, and different limits for different kinds of borrowing.

When we were debating these provisions in what is now the Localism Act, I tried to get an answer as to why Section 171 was needed as well as Section 4 of the 2003 Act. I do not believe we ever got a satisfactory reply, so perhaps I can use the opportunity to ask again, in the hope that the Minister can now clarify the position. That is my second question.

We have had the benefit of several briefings on this matter from the LGA, the National Federation of ALMOs, CIH and others, and in particular, as has been referred to, we have had the Let’s Get Building report, which was commissioned by the National Federation of ALMOs. The case for more housing is overwhelming, and the need for more affordable housing is desperate. We can debate until the cows come home which Government have delivered what, but it is surely common ground that we need to build more, and that this is becoming increasingly urgent.

Therefore, this is not just about providing decent homes for people. The boost to the economy is surely well understood, as is the strong multiplier effect on GDP of construction and the boost to employment. Given the grim GDP figures delivered last Friday, this could not be more urgent. The need to boost construction and build more social housing is clear. The Let’s Get Building report also lays out why councils, together with ALMOs, are particularly well placed to play a role, especially in using their land assets, and to link it in with their apprenticeship and work experience scheme. Do the Government accept that analysis from the report? It would seem that at least part of the coalition does.

As the report points out, the revenue costs and savings of an expanded council new-build programme are complex and depend on such factors as whether a grant from the HCA would be needed, the extent to which council tenants would require housing benefit—or universal credit in future—and the prior housing status of new tenants. To the extent that additional council housing reduces demand for supporting people in the private rented sector or temporary accommodation, there is a potential saving for the Government. Additional build also provides an opportunity to get a better balance in the local stock offering. As the noble Lord, Lord Best, said, it is a reasonable way of dealing with underoccupation.

Of course, the crunch issue is borrowing. It is accepted that, under current rules, additional borrowing by councils will form part of public sector debt, notwithstanding that it will be effectively financed out of rental income. There may be arguments about recasting the treatment of that debt, but they are probably not for us today. As we have heard, the Let’s Get Building report proposes that additional borrowing of some £7 billion over five years would facilitate the provision of 60,000 additional homes, although the amendment does not call for this. It calls for the housing cap to be removed. Even if the Government were not minded to support the amendment, would they at least be minded to raise the level of the cap? Have they given recent consideration to this? The Minister will doubtless tell us that there is existing headroom of some £2.8 billion, but this is not evenly distributed.

It is worth putting these borrowing numbers into context. According to the December OBR report, the forecast for debt at the end of this March is £1.2 trillion. Moreover, the forecast increased by £27 billion between March and December last year. Given the upside that it could bring to GDP growth, £7 billion over five years would not seem of itself to be critical to our chances of hanging on to our AAA rating—whatever they may be—or to the Government’s chances of meeting their fiscal rules. That £7 billion over five years is within the margin of standard statistical error for public borrowing figures. As for removing the cap entirely, the evidence from CIPFA is that the introduction of prudential borrowing for councils in 2004 has been a complete success and that borrowing levels have remained modest and prudent. Total local government borrowing is in the order of some £81 billion.

The reform of council house finance from April 2012 has boosted councils’ ability to manage their housing finance more positively. They all have 30-year business plans, while average council housing debt is reported as being just over £17,000 per property. I ask the Minister: why not trust local councils on the basis of their track record to date? These are some serious questions for the Government to answer.

Welfare Reform Bill

Debate between Lord McKenzie of Luton and Lord Best

Monday 23rd January 2012 Lords Chamber

[Lord McKenzie of Luton]

My Lords, it seems that we are all, Lib Dems, Conservatives and ourselves, in favour of a benefit cap. Perhaps at some stage in the future, some analyst or academic might look back on these times and determine the origin of these policies, what analysis underpinned them and whether assuaging the court of public opinion played any role. It seems from what the Minister said a while ago that it played quite a considerable role.

But we are where we are. My party supports a benefit cap, but one based on fairness. A particular concern for us, as currently proposed, is its potential to drive increased homelessness, which is a major consequence of the cap—homelessness for vulnerable individuals, homelessness for families and homelessness for children. The way in which the cap is to be applied, albeit calculated by reference to a range of benefits, means that it is an effective second cap on housing support. It is a second cap on top of the range of reductions in housing support already introduced through the move to the 30th percentile of local market rents, uprating by CPI, a cap on rent levels and room sizes, and increases in scope of the shared room rate.

Not only will the overall cap dramatically increase the prospects of people becoming homeless but, in some cases, the Government will miss their target, and local authorities will bear the cost of the benefit cap, not the tenant. It will fall on council tax payers. If a family is already in accommodation provided for them under homelessness duties, no shortfall between housing benefit or housing allowance and actual rent will be payable by the tenant. Increasing the shortfall by the cap does not change this. There may be the opportunity to discharge the duty into cheaper accommodation, but this is increasingly unlikely to be available, certainly without significant migration to elsewhere in the UK, with all that that entails.

As Shelter points out, the reach of the household benefit cap goes way beyond the extreme cases generally associated with London, and it will be difficult for many households to afford to rent both in the private sector and at 80 per cent of market rents in the social sector across much of the south-east. It affects not only households with large families. Families in the private rented sector with just two children will be subject to the cap in all of central London. The DWP estimates that 50,000 households will be affected by this measure—I think that the estimate has been uprated to 75,000 households as a result of today’s news—and lose £83 a week on average, with 90,000 adults and 220,000 children affected by the measures. Fifteen per cent of those households will lose more than £150 a week. The Children’s Society has suggested that more than 82,000 children could lose their homes as a result of the cap. As the Children’s Commissioner pointed out in a recent report, the DWP’s own equality impact assessment sees homelessness, diversion of living costs benefits to housing costs and migration within the UK as primary effects of the cap. In a chillingly bland comment, the DWP states in the original impact assessment:

“The cap is likely to affect where different family types will be able to live”.

Housing benefit may no longer cover housing costs and some households may go into rent arrears. This will require expense and effort on the part of the landlords and the courts to evict and seek to recoup rent arrears. The impact assessment continues:

“Some households are likely to present as homeless, and may as a result need to move into more expensive temporary accommodation, at a cost to the local authority”.

It is an awful admission that by deliberate act of policy people are to be made homeless, are to run up rent arrears and are to be evicted; an admission also that reduced costs for the DWP will add cost to local authorities. Can the Minister say whether these increased burdens will be met by central government?

The Children’s Commissioner’s report concluded that the impact of the cap will be increased child poverty with associated poor health, educational and other outcomes. The report identified that in order to stay in their homes, parents who cannot or do not find work will have to divert large amounts of their living costs, the non-housing element of universal credit plus child benefit, to make up the shortfall. This will have obvious consequences for children’s well-being. For those who cannot bridge the loss of housing benefit, the loss of the family home will be severe. Local authorities may well have an obligation to rehouse but this may be in temporary accommodation and may require a move to cheaper areas, if they exist. As 70 per cent of those affected by the cap already live in social housing—that percentage may have been updated by today’s impact assessment—cheaper housing may not exist. Evicting families from such accommodation only to rehouse them in more expensive private sector or temporary accommodation would only add cost for local authorities.

The impact of such moves on families is traumatic, especially for children. We know that children from homeless and transient families are more likely to go missing from education. Uprooting families from support networks, friends and communities can have a severe impact on the emotional and physical well-being of parents and children, and for vulnerable people especially so.

There are a number of ways in which these dire consequences might be addressed and subsequent amendments cover a series of possible ameliorations. This amendment supports the amendment separately tabled by the noble Lord, Lord Best, concerning those owed a duty to be provided with interim or temporary accommodation as part of the homeless safety net. The amendment refers only to English legislation and I was advised today that it should also be extended to Scotland. We might bear that in mind for later stages. As the noble Lord explained in Committee, temporary accommodation tends to be more expensive than mainstream housing and local authorities will struggle to obtain suitable accommodation for homeless families. Our amendment goes further and seeks exemption from the cap for those accepted as homeless and in priority need and those threatened because of the cap with becoming homeless. This raises points of detail that would have to be settled in regulations.

If the cap was introduced, households for which a homeless duty has been assumed and which are in temporary accommodation face a shortfall in rent as well as council tax. Local authorities must either cover the shortfall from the general fund or secure alternative temporary accommodation elsewhere within the monetary limits. However, it takes a long time to procure temporary accommodation and some local authorities will be in longish contracts with owners. They will need a long transition and so it may not be possible. Any family in private accommodation entered into prior to the introduction of the household benefit cap that falls into arrears and is in priority need and threatened with homelessness will be able to apply as homeless to the local authority which can then discharge its duty into alternative private accommodation affordable for the family. In many areas there are already insufficient private rented homes that are affordable to people on the local housing allowance. But this does not relieve the local authority of its duty.

Any family with a secure assured tenancy and facing a shortfall—whether it is a council or housing association property—would in theory be able to ask the local authority to secure them affordable accommodation if they are threatened with homelessness due to arrears. However, as all local authorities have their own allocations procedure this would inevitably mean tenants in secure social housing exchanging these tenancies for assured shorthold private tenancies in cheaper parts of the country, again if they can be obtained. If not, the local authority will have to fund the shortfall.

What would be the effect of our amendment? It would relieve the pressure on local authorities currently housing homeless families which would face the cost of the shortfall in rent if there was no suitable cheaper alternative. It would avoid costs being transferred to the general fund, potentially costing some hard-pressed councils millions of pounds. It would stop some individuals and families being uprooted from their communities. This protection would apply not only to households with children but to vulnerable individuals; for example, those with mental health conditions, disabled people and people fleeing from domestic violence. It would not stop increased homelessness and migration within the UK driven by cuts already announced to housing benefits but it could help to stop it getting much worse. It would not facilitate people remaining in lavish up-market properties, so beloved of the press. The pre-cap housing support would be determined on the basis of the changes already being introduced.

The Minister will doubtless put another of his costings on this amendment. When he does, perhaps he will make sure that he includes the actual costs to local authorities in meeting rent shortfalls; the implications for a range of services in supporting the migration across the country which will flow from the cap; and, of course, the costs to landlords and the courts in pursuing evictions. Most of all, will he factor in the human misery that the cap will generate?

There are a range of other amendments suggesting carve outs for the cap, transitional measures and refining the basis of calculation which can sit perfectly well alongside this amendment. If for no other reason, this amendment can provide for those who seek, and have the leverage to encourage, concessions from the Government, but its primary purpose is to prevent the slide into further poverty and disadvantage that homelessness can bring and the multiple disadvantages that spring from poor housing to blight lives, particularly those of the young. I beg to move.

[Lord Best]

My Lords, I support the amendment. As we have heard, it would mean that families facing immediate homelessness because of the imposition of the benefit cap would be saved.

A major problem with the cap is that, as well as taking no account of the number of children in a family—a point which a later amendment in the name of the right reverend Prelate the Bishop of Ripon and Leeds and others will seek to address—it takes no account of the level of rent: that is, it takes no account of how much of the benefits within a £500 cap must go to the landlord not the tenant. The £500 cap looks relatively high in areas where housing costs are low. In Committee, I quoted £85 per week rent for a council house in the north-east or south Wales, leaving a headroom of £415 per week for benefits to cover all other expenditure. Indeed, the average cost of housing—the £500 is all about comparisons with average earnings—is some £87.50 per week. However, the same cap applies in all areas, including London and the south-east of England, where housing costs are much higher. I am not talking about the extreme cases of refugee families with 10 children living in Hampstead. A rent for a not very salubrious private sector flat in the east end of London can be £350 a week. A £500 cap will plunge a family with three children living there into poverty, with only, in this example, £150 per week left for food, clothing, ever rising fuel bills and the rest, instead of more than £300 as at present. It is not their fault that rents are so high in much of southern England, but clearly the family will have to move out if the application of the cap is not moderated as by this amendment.

However, it is very uncertain where those made homeless can be moved to. The logistics for local authorities of moving large numbers of families to cheaper areas will be extremely complex and expensive. Finding new homes for them, even in a much lower cost area, will not be easy. Most private landlords prefer not to take on tenants on housing benefit and local housing allowance, particularly those not known in the locality, not least because benefit is now seldom paid direct to the landlord. No one wants to send families to so-called benefit ghettos with the lowest quality housing which is bound to undermine the hopes, aspirations and life chances of those sent there. It should be remembered that the new benefits cap is in addition to the caps on rents in high-priced areas which have already been introduced and are now beginning to bite, as existing tenancies come to an end. Regrettably, we are just beginning to see a return to the use of expensive but seedy bed-and-breakfast hotels as the numbers of homeless families rise. The new cap will considerably compound the problem.

This morning on the radio I heard the Secretary of State, Iain Duncan Smith, suggesting that the definition of homelessness was that children would have to share a bedroom. That is a confusion with an earlier amendment which found favour with your Lordships concerning the underoccupation penalty—the so-called bedroom tax—which was not about homelessness at all. Families are deemed to be homeless if the local authority deems that unintentionally they have no place to go. That can happen if they can no longer pay the rent where they are because their benefits are cut drastically. The council is then required to step in to find them somewhere to live. Amendment 58D would avoid that miserable and expensive outcome for thousands of families and tens of thousands of children who will otherwise have to leave their current homes. Two later amendments in my name address two of the most extreme aspects of the imposition of the new cap. At this point, I am pleased to support Amendment 58D.

Welfare Reform Bill

Debate between Lord McKenzie of Luton and Lord Best

Monday 21st November 2011 Grand Committee

[Lord McKenzie of Luton]

My Lords, I think that the noble Lord, Lord Best, wishes to speak.

[Lord Best]

My Lords, in speaking to Amendment 99AC in this group, I am very grateful to Shelter, Homeless Link and the National Housing Federation, which have formulated a series of amendments here and given invaluable advice to all of us.

It turns out that the new benefit cap is really about two factors: children and housing. As was so clearly demonstrated by the noble Baroness, Lady Tyler, and the right reverend Prelate, because the cap is not adjusted to take account of the number of children in a family, larger families will be hardest hit. The other factor for which no allowance is made in the crude calculation of the benefit cap is housing costs. No account is taken of the fact that families in otherwise identical circumstances have to pay very different amounts for their housing, not out of choice but because of where they live, what type of landlord they have and the size of home that their family requires.

Rents are far higher in some areas than in others. In London and the south-east, rents may be four times the levels in the cheaper areas of the north of England or, say, south Wales. If the accommodation is in the private rented sector, again rents can be several times higher than in the social, council or housing association sector. Of course, accommodation costs will be higher if you have a larger family. Heaven help you if you have, say, three children—let alone four, as in my own family—and you are in the private rented sector and you live in the southern half of England. If you cannot find a job, you are probably going to have to move, most likely to a cheaper area where, unfortunately, employment prospects are likely to be even worse, or you will face homelessness.

The cap is very much about housing, and the way that it is applied relates directly to housing costs. Where a family’s entitlement to benefits exceeds the cap, the cut to their state support is to be achieved, in the first instance, by cutting their housing benefit. The DWP calculates that some 50,000 households will be affected. On average, they will lose £93 per week from the amount that they can contribute towards their rent. This shortfall, which cannot possibly be covered by cutting back on food, clothing, heating and so on, rises to a colossal £150 per week for some 7,500 families. The cap also raises the prospect that some families who will have to move in 2012, because of caps on housing benefit and local housing allowance already announced, will be hit again and uprooted for a second time when this overall cap reaches them in 2013.

Amendment 99AC in my name seeks to address this fundamental flaw in the proposal for a benefit cap by excluding the housing benefit component from it. This would not save all those affected since the largest families will be left with virtually nothing with which to pay their rents if they are not to fall below the poverty line. However, it recognises the extreme consequences, even for those in smaller households, of having to pay today’s market rents in so many areas. Removing the housing benefit element from the cap would greatly moderate its effect upon already very poor households.

The DWP itself points out in its impact assessment that households are very likely to go into rent arrears, which means landlords and the courts incurring the expense and effort of evictions, and local authorities facing the increased cost of handling homelessness. Shelter research shows that out-of-work families with just two children will face a shortfall in what they receive for their rent in the private rented sector in all inner London boroughs and many outer London boroughs, from Hounslow to Haringey to Newham. Those with three children will face this problem in every London borough and in 82 per cent of all local authorities throughout the south-east of England.

I may be pre-empting the Minister’s response but the problem would be solved if private landlords and housing associations charging the highest rents were to cut dramatically the rents of their tenants receiving housing benefit or local housing allowance. However, we should remember that housing benefit and local housing allowance are being cut and capped in several other ways, including through the high rent caps and the restriction to the lowest 30 per cent of rents. Therefore, in total, some pretty hefty rent reductions will be necessary. I fear that there is simply no chance of private landlords, who now have lots of new customers because so few younger households can afford to buy, slashing rents to accommodate the extra cap. Rather, Amendment 99AC seeks to remove much of this problem by taking housing benefits out of the equation.

In the next set of amendments, I will look at some of the ways in which the problem might be mitigated. However, this overarching amendment seeks to remove from the problem of a simple, overarching benefit cap the housing costs that make such a big difference to who is and who is not affected by the new overall cap.

Localism Bill

Debate between Lord McKenzie of Luton and Lord Best

Monday 31st October 2011 Lords Chamber

[Lord McKenzie of Luton]

My Lords, as the noble Lord, Lord Greaves, has spotted, we have an amendment in this group which may be familiar to him. Frankly, particularly following the debate last week, we were concerned that something was not going to get on to the agenda for tonight, so we reached for a handy amendment and this one came within our view. We tabled it to make sure that we had a last opportunity to address issues concerning sustainable development.

I am comforted by what the noble Lord, Lord Greaves, has just said if it is his understanding that the Government’s intent is consistent with the contents of his amendment. We accept that definitions are not going to be included in the Bill but I hope that at least we shall be able to get very strong assurances that there will be full definitions in the NPPF. However, again I accept that the state of the consultation and what now has to happen will mean that the noble Baroness cannot be as fulsome as she would perhaps wish to be.

Notwithstanding that, I should like to hear from the Government more precisely where they stand on sustainable development. We have had assertions in the past that Brundtland and the 2005 strategy still hold sway, yet some of the wording in the draft NPPF document seems to countermand and undermine that. Therefore, when the noble Baroness responds, can she tell us whether it was the Government’s intent to change the balance of that 2005 Brundtland sustainable development approach or whether it was just due to inconsistencies and lack of clarity in the wording? If the consultation took the Government in a direction of supporting more growth at the expense of other pillars of the approach, is that something that they would resist? Where is their core on this? Is it Brundtland in 2005 and is the issue making sure that that is comprehensively dealt with in a consistent and coherent manner in the NPPF, or is it open for change? If it is open for change, what is the Government’s view on what the direction of that change should be? It will be interesting to hear what the Minister can say on that.

[Lord Best]

My Lords, perhaps it would be valuable to noble Lords to hear the views of the Local Government Association. I declare my interest as its president. The LGA believes that sustainable development can only be defined locally. Indeed, sustainable development makes sense only at a local level, as set out in the definition of sustainable development at the beginning of the national planning policy framework. There must be a balance between economic, environmental and social issues and locally elected councillors must have the flexibility to make the necessary trade-offs locally. In relation to guidance from central Government, the LGA maintains that the NPPF should make clear that it will be for the local plan to set out what sustainable development means for the local area and for the development that it will require.

Localism Bill

Debate between Lord McKenzie of Luton and Lord Best

Monday 17th October 2011 Lords Chamber

[Lord Best]

My Lords, I think the government amendment does something helpful. Councillors on planning committees have to face the accusation, if they are not careful, that they are selling planning consents, that they are just doing it for the money. There is ambivalence as to whether they can take on board the fact that it is surely important to consider that the local community may benefit financially from what happens if the development goes ahead.

The Minister has clarified the circumstances in which it is entirely legitimate for the planning committee to say, “Yes, we have taken on board the fact that there are financial gains for the locality as a result of this. It is not the only thing we take into account. It has no greater weight than the other material considerations. The fact that local people are going to benefit from this”—as the noble Earl made so clear—“can be taken into account, but don’t let anybody accuse us, the planning committee, of just doing it for the money. We’re doing something that is legitimate”, as this clause makes clear. I think it can be quite helpful.

[Lord McKenzie of Luton]

My Lords, I speak in support of Amendment 223D to leave out Clause 130 and in support of the noble Baronesses, Lady Parminter and Lady Hamwee, my noble friend Lord Howarth and the noble Lord, Lord Greaves. To argue that these amendments are unnecessary and that this clause is necessary because it addresses the issue of confusion seems to be turning the matter on its head. We know there is confusion because the clause exists. The noble Baroness, Lady Parminter, said that it takes something to get the CPRE, the TCPA and the RTPI in the same position and all very concerned about this. They do not arrive at spurious conclusions. They have impressed on us and all noble Lords their real concerns about the impact of these provisions.

The noble Lord, Lord Best, said that the provision helps councillors understand what they can and cannot do. The Government’s basic proposition in this is that the clause does not change the law. If the clause does not change the law, why have it? The proposition that noble Lords, particularly the noble Lord, Lord Greaves, referred to—that it does no harm—is an extremely spurious basis on which to legislate, particularly in such an important area. I accept that the Minister made some effort to differentiate situations where material considerations—local financial considerations—can legitimately be taken into account from those where they cannot, but that analysis does not depend upon the clause and the amendments before us but upon the law as it currently is. Are we not much better off leaving the law as it currently is rather than introducing something that does not, with great respect, clarify matters but adds to the confusion?

The very existence of the clause, amended or not, has caused great controversy. What changes the existing position? How does the new homes bonus or CIL change, from the Government’s point of view, and to what extent can it be taken into account as a material consideration? As I understand it from the Minister, nothing changes. All it does is describe the law as it is. If that description is the cause of confusion and uncertainty, surely we are better off without it. It seems a very straightforward proposition. It seems to me that the onus should be on those seeking to introduce and sustain the clause as amended to explain why. To say that it does no harm is a totally inadequate justification for a provision that is causing great consternation among many people involved in planning, who are experts and who have been in the field for a very long time. I urge the Government to reconsider this matter. If the only justification for the clause is that it will help to deal with uncertainty, I hope the Minister will accept just from the discussion tonight that in many quarters it clearly does not and that we are better off without it.

Localism Bill

Debate between Lord McKenzie of Luton and Lord Best

Wednesday 7th September 2011 Lords Chamber

[Lord Best]

My Lords, this amendment is about community land trusts and enfranchisement. Community land trusts acquire land from benevolent landowners or public bodies with a social concern free of charge or at a much reduced price. They then build homes for renting and shared ownership using the cheap or free land as the subsidy that makes the homes affordable. This means that they can keep the homes as affordable to those on modest incomes for present and future generations. They are very local, although they may use a housing association to help them; they work with the planners, the parish council, the landowner and volunteers. Very often they are self-help organisations in which future residents play a major part.

The community land trusts are real big society stuff. However, they have a problem in relation to the Leasehold Reform Act 1967, which entitles the occupier to acquire the freehold and remove thereby the opportunity for others in future to benefit from the initial gift or concession on the land price. Similarly, the right to acquire under the Housing and Regeneration Act 2008 can remove the property from its original purpose. This amendment seeks to protect the homes built through community land trusts from legislation that can undermine the whole basis on which they are set up to operate. It is not a denial of rights of tenants or shared owners, because those moving in are very willingly, indeed enthusiastically, signing up to getting homes that they could not otherwise afford. They do so in the full knowledge that they will benefit from the excellent accommodation, but any capital gains that they might make will not include the appreciation of the land value.

The community land trust approach, which is being used in east London as part of the Olympic legacy measures, as well as in rural areas, where benevolent landlords are making land available on highly beneficial terms, deserves our support. Removal of the enfranchisement arrangements, which were never intended to cover circumstances of this kind, seems essential to secure their future. Homes developed under the community right to build, of which I am also very supportive, will have the benefit of an exemption from the leasehold enfranchisement arrangements. This amendment would give the same exemption to community land trusts. I understand that the National CLT Network Board, which seeks to promote local community land trusts, has been advised that the local projects could convert into community right to build organisations, which would solve their enfranchisement problem. The community right to build schemes require a majority of the governing body to be local residents. This might not be an insuperable problem for a community land trust, as they are often extremely local, but the community right to build route requires that the project must eventually go to a referendum before proceeding, even if the parish council and planning authority and everyone else is very happy with it. That can be very worrying for landowners, local volunteers, prospective residents and lenders to the project. It means uncertainty, delay and possible local conflict. It would seem far simpler, less bureaucratic and more likely to encourage gifts of land and engage those big society volunteers locally if community land trusts could be taken out of the enfranchisement legislation, as this amendment proposes.

I know that Ministers are supportive of the community land trust approach and I assure them that acceptance of an amendment along these lines would be enormously important and greatly appreciated by all the supporters of this excellent way of creating affordable housing and guaranteeing its affordability in perpetuity. I beg to move.

[Lord McKenzie of Luton]

My Lords, I thank the noble Lord, Lord Best, for introducing this amendment and for his description of the Community Land Trusts approach. We have a good deal of sympathy with the thrust of this because we have seen the benefit of the Government’s reply to the amendment in the document they issued in August. Of course, this was one of the amendments that was withdrawn at the last stages of Committee.

As we have heard, these powers seek to replicate provisions already in the Bill relating to community right to build orders. The amendment seeks to remove enfranchisement rights in respect of dwellings owned by CLTs, and enfranchisement rights give leaseholders the right to acquire freeholds in certain circumstances—legislation, as the noble Lord referred to, that was started by the Leasehold Reform Act 1967, but I think those opportunities have been greatly extended since.

As I understand it, the gist of the Government’s position appears to be that CLTs do not necessarily have the same level of community engagement as bodies do under the community right to build provisions, which are proposed by the community, supported by the community, subject to a community referendum. However, where the CLT does satisfy the level of community engagement, it will be able to apply for a community right to build order and thereby obtain the benefit of disapplication of enfranchisement rights. But I am bound say, therefore, that I am not sure why, where there are circumstances that permit this, they could not be described in the prescribed circumstances that the noble Lord is seeking in his amendment. Proposed subsection (1) says,

“regulations may make provisions for securing that in prescribed circumstances, an enfranchisement right”—

et cetera. So why could what the noble Lord describes not be encompassed in that way?

I think that the noble Lord makes a good point about referendums in relation to community right to build orders. In circumstances where there is clearly a very high degree of support for a project, why indeed put the project through the process, cost and challenges that this entails? It does appear that one way or another there is a route to the result that the noble Lord is seeking, which is all well and good, and I agree that we should not be seeking to remove enfranchisement rights lightly—these are important rights. I think that he has described fully why they should be removed in these sorts of circumstances.

I therefore support the thrust of the noble Lord’s amendment. I believe that they should not be forced through the community right to build process just to achieve the outcome here and that it could be dealt with by regulations that, as his amendment suggests, fully cover the situation.

Localism Bill

Debate between Lord McKenzie of Luton and Lord Best

Wednesday 7th September 2011 Lords Chamber

[Lord Best]

I am very grateful to the Minister for what he has just said. There has been a problem here, but it sounds as though it is well on the way to resolution. I am very happy not to move Amendment 64.

[Lord McKenzie of Luton]

We are grateful to the Government for responding to the earlier amendment. I acknowledge that the noble Lord, Lord Best, will not move his amendment, but are classes 4 and 5 specified in that amendment classes that the Government would support and take forward under the process that they have set down?

Amendment 63 refers to,

“modifying or removing a permitted class added by order under this subsection”.

Do the Government have anything in mind concerning modifying or removing a particular class?

Localism Bill

Debate between Lord McKenzie of Luton and Lord Best

Monday 5th September 2011 Lords Chamber

[Lord Best]

My Lords, the amendments of the noble Lord, Lord Whitty, would leave out a whole series of clauses that relate to the housing revenue account. I have added my name to Amendment 46, which would leave out just one of those clauses. That implies that I am happy with the others, as indeed I am.

The housing revenue account is regarded in local government circles as well past its sell-by date and there is general acclaim for its abolition. It is a significant aspect of the localism agenda that financial responsibility for council housing is to be put back into the hands of councils. In place of pooled debt and pooled rents, each council involved will henceforth assume direct responsibility for housing debt according to its ability to repay it, and it will keep all the income from rents for managing and maintaining its own council stock. Efficiency gains on its rented account will go back into improved housing provision. These are helpful reforms, but they stop well short of giving councils the full financial independence that could enable proper asset management of their housing resources and harness significant prudential investment in new homes. These freedoms are enjoyed by even the smallest housing association.

Amendment 46, in leaving out Clause 158, would remove the restriction on councils that want to borrow prudentially—knowing that they can repay what they borrow—for housing purposes. When councils move to a self-financing regime with the housing revenue account buyout on 1 April 2012, they will face new restrictions on borrowing for housing purposes—a new capping regime—despite the continued presence of the prudential code that has operated perfectly well since 2003. The chairman of the Local Government Group points out that it has demonstrated on many occasions that councils have a strong record of sound financial management and manage borrowing responsibly in accordance with the prudential code. He says that local government’s view is that these rules to which it adheres provide sufficient protection that councils will undertake only borrowing that is affordable, and that imposing a cap on councils’ ability to borrow for affordable housing will severely restrict their ability to invest in an increased number of affordable homes, which government wants to see. Paradoxically, housing associations are being encouraged at exactly the same time to borrow a lot more to replace the shortfall resulting from smaller grants. A lot of housing associations are borrowing more, but not councils, which must accord with the new cap. The Local Government Group says that it hopes that if government will not remove the new cap, Ministers will at least consider committing that local government will be properly consulted in determining the level at which the cap is to be set for each authority to allow some crucial further investment on a sustainable basis. I support the removal of the clause as proposed by Amendment 46.

[Lord McKenzie of Luton]

My Lords, I suppose that there are not many people who like to collect together at this hour to discuss local housing finance, but it falls to us to do it. We understand that the amendment of my noble friend Lord Whitty is probing in nature to try to gain an understanding of where the Government currently stand on this issue. If I have to be fair to the Government—I try not to be—I think that they have been quite active in putting out consultations; there is one due in November if my understanding about the final figures which will be debated with local government is correct. Of course, they have built on the prospectus that was issued in March last year under the previous Government.

As with the noble Lord, Lord Best, we support the thrust of most of these clauses except for Clause 158. They provide the framework for the self-financing scheme for local authority housing stock which will replace the existing housing revenue account subsidy system. As noble Lords have recognised, the current subsidy system is based on a range of assumptions about local authority housing stock, covering rental income, maintenance and management costs, costs of service in debt and of major repairs. An authority will either receive a subsidy from the notional calculation if it was in deficit or pay to the Exchequer amounts when the calculation showed a surplus.

When the current subsidy system started, no local authority was in surplus but, as I understand it, by 2008-09 the system overall had tipped into surplus with the aggregate of amounts paid to the Exchequer exceeding the aggregate of subsidy payments. The reforms reflected in these clauses were initiated by the last Labour Government. As my noble friend recognised, the current system had become a source of discontent for a variety of reasons, particularly because it is complex and lacks transparency, with changes from year to year making it difficult to plan effectively over the long term. We believe it is right to change that, which is why we support the thrust of these amendments.

The reform consulted on by the previous Government involved a devolved, self-financing system where there is no redistribution of revenues in return for a one-off allocation of debt to local authorities. This allocation would be based on each authority’s ability to service the debt and maintain its housing stock. In essence, this represents a deal between central government and local authorities. In return for allocating excess debts to local authorities, the latter will obtain greater spending power over the long term through retention of future rent increases. It represents a transfer of risk from the Government to local authorities.

My noble friend Lord Whitty will doubtless recall that the proposition for a self-financing regime proposed by the then Housing Minister, John Healey, included the one-off distribution and allocation of housing debt. All rents and receipts from the sales of housing and land in the HRA were to be obtained by the local authorities, with rental income to be based on current rental policy—that is, convergence with standard housing association rents by 2015-16. The housing stock would be valued using the 7 per cent discount rate. The latter component in particular—the 7 per cent discount—would have given local authorities headroom to be able to fund 10,000 new council homes each year.

Noble Lords will be aware that the principle of moving to a self-financing regime was overwhelmingly supported by local authorities. As these clauses make clear, the coalition Government are proceeding with the self-financing option and the basic method of debt allocation is to be as set out in the March 2010 prospectus—that is as I understand it but the Minister will tell me if I am wrong.

However, there are some differences and some major concerns, which are reflected in subsequent amendments. In particular, the discount rate to be used is 6.5 per cent not 7 per cent. This may seem a small difference but the effect is for central government to be some £1.2 million to the good and to remove much of the headroom that would have been in the system for building additional council housing. As the noble Lord, Lord Best, has said, the plan to cap the overall borrowing of each authority at a level linked to opening debt runs contrary to the spirit of localism and the self-financing concept.

We would argue that central government already have powers under the Local Government Act 2003. I should be grateful if the Minister could specifically deal with this. Section 3 of that Act talks about a local authority determining and keeping under review how much money it can afford to borrow. Section 4 gives the Secretary of State, by regulations for national, economic reasons, power to set limits in relation to the borrowing of money by local authorities. If that is on the statute book already, we do not need Clause 158. I agree with my noble friend and with the noble Lord, Lord Best, that that should not stand part of the Bill.

As for rents, retaining the approach of convergence with RSLs by 2015 is all very well, but the impact of changes to housing benefit, the urban benefit cap, the non-dependant reductions upratings and the 2013 room- size criteria for the working-age tenants create additional uncertainty and risk. Reversal of the plans for local authorities to retain all the receipts from right to buy should not be accepted, and we will debate that shortly.

Although my noble friend is right to challenge these provisions, we consider that it is right for the self-financing regime to proceed. However, as ever, the devil is in the detail and we look forward to an update from the Minister.