Housing: Availability and Affordability

Lord Shipley Excerpts

Thursday 12th October 2017 Lords Chamber

[Lord Shipley (LD)]

My Lords, I remind the House of my vice-presidency of the Local Government Association. I thank the noble Lord, Lord Smith of Leigh, for enabling us to have this debate. It has proved to be extremely important: it could serve as a compendium for the Government of both what is wrong with housing in this country and what they should do about it.

From these Benches, my noble friend Lord Greaves reminded us that the Government have promised to build more homes but their policies have not delivered them. He also emphasised the need for greater local flexibility. He said, rightly, that the planning system is not to blame because nearly all planning applications are approved, with several hundred thousand unfulfilled permissions as we speak. He also reminded us that neighbourhood plans can build more houses than is the case with top-down planning.

My noble friend Lord Stunell reminded us that the Government want to build more homes, and I agree that they do, but he pointed out the obvious problem, which is that there is a ceiling on the number of private homes that a private builder will build without a subsidy. He also reminded us that planning is not a bottleneck, and he emphasised the importance of building on smaller sites because you build more quickly. He then asked how we build the extra homes. He said that to deliver a steady, consistent investment, we require local authorities to build more and that they can produce best value for money. He too pointed out the impact of Help to Buy on rising prices.

My noble friend Lord Stoneham of Droxford talked about the value and potential of housing associations, but he pointed out their need for certainty and continuity of policy. He raised the question of policies on rents—subsidy levels, the impact of rent levels on the ability to build more new homes and the impact of rent levels on those of modest means. He also reminded us of the problems caused by the business model of private housebuilders and the need for us to focus on and promote public/private partnerships. He too raised questions about Help to Buy.

My noble friend Lady Grender reminded us of the scourge of homelessness. She too, in the hours before the Prime Minister’s speech, experienced that burst of optimism that the Government were going to build council housing at a level not seen for a generation. However, that shows no sign of being fulfilled. She asked the Minister whether the Government would ever get to the situation where it replaced sold council houses on a one-for-one basis.

The last 20 years have seen 15 Housing Ministers and over 100 Bills affecting housing policy. Despite all that effort, we have built 100,000 homes too few every year for those 20 years. The Government admit that we have a broken housing market. In recent years, public investment in housebuilding has declined by half, when housing benefit costs have almost doubled because of the shortage of homes and rising rents. The Government need to build more homes that people can afford to live in—that should be the Government’s strategic aim.

Surely it was foreseeable that, unless action was taken to build more social homes for rent, rents, homelessness and government costs would rise. We have ended up in a situation where 20% of households in this country are in private rented accommodation. The total has risen by 1 million households in the last 10 years. The Government are still not getting to the root of the problems of housing supply, and that is because they promote owner-occupation to the exclusion of building enough homes for affordable and social rent. As an example of the problems that this causes, since 2015 the Government have overseen the sell-off of over 25,000 council homes, replacing just one in three of them.

In March this year, the Chartered Institute of Housing said:

“The government’s ambition to solve the housing crisis will not be possible if an imbalance in housing funding continues”.


The institute pointed out that just £8 billion of the £51 billion earmarked for housing up to 2021 will directly fund affordable homes. The consequences of that policy are clear.

As we have heard, there is some evidence that the Government are responding in aspirational terms to building more homes generally. They now accept that there is a housing need amounting to 266,000 homes a year for the next 10 years. My question to the Minister is: do the Government have an action plan that will deliver those homes?

The Prime Minister’s announcement at the Conservative Party conference that the Government would put in an additional £2 billion for affordable and social housing sounded better than it has proved to be. It is just one-fifth of the extra subsidy going into Help to Buy and from it we will apparently secure only an extra 5,000 homes for social rent a year. That is a very small number, which is described as “a start”, but we have known about this problem for some considerable time and we should not be in the position where we are still trying to start.

There is a value to be addressed here. I feel very strongly that someone on the living wage should be able to afford to live reasonably close to where they work. Many are not able to do so because of the cost of housing. If this is not addressed, things will only get worse. I suspect that the Government’s announcement and their Green Paper will not do much to build the volume of social homes for rent that are needed. The Government acknowledge that there is a problem but it is very hard to see how the announcement by the Prime Minister will deliver a long-term solution to the unaffordability of housing for those on low household incomes. Social housing units now stand at 4 million, whereas there were 5.5 million just over 30 years ago. Successive Governments have not replaced homes sold under right to buy. I think that we are reaching the point where local housing authorities should have the right to decide whether homes in their area are sold.

As we know, home ownership is at an all-time low. For young people under 35, over the past 15 years it has dropped from 58% to 37%. That is a huge decline which cannot be allowed to continue. We have already heard the comment that I am about to make but I agree entirely that housing needs Cabinet-level representation—it needs a higher focus in Whitehall.

In addition, housing associations and councils must be seen as part of the solution, with sustainable long-term financial frameworks for councils to build more new homes, including for supported housing, through borrowing to build against their assets. I particularly appreciated the contribution of the noble Lord, Lord Horam, who identified a blockage in the Treasury on this issue.

I think that we have to redefine the meaning of “affordable”. The noble Baroness, Lady Donaghy, explained the problem. Maybe it means about 30% or less of household income. We have heard about viability assessments not being public, and that is something that the Government have to look at. The Government too have to change the rules to ensure that public land disposal enables new homes to be built. We should not require public bodies to sell at best consideration, something that the White Paper promised. We should instead be using social return as a basis for decision-making, as well as financial return.

This debate is all about availability and affordability, and has turned into a challenge to Treasury orthodoxy. It has been a very good debate, but as we speak, homelessness continues to rise and more than a million households are awaiting a social home to rent. That is an unacceptable situation.