Budget Statement

Lord Shipley Excerpts

Monday 4th December 2017 Lords Chamber

[Lord Shipley (LD)]

My Lords, I remind the House that I am a vice-president of the Local Government Association.

The advance publicity for the Budget suggested that housing would be at the centre of it, but I agree with the noble Lord, Lord Ryder of Wensum, that it was timid in this respect and that measures in it would not address the “flawed supply pipeline” that he referred to. I agree, too, with the noble Lord, Lord Horam, that the Government need to intervene directly over publicly owned land and use its value to build more homes that are affordable for people to live in.

The Chancellor referred to the housing market as a “challenge”. A few months ago, it was described as “broken” in the housing White Paper. Since publication of that White Paper, very little has happened to address two crucial problems: first, an inadequate supply of new homes in absolute terms; and, secondly, the lack of new social homes for those on low incomes.

The Government know that one solution lies with councils, but councils need greater freedoms to borrow. There has been a cap since 2012 on the amount a local authority can borrow under its housing revenue account. I find it odd that it can be easier for councils to borrow to buy shopping centres and office developments than for them to borrow to build homes. That cannot be right.

The Budget took a step towards some easement of this situation by permitting a lifting of the borrowing cap for some councils. But all councils have waiting lists. It is not possible anyway to build 300,000 homes a year by the mid-2020s unless all councils are empowered to build more affordable and social homes.

Why is the Treasury allocating a sum of £1 billion for additional borrowing by councils by the end of 2021-22 in areas of greatest pressure, because it assumes in so doing that it will spend only 80% of it? Might the Government not do two things: first, allocate 120% of the £1 billion so that they will actually spend the £1 billion; and, secondly, explain why they have not taken the opportunity, following the reclassification of housing association debt from the public to the private sector, to borrow more for social housing by councils? In any case, why is borrowing for council housing a matter of public debt? It is not treated as public debt anywhere else in the European Union, so why does the Treasury continue to claim that it must be treated as part of public debt?

I fear that the Budget will not deliver the boost to housebuilding required. Abolition of stamp duty for first-time buyers purchasing homes under £300,000 is obviously good news for individuals, builders or the current owners of a property, but as the Office for Budget Responsibility pointed out, house prices will rise as a consequence. We should just note that the average purchase price of a first home in the UK is £165,000. The reduction in stamp duty is worth £800 of that, of which some will go in higher purchase price.

The Chancellor has set a target of building a net 300,000 homes by the mid-2020s. I agree with the noble Lord, Lord Skidelsky, that the Government could and should reach 300,000 homes a year much earlier. It will not be reached because the levers introduced in the Budget are insufficient to do it. The financial allocation for housing in the Budget is £44 billion, but that is over five years and only a third of it is new money for housing,

There are some positive things in the Budget. It is good to see extra support for small builders to get some 40,000 extra homes built on smaller sites. It is good to see extra resource to increase skills in construction, but it is very small beer in the face of Brexit—if Brexit happens—because of the loss of EU skilled workers. The Letwin review of land-banking is welcome, just so long as it does something to reduce the scale of the problem of land-banking by large builders. Big housebuilders need to realise that they are seen by the general public as hoarding land for reasons of managing supply and keeping prices higher than they need to be. The buildout of their planning permissions is too slow and something needs to be done about it. Let us hope that the Letwin review is speedy and comes up with conclusions that ease the problem.

It is right to permit local authorities to charge a 100% council tax levy on empty homes after two years, rather than 50%. In some places where homes are left empty deliberately as investment properties, they should be taxed more heavily. I do not see the 100% after two years as the end of the issue.

It was good to see the extension to the home building fund, the doubling of the housing infrastructure fund and the extra funding for urban regeneration schemes, but in absolute terms the total sums of money involved are not that great.

The difficulty is this: what the Chancellor has proposed in the Budget does not address the central problem, which is the lack of supply of new housing. Housing cannot be all about owner-occupation. The number of affordable social homes is too low and their supply needs to be increased. In that respect, will the Minister tell the House when the Communities Secretary will say more about the housing elements of the Budget promised by the Chancellor? Secondly, when will the much trailed Green Paper on social housing be published?