Housing and Planning Bill

Lord Stoneham of Droxford Excerpts

Tuesday 26th January 2016 Lords Chamber

[Lord Stoneham of Droxford (LD)]

My Lords, in the limited time available in this debate, I would like to speak from the perspective of someone who for the past 12 years has been involved in challenging three housing associations to improve their performance and do more for development. I must declare my interest as currently chair of Housing and Care 21. Because of my experience of wanting to challenge organisations to do better, I accept that one should not take a totally negative view of the Government’s challenges to housing associations at this time, although I accept that at times I have been somewhat tested. Every challenge is an opportunity to improve performance and there is great potential in housing associations to build more homes, if only the Government would realise that potential. But that potential depends on a stream of rents, using assets well and creating surpluses so that the funds can be found to do more development.

I have two general questions to ask about the Bill. The first is whether it will help us to build more homes over the next 10 years, which I think is a relevant timescale not least because we do not want to see 1 million homes built by the next general election and then the housing industry going into its normal cyclical downturn, so we are back to the average for housebuilding for the next decade that we have seen in the past decade. The second question that I want to challenge is: is it the type of housing that we want? Is it the quality and balance that we want to meet genuine need?

To deal with balance first, I just cannot believe that the whole emphasis of this housing strategy on private ownership is right. It cannot be right socially to have all your eggs in one basket and it certainly is not right economically, either. We seem to have abandoned the strategy of the previous Government of building rented accommodation through affordable rents. I am quite glad about that because we were told at the time that that was more cost-effective than grants—but I never believed it. Affordable rents merely put pressure, as we predicted, on housing benefit bills. But it is not clear what will happen to funding after 2018. We may have a situation in housing associations where the only development being done is replacing property which has been sold through the right to buy.

There is one huge inconsistency in this Bill, which goes back to the bedroom tax. At the time of the bedroom tax, we were told that 500,000 households were living in accommodation which was too large for them. But to deliver on that policy, we had to provide smaller accommodation that they could move into. I am afraid that this Bill will not answer that at all. So I ask the Minister: what is the implication for the policy on the bedroom tax in five years’ time as this policy is pursued?

Can anybody imagine a more complex funding scheme for the right to buy than the one proposed in this Bill? The Government have persuaded the National Housing Federation to co-operate with right to buy, but I think that we have yet to hear the full voice of councils which are concerned that they will have to sell their expensive properties. As the noble Lord, Lord Kerslake, said, there is a huge discrepancy in funding which has got to be exposed and which we have to be told about. There is a fundamental principle here, which is that areas that have to sell their council housing should be able to use the money in their own area to improve their stock and to build more affordable housing. I do not want to be told that there is not extreme relative deprivation in some of these wealthy areas. I have seen it in council estates in Winchester, and these are the areas which are going to have to sell most of their stock.

Finally, I turn to the issue of what we should do about the cyclical nature of private housing development in this country, which was raised by the noble Lord, Lord Kerslake. What safeguards will the Government put in to protect when the cyclical downturn comes? Because it will; it comes repeatedly. Every five to six years we get a downturn. Tony Pidgley, the chairman of Berkeley Homes, says that he runs his business on the basis that a catastrophe is round the corner—not his catastrophe, just the market. If you put all your eggs in one basket on private ownership, you raise that risk.

All the Government initiatives, including help to buy and starter homes, have the effect of distorting markets and encouraging price rises. Housing associations will be encouraged to develop a new business model of making profit from private home sales to find funds for development, including perhaps some development that could be for social rent—if they can find it. That will be fine when we are riding the housing upturn. We will have people saying, “Great, we can build more”. That will be the rallying cry. But when the downturn comes, as it surely will, housing associations will be very vulnerable when the housing sector hits the buffers. They will not have the experience to deal with the calls in the market. In many areas, particularly where they have gone into shared ownership, they will have gone into the margins of home ownership and the people buying those homes are the most vulnerable in the economic downturn.

So as we go through this Bill, we have to ask what the countercyclical policies are to switch policies to social rent when that happens. Let us remember the words of the noble Lord, Lord Kerslake, who said in his speech that it was the housing associations which kept the housing sector going in the last recession. Housing associations are best at providing homes for rent. They have developed a knowledge of shared ownership, but private sales will be largely a new venture and that is a substantial risk for them. We should respect the skills that they have and build on them to get the most and the best homes built. Taking them out of their comfort zone will provide risks in this very cyclical sector.