Housing (Built Environment Committee Report)

Lord Stunell Excerpts

Tuesday 8th November 2022 Lords Chamber

[Lord Stunell (LD)]

My Lords, I start by declaring my interests as an honorary president of the National Home Improvement Council and an honorary fellow of the Institution of Civil Engineers. For the purposes of this debate, I also declare that I am a mortgage-free owner-occupier, and that my wife and I have a leasehold flat in London. I am part of the housing-privileged, as are nearly all the opinion-formers in this building. We would do well to remember, when we talk about the housing crisis and housing issues, that our own perspectives may perhaps be limiting our understanding of just how traumatic and difficult it is for many people. In that light, I believe that this report is a very clear-headed and well-evidenced document that, as a committee member, I am very ready to endorse.

I will not review the speeches made by the 13 contributors so far, particularly as nine of us have been on the committee and we have probably spoken quite enough to each other about this already. I will go straight to the Government’s response to the report, which I have described elsewhere as being half-hearted—although I have to say that there have been three different Governments to choose from, and goodness knows exactly how the industry is supposed to plan when housing targets are yo-yoing all over the place. This year started off with 300,000 as the Government’s target, which was subsequently dismissed by the next Government as being Stalinist. As I understand it, the target was reinstated by the following Government to be 300,000 again—and we are of course waiting to see what happens on 17 November. In fact, with current policies, never mind the current economic situation, 300,000 is not so much Stalinist as fantasist.

We have had four Housing Ministers this year since our report was published. Is it any wonder that housing completions are falling, house price inflation is outrunning actual inflation, as it has been for over a decade, and, as the report makes clear, the balance between supply and demand for both social homes and homes in the private rented sector is totally out of kilter? At the very bottom end of the market, homelessness and sofa surfing are rapidly rising trends.

What are the solutions and how close are the new ministerial team to applying them? Noble Lords in their contributions so far have made it clear what some of those questions and some of those answers are. I will take just a quick look at local planning and ask the Government to say what they believe the locus of decision-making should be. Should it be decided in Whitehall, in the town hall, or in the local community? The committee, four Ministers ago, got a very clear answer that that Government and that Housing Minister believed that the decision should be based in the local community, who gave a great uptick to the idea of neighbourhood plans, which have been succeeding in many parts of the country. Will the Minister tell noble Lords what the current policy is on where planning should be and what it should be delivering?

I want to draw attention to one statistic which has not come into the debate today, which is that there are over 600,000 unused planning permissions for homes already in existence. The reality is that housebuilders build houses to sell. Most years they can sell 100,000 to 150,000 homes. If the Government want more homes built, they have to bribe or pay for those homes to be built. The report in front of noble Lords found that Help to Buy certainly provided the bribe okay, but there was very little evidence that, as a result, more homes were built using that money. Instead, housebuilders still sold 150,000 homes, but they cost a lot more.

Perhaps noble Lords will indulge in a thought experiment. Just imagine that there were suddenly no planning restrictions. How many homes would house- builders build each year? The answer is: not more than 150,000, although they would, to some extent, be in different places. Incidentally, it would probably be less than that, as the asset value of their jealously hoarded land banks would collapse and so, probably, would their business.

Ministers have to decide, if they want homes that are beyond the capacity of the private market to absorb, how much they want to pay to get those extra homes. They will certainly get the most homes for their bucks if they put the money into local council housebuilding. I am making the economic argument—a financial, Treasury argument—that if you want those homes, social housing is the way to get them at the lowest cost per house. They will also get those homes with fewer delays and fewer broken bones if they let local communities take control of their planning and stop imposing Whitehall master plans.

However, market failure is not the only barrier to more and better homes built more quickly. There is a major capacity and skills deficit in the industry. I was delighted to hear what the right reverend Prelate the Bishop of Durham had to say about what is happening in Sunderland to try to address part of that. That problem is an accelerating and deepening one, made worse by some of the actions of the biggest housebuilders.

The Halifax produced its running total on house prices, and the average house price in Britain last month was £292,000. That appeared in the newspapers as bad news, because it was a fall from the rise in the previous month, but what they did not report was that it was an 8.6% rise compared with 12 months before. The average house price has risen by £28,000 in 12 months. In London, where the average house price, according to the Halifax, is £551,000, the price has risen by more than £40,000.

According to a publication called Money Matters, the top eight housebuilders made £7 billion profit in the past two years. That includes Barratt, Taylor Wimpey, Redrow, Persimmon, Berkeley and others. They are all in the Home Builders Federation, their trade association. I am not sure whether it is an oligopoly, as the noble Earl, Lord Lytton, said or whether it is a 1960s trade union, but the outcome is pretty much the same: very low standards of work, with many faults and rampant poor workmanship—the situation is so bad that purchasers prefer to buy a 30 year-old house than a new one. If you were selling 30 year-old cars from the forecourt, you would expect them to go for a lower price than the brand new ones, but that is not what we have.

Yet, the HBF, in its report to noble Lords which has already been referenced in this debate, Building Homes in a Changing Business Environment, has a self-serving list of 12 areas of additional costs, for which it pleads that it needs recompense or, better still, delay or abolition of those 12 imposts. If it does not get that, it is quite clear: it will not build as many affordable homes. It threatens to offset the extra costs it alleges will arise against its Section 106 contribution—which, in 2019-20, delivered 51% of affordable homes. It still found space to complain about the loss of Help to Buy, which was fattening its members’ wallets, obviously, despite the committee’s evidence that it was a waste of money as far as getting extra homes was concerned.

So, what were those 12 things? Electric vehicle charging points were one. Upgrading homes to produce better energy performance and biodiversity net gain—matters that the noble Earl, Lord Lytton, referred to—was another. Even the levy to put right Grenfell’s cladding failures was on the developers’ list of unbearable costs that meant that they could build fewer affordable homes.

Housebuilders have inflated margins not just on their sales, with their multi-billion pound profits, but on their cost estimates for the 12 imposts that they are complaining about. I cannot go into those as we do not have the time but nowhere in the HBF’s report to noble Lords is there any hint that not only will purchasers of a new home nowadays expect to have an electric vehicle charging point but that having zero heating bills is a rather good sales pitch just now.

Of course, not a moment’s thought is given to the idea that maybe, just maybe, housebuilders should invest more in producing decent homes and take a dip in their profits. If they did, of course, that would be one important step towards letting SMEs back into the market. They develop smaller sites, develop more quickly, develop to higher standards and are usually more locally accountable.

These are my questions for the Government. First, are the Government committed to building 300,000 homes a year? Secondly, are they willing to accept the logic of the lowest-cost delivery of the homes that the market cannot provide, and to use what money there is after 17 November to invest in social housing? Thirdly, will they resist the HBF’s blackmail and insist on it raising money to pay for Grenfell cladding replacements, higher environmental standards in and around homes, and zero-carbon standards? Fourthly, are the Government ready to work with the whole construction industry to boost skills and capacity, debug the supply chain and support new entrants on to the housebuilding scene? If so, this report will have done its job.