Building More Homes (Economic Affairs Committee Report)

Baroness Blackstone Excerpts

Thursday 2nd March 2017 Lords Chamber

[Baroness Blackstone (Lab)]

My Lords, I must declare an interest as I chair the board of Orbit, a large housing association. I want to focus on the supply-side issues that the Select Committee identified as being of crucial importance in rectifying our housing crisis but that have been neglected by successive Governments. I was a member of the committee when we undertook this inquiry. It was a great pleasure, not least because the noble Lord, Lord Forsyth, and I agreed on both the nature of the problems and the solutions—surprising as that may seem.

The spiralling rise in house prices was central to the committee’s concerns. Following nearly 40 years of stability in these prices, they have risen dramatically since the 1970s and particularly fast in recent years. In London, the average price of a house is nearly £500,000 and in the rest of the country £220,000. As my noble friend Lord Hollick said, rents have also increased vastly. Private renters spend 43% of gross income on rent; in London it is 60%. In the past, many couples could save to put down a deposit and buy a house within a decade. Today, many will never be able to do so. Aspirations are dashed and increasing numbers of families live in poor accommodation and in poverty because of its high cost, greatly affecting the quality of their lives.

We are in this mess because for many years we failed to build anything like as many houses as are needed to meet demand. The starkest of statistics is that between 1955 and 1975 local authorities built 2 million homes, but between 1995 and 2015 they built just over 12,000. As other speakers said, including the noble Lord, Lord Forsyth, the private sector completely failed to replace local authority housing construction. Moreover, the three biggest builders have 200,000 plots in short-term land banks and more than a third of new houses granted planning permission between 2010 and 2015 have not yet been built.

The Select Committee set out these shocking statistics which demonstrate that the housing market is not working. The Government have been too slow to acknowledge this and not so long ago came up with policies that were no solution. Indeed, they stoked up demand resulting in further house price increases and made the problem worse. I congratulate the Government on moving away from those policies and for stating categorically in the White Paper that the housing market is broken. I welcome this change of direction.

However, like many commentators, I am sceptical about whether the Government will meet their target of 250,000 new homes. Moreover, it is doubtful whether this target is large enough to deal with the enormous backlog and continuing population growth. As my noble friend Lord Layard said, the committee estimated that at least 300,000 new homes are needed annually for the foreseeable future to stop things getting worse. Why is the Government’s own target quite a lot lower than the committee and independent experts calculate is needed?

As chair of a housing association that is also one of the largest housebuilders in the sector, I am acutely aware of the struggle to find suitable land, which many speakers in the debate referred to. The committee’s report advocates a more aggressive approach to the release of public land. Some government departments and their agencies hoard land for which they have no current use. In their response to the committee’s report, the Government were vague, saying just that they would work harder to release this land. In the White Paper, they are much more specific, mentioning the 160,000 homes they plan to build on public land. Can the Minister tell the House what mechanism the Government propose for monitoring progress in reaching this target and how the release of public land will be co-ordinated across government? Perhaps the great Mr Barwell, who has received so many accolades today, can be asked to take this on, but he needs support from the top to make this happen.

I welcome the fact that the White Paper proposes consultation on allowing local authorities the flexibility to dispose of land to be used for housing,

“at less than best consideration”.

Can the Minister also say what the Government’s plans are to deal with the hoarding planned by land traders? I welcome the Government’s determination to improve the planning process and their decision to consult on much-needed increases in density in areas where demand is high. We lag behind many of our neighbours in Europe in this respect. The £45 million land release fund to help local authorities identify surplus land for housing is welcome, although given the size of the problem I wonder whether this sum will go far enough. The costs of decontamination alone for many brownfield sites are enormous. Can the Minister say how the Government intend to address this?

The White Paper proposes to allow local authorities to increase planning fees by 20%. This, again, reflects a recommendation of the committee. It is right to stipulate that this should be reinvested in planning departments, which have suffered from reductions in skilled staff as a result of a 46% cut in funding between 2010-11 and 2014-15. Housing associations want well-resourced local teams, and they will be willing to pay a little more to achieve this.

I have already referred to the gap between the number of planning permissions granted and the number of homes built. Measures in the White Paper to speed up the delivery of new houses are welcome, but the Government’s failure to accept the Select Committee’s recommendation to levy council tax on those developments not completed within a set time is disappointing. Again, perhaps the Minister could comment on this.

The committee recommended that the National Infrastructure Commission should oversee the release of public land for housing. A number of speakers have referred to this. Perhaps we missed a trick by failing to include a bigger role for the commission in setting the agenda for large-scale housing developments across the country. The £2.3 billion committed in the White Paper to a housing infrastructure fund in areas of greatest social need to help unlock the delivery of new towns and developments of 1,500 homes or more is welcome, but could the Government agree to the commission assessing the infrastructure needs in the interests of speeding up the process and getting more homes built quickly? If these infrastructure issues are not addressed, nothing will happen.

The Government’s obsession with home ownership at the expense of other types of tenure concerned the committee greatly. The White Paper’s new approach, with social and affordable housing and private renting at last on the agenda, is really refreshing. It is vital to improve the housing of those who cannot afford to buy their own homes and to help them escape from poor-quality accommodation provided by private landlords. But to achieve this it is important to make it much easier for local authorities to provide new homes on a much larger scale, as many speakers have pointed out.

I conclude on what I think has been the main theme of the debate. In his White Paper, the Secretary of State trumpets a “bold, radical vision”, but with respect to local authorities’ freedom to build, it fails to be either bold or radical. It does not give councils the borrowing powers they need, nor the right to retain right-to-buy receipts to invest in new affordable homes. It also fails to recognise that interfering in the rents that housing associations can charge damages their capacity to build more affordable homes and to reach the 120,000 target mentioned by the noble Lord, Lord Kerslake. Lenders’ appraisals of risk are affected, as are housing associations’ business plans. Will the Government think again, first, about liberating housing associations in this respect and, secondly, about local authorities’ powers and freedoms to build?

A change of heart would diminish the scepticism of many commentators, which I referred to at the beginning of my speech, about the likelihood that the White Paper targets can be achieved. Only then will we reduce the housing benefit bill and make the progress needed to alleviate the misery of so many people who are suffering because of wholly inadequate housing.