Affordable Housing: Supply

Baroness Swinburne Excerpts

Thursday 25th April 2024 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Swinburne) (Con)]

I thank the noble Viscount, Lord Chandos, for introducing the debate on the topic of more affordable homes. I reassure the noble Lord, Lord Griffiths, and others, that I am not concerned about my personal career, on the basis that I am covering my noble friend Lady Penn’s six-month maternity leave while she spends some time with her newborn son, and therefore I will be leaving this position in September.

I welcome the noble Baroness, Lady Smith of Llanfaes, to your Lordships’ House, and I congratulate her on her maiden speech. Croeso i’r Farwnes Smith o Llanfaes i Dŷ’r Arglwyddi a llongyfarchiadau ar eich araith—that was awful, and my mother will not forgive me for my pronunciation. I thank all other noble Lords who have spoken in this afternoon’s debate. They raised important points, which I hope to address in my response.

We all agree with the need for more affordable, high-quality homes in this country, to meet growing demand. The Government recognise the real pressures facing the housing market right now. As noble Lords, including the noble Lord, Lord Griffiths, and the noble Baroness, Lady Taylor, have said, full-time workers in England expect to spend some eight times their annual earnings buying a home. Private sector rents have also increased by an average of 8% over the last 18 months. We also recognise that housing providers are facing a more challenging financial position. The Government continuously work with their delivery agencies to ensure that the affordable homes programme can still deliver effectively, in the light of this.

All this underscores the need for more homes of all tenures: homes to rent, homes to buy and homes to part-buy. Affordable homes that the average working family can comfortably live in is the ambition that underpins the £11.5 billion affordable homes programme, launched in 2020. This represents a significant investment in affordable housing by the Government, and a clear commitment to deliver tens of thousands of affordable homes, for both sale and rent, throughout the country.

I will briefly outline how, and why, they have been broken down, and how the affordable homes programme in different tenures gives us the results. I start with homes for social rent. We recognise, as do many in this House, that these are the vital homes that we need to build to maintain thriving communities. As was so eloquently stated by numerous noble Lords, homes for social rent are a fundamental part of our housing stock—indeed, they are a lifeline for those who would struggle to secure and maintain a home at market rates. With that in mind, it was right for us to bring social rent homes into the scope of the affordable homes programme, which the Government did in 2018. Since then, we have affirmed our commitment to increase the supply of social rented homes in our levelling up White Paper, while improving the quality of housing across the board, in both the social and private rental sectors. We have also changed the parameters of the affordable homes programme to support this commitment, enabling further increases to the share of social rented homes that we are delivering.

Furthermore, the affordable homes programme is committed to funding a mix of tenures, enabling developers to deliver mixed communities. For that reason, we have kept a commitment to delivering homes for affordable rent as part of the programme. Whereas social rent is calculated using a formula, which takes into account regional earnings, homes for affordable rent is where rent is capped at 80% of the market rate—or lower, in London. This is an important way to support mixed communities with different tenures in new developments. It enables the programme to build more of the affordable homes that this country needs, because they need less subsidy than homes let at social rent.

Although social rent and affordable rent are clearly key elements of our approach, we also support aspiring homeowners to take their first step on the housing ladder. We understand what a difference that increased sense of security can make in all aspects of someone’s life and the lives of their family. That is why home ownership continues to be a fundamental part of the affordable homes programme offer. We will continue to deliver a significant number of homes for shared ownership.

This builds on our record to date of helping hard-working families to buy homes under shared ownership and build real capital in their properties. Between 2010 and 2023, we have delivered 156,800 new shared ownership homes, and our ambition is to build tens of thousands more as the affordable homes programme gathers pace. Since 2010, we have delivered over 696,000 new affordable homes, including over 482,000 affordable homes for rent, of which 172,600 are for social rent. To put this into perspective, the overall number of new homes during this period has been 2.5 million.

Local authorities are a critical part of delivering on the levelling up White Paper commitment to increase the supply of social housing over time. We are empowering them with flexibilities to make locally led decisions that deliver the best possible deal for their communities. In 2022-23, local authorities delivered over 8,900 affordable homes, representing 14% of the overall affordable housing delivery and the highest recorded number of local authority completions since 1991-92. To support continued delivery, in March last year we announced that local authorities will now have access to a new concessionary Public Works Loan Board interest rate for council house building from June this year.

Affordable housing is not delivered just through our affordable homes programme; around half of all delivery each year is through the planning system. As noble Lords will be aware, the Levelling-up and Regeneration Act gives the Government powers to create the new infrastructure levy, which aims to capture even more land value uplift than the current system, continuing our drive to deliver more affordable housing.

I reassure the noble Viscount, Lord Chandos, that the Government are committed to the delivery of onsite affordable housing through the new levy, and to delivering more affordable housing than the current system of developer contributions. Under the existing system, negotiation of Section 106 planning obligations can cause significant delay and uncertainty, which often means less affordable housing for communities and uncertainty about when key infrastructure is going to be provided. The new levy will be mandatory, non-negotiable change. It will be clear to developers what they are expected to pay, and this change can be used to secure the delivery of onsite affordable housing as a non-negotiable in-kind contribution, which offers significant protection of affordable housing delivery over the present system.

The technical consultation to inform the design of the levy regulations closed at the end of the year, and we are currently analysing consultation responses. The Government are committed to consult again on the design of the infrastructure levy and I hope that, with the passing of the Levelling-up and Regeneration Act, we will actually get this working to deliver more homes.

Finally, it is worth noting that councils continue to benefit not just from the £11.5 billion affordable homes programme that we have discussed today, but from the scrapping of the housing revenue account borrowing cap and greater flexibility in how they can use receipts from right-to-buy sales. I strongly urge councils to make full use of these measures, so we see more homes being built in the places where they are needed the most.

I turn to a number of questions—

[Baroness Taylor of Stevenage (Lab)]

I rise to make a brief intervention. The Minister is once again using the term “affordable homes”. Does she mean under the current six definitions of affordable homes—five of which are not affordable to anyone where I come from—and can she confirm that we will continue to have a permitted development regime that does not deliver any affordable homes at all?

[Baroness Swinburne (Con)]

I will bring forward the question that I was about to answer in response to both the noble Baroness, Lady Taylor, and the noble Lord, Lord Whitty, who asked how I define “affordable”. The Government do not prescribe a definition of affordability. We recognise that the fundamental purpose of social housing is to provide affordable, safe and secure homes to those who cannot afford to rent or buy through the open market.

The purpose is reflected in the definition of affordable housing in the National Planning Policy Framework. This defines affordable housing as:

“Housing for sale or rent, for those whose needs are not met by the market”.


So, to fall within the definition, homes must meet one or more other conditions: for example, affordable housing for rent must have rents that are set in accordance with the Government’s rent policy for social or affordable rent, or, alternatively, have terms that are at least 20% below the market rate. It is a very broad definition because there are lots of tenures and lots of people providing this housing for the different audiences that require it.

With regard to planning reform, which noble Lords—including the noble Viscount, Lord Chandos, the noble Lord, Lord Best, and the noble Baroness, Lady Taylor—have mentioned, the Levelling-Up and Regeneration Act 2023 creates a simplified and strengthened plan-led system. The Act puts local people at the heart of development. This, we hope, will deliver more homes in a way that works for more communities.

Turning to questions put to me by the noble Lord, Lord Best, I would like to reassure him that the social housing stock has grown by 151,000 since 2010, compared with the previous 15 years, when it fell by more than 420,000. So we have a big gap to make up and we are aware of that.

With regard to the affordable homes programme, this currently allows for 30% of the homes in the programme to be delivered through acquisitions. In practice, this tends to be the conversion of new homes that would otherwise have been sold on the open market to alternative affordable tenure types.

I turn now to temporary accommodation, which many noble Lords have mentioned. Indeed, when it comes to this, the Government are committed to reducing the need for temporary accommodation by preventing homelessness before it occurs. However, the current global context and the significant economic challenges we are facing are making our objectives on homelessness more challenging. We remain committed to preventing homelessness where possible and helping people to stay in their homes. Since 2022, we have provided £104 billion in cost of living support, an average of £3,700 per UK household, helping those most in need while acting in a fiscally responsible way. Where homelessness cannot be prevented, temporary accommodation is an important way to ensure that no family is without a roof over their heads.

However, we appreciate that it is not ideal and needs to be temporary. The £1.2 billion local authority housing fund enables councils in England to obtain better-quality temporary accommodation for those owed a homelessness duty, providing a lasting, affordable housing asset for the future. Indeed, between 2022 and 2025, we are providing local authorities with over £1.2 billion through the homelessness prevention grant.

With regards the concerns of the noble Baroness, Lady Smith, there are mechanisms by which social housing tenants can receive housing support to help pay their rent. For these tenants, the costs of rent increases are met by their housing benefit or the housing element of their universal credit. Discretionary housing payments can be made to those entitled to housing support who face a shortfall in meeting their housing costs.

In respect of social rent levels, they typically are at between 50% and 60% of market rent, set in accordance with government rent policy for social rent, using a formula that accounts for relative county earnings. Indeed, 90% of the stock is done through social rent. As to affordable rents, they make up some 10% of the rental stock, and they are actually available at 80% of the market value—although the 80% number is much lower in parts of London. So we are talking about the difference between some £98 a week under social rent and £143 a week, although all the social benefits and the DWP benefits are not specific to the tenure.

Turning to the right to buy, in response to the noble Baroness, Lady Bennett, and the noble Lords, Lord Birt and Lord Davies, the Government believe that the housing market should work for everyone. We believe that those who want to rent their homes should be able to rent their homes, but those who wish to buy them should also be allowed to do so. We remain committed to the right to buy. This, since 1980, has helped more than 2 million social housing tenants become homeowners. We want to support councils to continue to deliver new and existing supply plans, and there is a requirement for replacement homes to be put in place as these are sold.

To help councils deliver more replacement homes in the current economic context, the Government have frozen the cap on acquisitions. Councils will be able to continue to deliver up to 50% of their right-to-buy replacement homes as acquisitions each year until 2025, with a focus on the purchase of new-build homes. From 1 April 2024, the Government are also increasing the percentage of the cost of replacement affordable homes that can be funded from the right-to-buy receipts, from 40% to 50%. We have listened to calls from councils to increase this cap, which some have said is making some build schemes unviable due to higher build costs.

With regard to the statistics that the noble Baroness, Lady Bennett, asked for, in 2022-23, local authorities sold 10,896 homes; they built 8,900. With all sources of affordable homes considered, there was a net increase of 14,680 affordable homes for rent.

Turning to the speech of the noble Baroness, Lady Warwick, I agree that we need to do more. All measures to increase the rate of housebuilding for the provision of affordable homes should be considered, and we are including things such as the preferential borrowing rate for council house buildings from the Public Works Loan Board, which we have extended to June 2025. We have tried to allow them to retain, on a temporary measure, 100% of their right-to-buy receipts for 2022-23 and 2023-24, and indeed we have therefore allowed them to increase their capital buffer to provide more homes in the short term. Abolition of the housing revenue account borrowing cap, alongside the £11.5 billion affordable homes programme, I hope means that local authorities and housing associations are supported to maximise the delivery of new homes, and we strongly urge them to mobilise and utilise these flexibilities in order to do it quickly.

I have another question, from the noble Baroness, Lady Warwick of Undercliffe, who asked me about the skills set with regards to construction. The Government recognise that there are challenges in the sector due to skill shortages in the housebuilding workforce and construction more broadly, which will become a greater challenge without active work to augment skills development. We are therefore committed to ensuring that the right skills and training are available for apprentices and others considering a career in the construction industry. For example, the Government are currently reviewing the work of the industry training boards and will be publishing the findings of these reviews along with any recommendations later this year. The Department for Education is improving training routes into construction, creating opportunities for workers to retrain, and the Government are increasing the funding for apprenticeships across the sectors, including construction, to £2.7 billion in the 2024-25 period.

On the report from Women’s Aid, which I believe came into all our inboxes earlier this week, it is critical that victims of domestic abuse get support, especially when they are in a housing need. The Domestic Abuse Act 2021 has given those who are homeless as a result of being a victim of domestic abuse priority need for accommodation secured by the local authority. Statutory guidance encourages local authorities to make exceptions from any residency requirements.

I will also no doubt be having numerous discussions at this Dispatch Box over the coming weeks as we bring the private Renters (Reform) Bill to this House. I understand that we will have that on Tuesday next week, so I look forward to discussing the details with many of your Lordships then.

In closing, I thank your Lordships for prompting this important debate. It is clear that, although we may disagree regarding different approaches, all of us here agree on the underlying mission: to drive up affordable housing supply—truly affordable housing—for those who need it. This is a clear part of our mission to level up the country; indeed, it was a key tenet of our levelling up White Paper. The figures I have outlined today—more than 632,000 affordable homes built since 2010—show that we are making real progress towards it. However, I agree that more needs to be done.

Today we have also discussed the wide-ranging challenges that are facing us, and indeed the changes the Government continue to make to boost the social housing numbers over the medium to long term. Of course, through our Levelling-up and Regeneration Act and the simplified infrastructure levy, these will take time, but I hope your Lordships will work with me and the rest of government to ensure that this issue cuts across party-political lines. It is an issue I am certainly committed to working on with noble Lords across this House, as I said earlier this week at the launch of the Church of England’s report. I am confident that, working together, we can get the right homes built in the right places for the people who need them most.