Affordable Housing

Baroness Thornhill Excerpts

Thursday 25th October 2018 Lords Chamber

[Baroness Thornhill (LD)]

I declare my interest as one of the many vice-presidents of the Local Government Association in the House. I am privileged to be able to contribute to this debate, which has been true to the standard of your Lordships’ House—well informed, passionate and extremely wide ranging. I thank my noble friend Lord Shipley for affording us this opportunity to discuss what is, without doubt, an important issue. My contribution will be a gallop around the course.

Several noble colleagues, particularly the noble Lords, Lord Best and Lord Whitty, succinctly summarised the current housing crisis and offered some solutions. So much expert opinion, government policy and our own contributions today show that, to a greater or lesser extent, the case is proven: we need more affordable homes. I was grateful to my noble friends Lady Brinton and Lady Thomas for particularly highlighting the need for more supported homes and lifetime homes. We are indeed building far fewer such homes and of those we are building, an even smaller percentage are social homes for rent. It is important to repeat that of the 42,000 affordable homes built last year, only 5,380 were for social rent.

Let us be in no doubt about the difference; we are all guilty of using the terms interchangeably, but the real need is social rent, currently described as up to 60% of market rent, although perhaps, as has been pointed out, that is not necessarily the best definition. The noble Lord, Lord McKenzie, was particularly exercised on that point.

I am personally in full support of the Government’s drive for diversity among housing providers and in tenure. As has been evidenced by several speakers, including the noble Lord, Lord Kerslake, the current policy emphasis seems to be on the delivery of numbers and home ownership. While this is indeed the tenure of choice for many, the harsh reality is such that we cannot build ourselves quickly out of this crisis and that there will always be a need for low-cost rented homes. I also believe in the diversity of people within communities and recognise that there are millions of low-waged working people for whom a home of their own is, and always will be, the council house or the housing association’s socially rented property. A sustainable town means a town for all. Our country needs these workers; indeed, I would argue that they are the lifeblood that keeps our towns, cities and villages moving and functioning.

The Government need to prioritise the delivery of homes for social rent as it is the only tenure that will effectively reduce homelessness and take pressure off the housing benefit system, as amplified by the noble Lord, Lord Rooker. While there is good news in the White Paper, the revised NPPF and the Letwin review, the current Green Paper seems to reinforce the idea that the Government see social rent as a springboard to ownership or other tenures. Can the Minister clarify the Government’s position on the need for social housing and its importance in the menu of fixed tenure?

Many of the Government’s good proposals are medium to long term but in the short term, as the noble Baroness, Lady Donaghy, said, will the Government consider allowing councils the power to restrict right to buy or have a moratorium on new-build social homes while a solution is sought to ensure one-for-one replacement? The LGA’s figures show that almost £3.5 billion in right-to-buy discounts have been handed out to council tenants over the last six years, at an average cost of £60,000 per dwelling last year. The loss of this social housing risks pushing more families into the private sector, again driving up the housing benefit bill. As we know, eviction from the private rented sector is now the single biggest cause of homelessness.

In the short term, the rise in planning fees by 20% was also welcomed. But given that the industry is still being subsidised to the tune of £125 million a year—I checked that figure but it is correct—when will we know the outcome of the recent consultation on councils’ ability to raise planning fees even further?

The noble Lord, Lord Rooker, passionately pointed out that conversions from office to residential under permitted development rights have been problematic. While it has obviously increased the number of homes, it has meant depriving councils of an opportunity to leverage any contributions from developers. The LGA has shown that this has led to a loss of 7,500 potential affordable homes over two years—not to mention the lack of ability to enforce housing standards, say on room size and quality, let alone environmental standards, as outlined by my noble friend Lady Walmsley. Old office blocks do not necessarily make good homes, especially if there is nowhere for the bins, bikes and buggies to go. Will the Government reconsider removing these permitted development rights to allow councils to decide where and when it might be appropriate to use these powers to create sustainable neighbourhoods and, perhaps more importantly, to secure more homes for social rent?

The lifting of the borrowing cap was mentioned by several, including the noble Baroness, Lady Warwick, and certainly welcomed by most. Will the Minister outline the timeframe for this so that even more councils can get cracking and build? Councils want to be part of the solution but I draw the House’s attention to the massive variations that exist between places in the cost of building social housing. In my own authority we have spent a great deal of time and expertise, which the Minister might be pleased to know we have shared with his civil servants, on working out the true cost of subsidy for building a social home in Watford. It is at least £100,000 per unit, and that is where the land has been provided at no cost and based on Homes England’s 40-year appraisal model. By contrast, the same model built to the affordable rent standard would break even, but it is social homes that we need. Do the Government recognise that councils will need consistent long-term funding for a new generation of public homes at social rather than affordable rent levels?

It is certainly the perception of residents that under the current system landowners and developers have too much control over what is built and where. Does the Minister agree that fundamentally what is needed is to get land into development at lower cost? The high price of land is the main driver in the loss of developer contributions when the unpopular viability test is applied.

Speakers have acknowledged that in the revised NPPF this viability loophole has, we hope, been closed. It is now imperative that councils use their powers to set strict and ambitious targets and achieve them. This will become more pertinent once the housing delivery test starts to apply. The Government will no doubt be monitoring closely how this plays out.

To make progress in the longer term we need a recognition that this speculative development model with its low-value land capture is not working for communities and ordinary people. As has already been said, the Centre for Progressive Capitalism has said that 75% of uplift in land value goes to landowners’ profit and only 25% to community benefit. Interestingly, in the rest of the EU the reverse is true. Perhaps this is why we have turned a nation of nimbies into BANANAs—build absolutely nothing anywhere near anybody.

Most recently, government policy, as expressed in the NPPF, sets a default level of 10% of housing on all development sites to be designated affordable. Noble Lords should note that the word is “affordable” not “social”. Did the Government give any thought to allowing councils to decide what is right for their area rather than the presumption of 10%, which is inflexible and limits local authorities’ bargaining power about what is most desirable for their area?

Finally, the noble Lords, Lord Horam and Lord Suri, eloquently expounded that the cost of land drives the current speculative development model which an increasing number of experts believe to be broken. There must be better ways of taxing land which are fairer for all parties. I know that that thinking is above my pay grade, but are our Government looking into this for serious long-term change or are they happy with the status quo? Rather controversially, is it perhaps not now time to question the whole premise of social housing being provided through the developer 106 contribution model, which is arguably ineffective, time-consuming, costly and loathed by all parties, and look to fund a much-needed renaissance of council house building by other means? It would be very popular and much needed.