Affordable Housing

Baroness Valentine Excerpts

Thursday 25th June 2015 Lords Chamber

[Baroness Valentine (CB)]

My Lords, I thank the noble Lord, Lord Whitty, for his opening remarks. I shall focus my remarks on having the right incentives in place to increase housebuilding. I declare that I am a director of Peabody and London First.

In London, we are building roughly half the houses that we need. Simplistically, if there were a free market, we would be providing everything from cheap and flimsy broom cupboards to penthouse flats. Instead, we have layer upon layer of well-intentioned policy intervention, which has the unintended consequence of building for the very rich and the very poor but not doing much for those in the middle. Those who are the backbone of the London economy—the supermarket checkout people, the waiters, the PAs, the newly graduated, even the professors—are neither rich nor poor enough to be housed. In a recent survey by London First, a lack of reasonably priced housing was ranked as a top three competitiveness risk for the capital.

Our housing crisis is the result of a range of misaligned incentives, from welfare to planning and cumbersome public sector procurement processes. These incentives include: housing benefit underwriting private landlords’ rents or indirectly subsidising employers’ salary costs; muddled incentives for social tenants when they weigh up staying on benefits versus being in work; local authorities being legally required to house people in need, but having no similar requirement to house London’s lower-paid workers; demands for social housing on private developers causing the rest of the housing to be more costly to make the schemes add up; and state bodies that have no incentive to dispose of unused land and property, and instead hoard for the future.

Among the other incentives, a narrow definition of affordable housing for planning purposes makes large-scale provision of private housing for rent less attractive than market sale. Two-thirds of New Yorkers live in rented accommodation. Making a substantial intervention in this space must be part of the answer. The green belt includes more land than is needed to limit urban sprawl. In particular, it includes scrub land near transport nodes which could be used for housing. The planning system continues to bog down development, particularly in negotiations that can last for years around what associated infrastructure will be provided. Resistance to innovation prevents higher-density or new housing products that could serve a market need. For instance, many first-time buyers of studio flats would be happy to start with smaller floor plates than policy typically allows.

There is no silver bullet, but I have three specific requests for the Minister. First, would she consider giving local authorities greater freedom to build homes by granting more borrowing headroom, albeit within existing prudential rules? As alluded to earlier, building at scale was delivered by the public sector until the 1980s, with a substantial and sustained drop in the last 20 years since local authorities were capped. I say in parenthesis that I am yet to be persuaded of the benefit of forcing local authorities to sell property to subsidise housing association right to buy. The long debate that we will no doubt have on that subject in this House is an unwelcome distraction from increasing supply, which the housing associations are well placed to do.

Secondly, although I am enthusiastic about the new London Land Commission, bringing public sector sites to market is easier said than done. Will sufficient resource be given to the commission to get land out into the market and will the Government set a target level of land disposal that will be actively monitored?

Finally, on targets, I want to deal with the rhetoric versus reality of London housing targets. Only this morning, the mayor launched another few housing zones, which are set to deliver 100,000 jobs and 50,000 homes. Every year, the London Plan sets targets for local authorities which add up to the number of houses required in London—roughly 50,000. Every year, we fail by a factor of roughly half, and surely we need a much tougher regime. On the one hand, where a local authority repeatedly fails to meet the targets, the mayor should be given step-in rights to start determining more applications; on the other, local authorities could be given a more generous new homes bonus for exceeding targets. Would not a carrot-and-stick approach to housebuilding better align our incentives to meet housing need?