Levelling-up and Regeneration Bill

Baroness Warwick of Undercliffe Excerpts
Baroness Warwick of Undercliffe Portrait Baroness Warwick of Undercliffe (Lab)
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My Lords, it is a great pleasure to follow the noble Lord, Lord Bourne. As we have heard, levelling up embraces so many economic and social challenges, but I believe that the most fundamental is ensuring that families have a home, and it is on this basic issue that I want to focus.

In December 2020, PricewaterhouseCoopers published a survey titled “Rethinking ‘levelling up’”. It found that:

“Housing was the stand out priority for our respondents ... 70% agree a focus on housing would be the most effective in levelling up the country and reducing inequality.”

Polling by YouGov last year found that a clear majority of Conservatives want their party to deliver more affordable housing, with two-thirds calling for new developments to include more affordable housing.

It is clear that housing must play a key role in the levelling-up agenda. Social housing in particular is central to addressing regional inequalities, particularly health outcomes. For families struggling with unaffordable private rents and unsuitable or overcrowded accommodation, social housing would transform living standards, and the nation’s health. Yet we currently face a grave affordable housing crisis: 4.2 million people are in need of social housing in England. Research from the National Housing Federation found that to meet demand, England currently needs 340,000 new homes a year for the next 10 years, including 145,000 affordable homes.

Social housing on this scale would help to bring down the housing benefit bill, support better health and well-being outcomes and reduce reliance on temporary accommodation. So why have successive Governments failed to realise this? Why have they allowed the supply of social rented housing to fall by 85% since 2010-11? The Bill could have really got to grips with this. Sadly, it is a missed opportunity to tackle our housing crisis and deliver the real levelling up which communities need and voters clearly want.

Happily, the noble Lord, Lord Bourne, mentioned health. There is a strong link between housing and health. In November 2021, a Building Research Establishment report, “The Cost of Poor Housing in England”, found that poor housing could be costing the NHS £1.5 billion a year in treatment bills. Legal and General’s research, “Levelling up through health”, found that investing in housing, particularly affordable housing, yields a multiplier effect which creates jobs, boosting the economy as well as public well-being.

In particular, supported housing helps ease the pressure on the NHS and care services and saves the public purse around £940 per resident per year. It makes a vital contribution to positive health outcomes for disabled people, homeless people, older people, people with mental health problems, people who have experienced domestic abuse and many others. Yet the sector is under acute pressure from inflation, rising costs and funding uncertainty, leaving vulnerable people without a safe place to live. Will the Minister give us the Government’s estimate of the impact on levelling up of the contraction in supported housing, and how they propose to reverse that decline?

I will briefly touch on regeneration, featured in the title of the Bill, and planning. Many communities are crying out for regeneration, but where are the measures that would unlock housing-led regeneration? With access to appropriate funding, councils and housing associations can deliver regeneration and employment support where it is most needed. Under current net additionality rules, housing associations cannot access grant funding for regeneration projects from Homes England, so they cannot regenerate homes that are often unfit for purpose. By changing that rule, the Government could unlock significant new funding for regeneration, delivering high-quality new affordable homes that support better environmental and health outcomes for residents. I hope the Minister will address this issue in her reply.

Lastly, on planning, there is a real risk that the Bill would further reduce the supply of affordable housing. Part 4 of the legislation creates provision for a new infrastructure levy to replace the current system for developer contributions via the planning system. That system is responsible for almost 50% of all new affordable housing. Without further protections included in the Bill, the new infrastructure levy risks diverting funds away from affordable housing towards other unspecified forms of infrastructure. In areas of low land value, it is difficult to see how levy rates will be able to deliver the same level of affordable housing as the present system. Ministers have said that the levy will deliver at least as much affordable housing as the current system, but can the Minister provide the evidence to support that claim? I urge the Minister to heed the calls from across this House, and from the housing sector, and include stronger protections for affordable housing in the Bill.

Levelling-up and Regeneration Bill Debate

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Department: Leader of the House

Levelling-up and Regeneration Bill

Baroness Warwick of Undercliffe Excerpts
Lastly—and sorry for the length of this introduction —our Amendments 364 and 364A are tabled to probe how the Minister intends to assess the proposed impact of the infrastructure levy on the delivery of affordable housing. These amendments are very important because it is not indicated how levelling up, and therefore the building of more affordable housing which will help levelling up, is going to be achieved through the process of the infrastructure levy. I beg to move.
Baroness Warwick of Undercliffe Portrait Baroness Warwick of Undercliffe (Lab)
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My Lords, this is the second group of amendments today on the new infrastructure levy. While there is clear scope to reform and improve the existing system for developer contributions, it is none the less responsible for a huge proportion of new affordable and social homes. As its proposed replacement, the infrastructure levy represents, as I said in the earlier debate, a radical shift in how such housing will be funded and delivered.

There are 4.2 million people currently in need of social housing in England—I do not think that fact can be repeated too often. Our efforts to house them have so far been abysmal. Against this backdrop of acute housing need, changes to the planning system must at a minimum protect current levels of new affordable housing. In the earlier debate, the Minister emphasised that the Government aim to do just that but also said that these were decisions for local authorities and offered little confidence that this aim could be guaranteed.

The Daily Express on 29 April had a startling statistic that nine in 10 local authorities failed to build a single council house last year and no region in England saw an increase from 2021. As many as five locations in England did not complete a single social home last year, including the City of London. My noble friend Lady Taylor cited the evidence from Homes for the North, which provided us with an excellent briefing. Through its research with Liverpool University, it has shown that those most in need of levelling up, based on the Government’s own definition, are likely to have the least capacity to generate investment for affordable housing through the infrastructure levy, and it goes on to offer more data on that. The Minister expressed hope that more social housing would be built, but as targets are to be dispensed with and as local authorities and housing associations are clearly struggling to deliver any social housing at all, there is a singular lack of ambition to help the 4.2 million people in real need.

I have three amendments in this group—Amendments 326, 327 and 334. Each of them seeks to strengthen protections for affordable housing in this legislation and ensure that the infrastructure levy does not lead to a net loss of affordable housing. I am pleased to have received support for the amendments from the Labour and Lib Dem Front Benches, the right reverend Prelate the Bishop of Chelmsford and the noble Baroness, Lady Watkins of Tavistock.

I move to my first amendment, Amendment 326. One of the main concerns with the infrastructure levy, raised by stakeholders from across the housing sector, is the risk to on-site delivery of affordable and social housing. While imperfect, Section 106 has facilitated a well-integrated mix of housing tenures to support households of different sizes, ages and incomes. We have a proud history in this country of people living side by side. These mixed communities are a rare success story in housing and planning policy and must be retained if we move from Section 106 to the levy. But by moving us away from an in-kind system of affordable and social housing, as with Section 106, towards a financed-based system, the infrastructure levy risks undoing important progress in this area.

It is welcome that the Government have acknowledged this risk. In a policy paper published alongside the Levelling-up and Regeneration Bill on 11 May 2022, the Government committed to:

“Introduce a new ‘right to require’ to remove the role of negotiation in determining levels of onsite affordable housing. This rebalances the inequality between developers and local authorities by allowing local authorities to determine the portion of the levy they receive in-kind as on-site affordable homes”.

This was a very welcome commitment. In their recently published technical consultation on the infrastructure levy, the Government again confirmed their intention to bring forward a mechanism for on-site delivery. However, it is disappointing that not a single mention of the right to require mechanism is made in this Bill. Ministers have said it will instead be introduced via secondary legislation. This mechanism for on-site delivery is a highly significant aspect of the new levy and should not be left out of the Bill altogether. It should be subject to proper parliamentary scrutiny and a rigorous consultation and piloting process. I hope the Minister will comment on that.

My Amendment 326 would place a duty on the Government to bring forward infrastructure levy regulations which would introduce a mechanism for the delivery of on-site affordable housing as an in-kind levy payment. Put simply, my amendment would ensure that the Government abide by their own stated policy intentions and hold Ministers to their commitment to safeguard the future of mixed communities.

Again, this amendment does not seek to transform radically the design of the levy; it would simply put stated government policy in the Bill. It does not bind the Government to an onerous or cumbersome interpretation of the right to require; it merely ensures that such a mechanism is introduced. For these reasons, I hope that the Government will consider supporting this amendment.

Amendment 327, coupled with Amendment 328 in the name of my noble friend Lady Hayman of Ullock, seeks to place in primary legislation clear exemptions from payment of the infrastructure levy for registered providers of social housing. My amendment would provide for an exemption from liability to pay IL in respect of a development which contains 100% affordable housing. I support also the amendment tabled by my noble friend Lady Hayman which would exempt developments containing 75% affordable housing. Charging levy rates against such developments would clearly disincentivise new affordable housing and undermine the levy’s stated purpose. There are already such exemptions in place in the current system for developer contributions, most notably in the community infrastructure levy.

The Government have indicated that they will introduce such an exemption. It would be preferable to see this commitment included in primary legislation. At Commons Committee stage, the Housing Minister confirmed that the Government

“do not expect to charge the levy on exclusively affordable housing developments; we will explore that matter further in consultation”.—[Official Report, Commons, Levelling-up and Regeneration Bill Committee, 6/9/22; col. 638.]

It would be preferable to see this commitment in the Bill.

No argument has been forthcoming about why it is preferable to introduce such an exemption via regulation. This is particularly concerning as an exemption is provided for charities in new Section 204F, to be inserted by Schedule 11, which could encompass most registered providers of social housing. Further clarification is required as there is a risk of overlapping exemptions and confusion about criteria for housing associations. I hope the Minister can provide more clarity and certainty about the Government’s intention to bring forward exemptions from the levy for affordable housing.

My Amendment 334 would strengthen the requirement for local planning authorities to set infrastructure levy rates at a level which would not result in a loss of affordable housing. It would ensure that the infrastructure levy delivers baseline levels of affordable housing, thus removing the risk of a net loss of affordable housing under the new system.

In a public letter to the Secretary of State in February, 19 leading organisations from across the housing sector set out significant concerns about the impact that the proposals for a new infrastructure levy will have on the supply of new affordable housing. Signatories included Shelter, Crisis, the Church of England, the National Housing Federation and the Greater London Authority.

Levelling-up and Regeneration Bill

Baroness Warwick of Undercliffe Excerpts
Lord Mawson Portrait Lord Mawson (CB)
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My Lords, I support my noble friend Lord Ravensdale’s Amendment 504GG, which is practical and puts some real drive into our town centres.

I want to quote a colleague of mine from the north-west of England about her town centre, the fragmentation that she feels is going on and the opportunity being missed. She said:

“When I look at the 7”

connecting levelling-up schemes,

“what I feel is missing is the coherent and comprehensive consideration of the Old Town as a ‘place’. One ‘place’. A place where people live and have their businesses, not just somewhere people stop by to solely pop into the new health and education hub for an X-ray, or the new Buddhist temple for meditation or the new youth and arts provision or the upgraded theatre to watch a play. What I fear may happen is some lovely new buildings going up in amongst some really run down streets, which will surely only be made to look even worse. I get that the money available isn’t an endless pot. I get that a number of the properties have private landlords, but what I didn’t get is the approach and ambition of aiming to elevate the place as a whole. Many of the shops are vacant and the Council must be taking empty business rates from the landlords. I wonder if there is a strategy to bring those landlords into the debate about”

reconnecting the town,

“so that the 7 schemes aren’t just 7 pieces of a bigger jigsaw where”

the real opportunity

“has been lost!”

As I say, this amendment puts real drive and economic practicality into our town centres. I work a lot across the north of England and see a lot of fragmentation. Individual little schemes will not make a difference. There need to be real practical drivers, and what my noble friend Lord Ravensdale is suggesting is possibly one of them.

Baroness Warwick of Undercliffe Portrait Baroness Warwick of Undercliffe (Lab)
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My Lords, I speak in support of Amendment 491 in the name of my noble friend Lady Taylor of Stevenage. Currently, most government funding for affordable housing focuses on net additionality of new homes. This is much needed but it can lead to a loss of development potential and a lack of investment in the physical quality of existing communities. Without housing-specific regeneration funding streams, regeneration is virtually impossible to fund in lower-value areas, where there is little scope for cross subsidy from market scaling.

Last week, Homes England published its strategic plan, emphasising a renewed focus on regeneration. It was welcome to see this plan recognise the key role that housing associations should play in place-making, as well as the importance of sustainability in new communities. However, there is a lack of clarity about whether this would be accompanied by new regeneration funding or a flexibility around the use of AHP funds to deliver regeneration. This amendment, which also seeks clarity over the Government’s regeneration proposals, would be a step in the right direction. At present, there is a lack of strategic direction in the Government’s plans to deliver housing-led regeneration, yet regeneration is crucial if the Government are serious about delivering their economic and skills agenda while also helping to deliver quality and sustainable affordable homes across the country.

Baroness Pinnock Portrait Baroness Pinnock (LD)
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I hope noble Lords will bear with me because there was some confusion over the position of this group in the list. Some of us had an earlier list, where it appeared much later.

I have tabled Amendment 504GJH, about the state of schools and hospitals. At the heart of levelling up is the need to provide good-quality education to young people across the country and that means good-quality buildings in which children can go to school. Where schools are in disrepair and cannot be used appropriately, children are at a disadvantage, particularly, say, in secondary education with science blocks that are out of date so that children will not be able to do modern science experiments.

The quality of school buildings in this country is very important and a department report from December 2022 highlighted the critical level of disrepair in many of our school buildings across the country. This prompted me to lay this amendment to this part of the Bill. The annual report said that officials have raised the risk level of school buildings collapsing to “very likely” after an increase in serious structural issues being reported, especially in blocks built in the post-war years, 1945 to 1970.

The type of structure used has led to the quite rapid deterioration of those buildings. I said earlier that I was a school governor for a number of years. The school had a science block built in the early 1970s that was condemned for these very reasons, so I know how accurate this is.

If we are talking about levelling up and regeneration, at its heart should be public services, school buildings and the quality of the education delivered within them. It is school buildings that I am pointing to today. The report said that the risk level for school buildings had been escalated, as I said, from “critical” to “very likely”.

The difficulty is that, because so many school buildings were built in the 1950s, 1960s and 1970s with this sort of metal structure, there is a huge call on government funding. It is called a light frame system, I think; it is a steel structure anyway. Every one of us will have buildings like that where we live. I want this Bill to focus on doing something about school buildings and hospitals that we know about. The Government have committed to 40 new hospitals—five more have just been added—because they are falling down. That is not right. We are talking about regeneration and levelling up. Having school buildings and hospitals collapsing shows the level of investment that will be needed if we are genuinely going to try to level up across this country.