Autumn Statement: Economy

Baroness Warwick of Undercliffe Excerpts

Tuesday 29th November 2016 Lords Chamber

[Baroness Warwick of Undercliffe (Lab)]

My Lords, I want to focus on the housing aspects of the Autumn Statement and I declare an interest as chair of the National Housing Federation, the trade body for England’s housing associations. The Autumn Statement contained a clear and welcome commitment to increasing the supply of affordable housing. As the Prime Minister herself said, we simply need to build more homes. As a nation, we have not built enough houses for decades and we are currently almost 100,000 short of the number we need to build each year. This is having a real impact on the lives of ordinary families who, faced with high housing costs, find themselves, as the Chancellor has put it, “just about managing”. The public are looking to the Government to act and the housing announcements in the Autumn Statement were an important step in the right direction.

To tackle the housing shortage we need two things: a determined Government and an ambitious housebuilding industry. Housing associations are ready to step up to that challenge. They built one-third of all new homes last year—more than 40,000 houses—and they have an ambition to triple that number over the long term. The sector has a strong track record of building during times of economic uncertainty. At the height of the crash, between 2007 and 2008, output from private developers dropped 37%. Housing associations increased their output by 22% over the same period. They want to do that again and the housing measures in the Autumn Statement will support them to do it.

Looking at the specifics, the Chancellor announced an extra £1.4 billion for affordable housing, as well as flexibility over how the remainder of the £4.7 billion shared ownership and affordable homes programme will be spent. Flexibility is vital. The National Housing Federation has long argued for the Government to relax restrictions on existing affordable housing funding, so the flexibility promised in the Autumn Statement is welcome. Housing associations have worked at the forefront of delivering innovative routes to home ownership for people who find themselves “just about managing”, and they will continue to so.

However, we also know that communities need affordable rented homes, too. Flexibility on funding will enable many more of these to be built. The extra flexibility will not only allow the sector to build homes that better meet the needs of the communities they serve but will ensure that they are able to deliver the maximum number of houses for every pound the taxpayer puts in. The evidence backs this up. Recently, housing associations submitted bids to the shared ownership and affordable homes programme—both useful tenures in their own right—but they have told the federation that, had there been greater flexibility on tenure, they would have bid to build 60% more homes. One-third told us that they would have more than doubled the number of houses they bid for.

A flexible approach to investment will not only allow housing associations to build more homes more quickly but will foster greater innovation. As well as helping those in greatest need, the sector has long provided homes for low-income and middle-income families who are in work but struggling. The sector wants to build on this heritage and will make the most of flexible funding by developing innovative routes into home ownership. These new home-ownership products will make a real difference to the lives of hundreds of thousands of people for whom home ownership has become a distant dream. The sector will do even more with flexibility, using it to invest in regeneration in those communities that have felt left behind for far too long.

The Chancellor also announced £2.3 billion of new infrastructure funding specifically to unlock land for up to 100,000 new homes in high-demand areas. Again, this is good news, and a welcome recognition from the Government that housing is critical to improving the nation’s productivity. I would also argue that housing itself should be viewed as infrastructure. I echo the calls of others for large housing developments of around 1,500 homes or more to be considered as part of the nationally significant infrastructure projects planning regime. If this were to happen, the decision-making process would be much more certain, which would enable housing associations and other housing developers to build the homes more quickly. Given the difference this change could make, will the Minister consider extending the remit of the National Infrastructure Commission to include housing?

Certainty and freedom are two things that enable housing associations to build more homes. Certainty enables investment; freedom—in the form of more flexibility—ensures that the homes that are built are the ones that people actually need. But both certainty and freedom are lacking in one vital area. Despite being independent businesses, housing associations cannot set their own rents. The housing White Paper, now promised for January, provides an opportunity to fix this. I remind noble Lords that housing associations built one-third of all new homes last year. Rental income is critical to the success of their business plans. Yet it is an area where the Government have heavy involvement, both by setting rents and by capping housing benefit, affecting tenants’ ability to pay rent.

Giving housing association boards control of rent setting could improve their ability to plan for the future, manage risk and make the most effective use of their assets to deliver their ambitions for homes and communities. The existing regime does not match rents to the ability of people on low incomes to afford them, so giving the sector rent freedom could also help housing associations make rents genuinely affordable for tenants. I hope the Minister will agree to meet me to discuss how, by handing control of rent setting to housing association boards, the sector could deliver greater fairness for tenants by matching rents to local market conditions.

Finally, I turn to social care. The Government have talked a great deal about building a country that works for everyone—yet in his Autumn Statement, the Chancellor was utterly silent on the future funding of social care, despite the fact that the most recent proposals from the previous Government are now gathering dust after being shelved. At the same time we have hit crisis point in our social care system. Despite more people needing care, investment has shrunk by one-third in just five years. In every region of our country this has left people without the care they need even to get dressed, eat or leave the house. One in three women and one in four men will need care at some point in their life. Is the country really ready for this? Absolutely not. According to the King’s Fund, 81% of local authorities have cut their spending in real terms on social care for older people over the past five years.

Figures published on 10 November showed that the NHS had a total of more than 196,000 delayed transfer-of-care days in September—the highest figure since data were first collected in 2010. As Jane Ashcroft, CEO of Anchor, said:

“Such pressures demonstrate with tragic clarity the importance of funding services which can prevent people needing the NHS or help people leave it”.

As the Work and Pensions Select Committee calls for the triple lock on pensions to be scrapped, the Government must think hard about how to protect the least well-off older people. Failure to do so is already having an impact on NHS costs and risks huge consequences for older people.

We need to address urgently the financial black hole in social care. It is astonishing that the Autumn Statement failed to do that. The Care and Support Alliance, a coalition of more than 90 of Britain’s leading charities, which campaign alongside millions of older people, disabled people and their carers—and of which the National Housing Federation is a member—has expressed its outrage in no uncertain terms. Its chair, Vicky McDermott, said:

“Ignoring the social care crisis is deeply irresponsible. The sector couldn’t be clearer on how dire the situation is for social care and those who rely on it”.

I hope the Government will listen to the strong concerns raised by social care providers across the country, by local authorities and by the NHS, and will take action. I hope that the Minister will address this huge gap in his response.

In conclusion, I will return to my initial point on housing. The welcome announcements on housing in the Autumn Statement will not by themselves end the housing crisis. However, after decades of failing to build the homes we need, they feel like a genuine and important start in tackling it. Every part of the housebuilding industry will have to step up to the challenge. Housing associations are certainly ready to play their part. They know that the public are relying on them to do so.