Housing and Planning Bill

Baroness Williams of Trafford Excerpts

Thursday 10th March 2016 Lords Chamber

[Lord Carrington of Fulham (Con)]

My Lords, I intended to speak on the next group of amendments but, since my noble friend Lord True and the noble Lord, Lord Tope, have both raised the London problem, I thought that a few comments on that would be appropriate. They rightly pointed out that certain London boroughs, particularly those in central London, have a problem in terms of high-value assets and their definitions. Indeed, they mentioned Kensington and Chelsea and Westminster. I would extend this as far as the old LCC area, as my noble friend Lord True did. But, of course, the problem extends to the Corporation of London, which has relatively few council properties, most of which—if they were put on the open market— would be of extremely high value. Therefore, the definition of a high-value property is crucial not only in terms of a figure but of comparators with other London boroughs. I ask my noble friend the Minister to look very carefully at where the boundary of the defined area of high-value properties is drawn because, if it is drawn on the GLA area, we will see the total demise of social housing in central London. If it is drawn much more locally—perhaps on the LCC area, which may still be too wide in some cases—we can mitigate the problem. This issue concerns the point made by the noble Lord, Lord Tope, on the social mix in London. That social mix is very important for lots of reasons, including social cohesion, enabling people on lower pay to get to their jobs, live close to where they work and to work anti-social hours. I could go on and on—as we all could—to define the problem.

However, I add the caveat that this problem has not been created by this Bill and, sadly, is not of recent creation. As a former Member of Parliament for a part of inner London, I know with certainty that this problem has been generated over the last 30 years, and probably over the last 40 or 50 years, whereby, to obtain social housing, whether council or housing association property, a potential tenant had to be in a crisis situation. It was not enough to need low-cost housing; there was a requirement to qualify for it on grounds of disability, having a crisis housing need and being totally homeless, or having some other problems which got you up the housing list. Being on the list for long enough was not sufficient.

There are some very real problems in inner London. I know that my noble friend the Minister is very well aware of these problems, but they need to be specifically addressed and a blanket solution which covers the whole of the United Kingdom—or, indeed, England and Wales—will not solve them. We need a special and particular solution for London.

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Williams of Trafford) (Con)]

My Lords, before I respond to the amendments, I will make, as I did last week, some introductory remarks which will set today’s discussion in context and, I hope, reassure noble Lords about our proposed approach to this important issue.

For many years there has been underinvestment in housing, as my noble friend Lord Carrington and many other noble Lords have said. Recognising that the supply of housing needs to increase, as the noble Baroness, Lady Hollis, said, the Government have set a target of a million new homes by 2020-21 and are determined to do all that they can to boost housing supply. That is a key government priority. There are also many people living in housing association properties who do not have the opportunity to realise their dream of getting on to the property ladder because they do not have the right to buy. That is another key government priority. The provisions we are discussing today will support the delivery of both those priorities. I will explain how.

We know from published statements of accounts that the market value of local authorities’ housing stock in April 2014 was more than £200 billion. By requiring councils to sell their high-value housing as it falls vacant, we can realise that locked-up value to support the building of additional homes, increase housing supply and extend home ownership by funding the right-to-buy discount for housing association tenants.

Let me also be clear: this is a flagship manifesto commitment. I am not going to get into arguments today about manifesto fundamentalism. I shall leave that to other noble Lords. It took centre stage when the Prime Minister launched the manifesto because he and this Government believe passionately in the importance of building more homes, which this country needs, and helping more people achieve their dream of owning their own home.

I also want to update your Lordships’ House on the commitment I made at Second Reading when I said I would keep noble Lords informed as we made progress with the collection of data on the 1.6 million homes owned by local authorities. I understand the frustrations that have been expressed that we have not yet provided noble Lords with more details of the policy. I hope that noble Lords will understand the importance of ensuring that we have all the data and that they are correct before we make policy decisions that will inform how much individual authorities have to pay.

The majority of local authorities had provided data by the end of January 2016 but there were some outstanding issues, such as a lack of vacancy information for some areas. We have now obtained almost all the data required, and we are processing and validating them. I hope that noble Lords will understand that doing this for more than 16 million pieces of data takes time.

That is why this legislation has been designed as a clear framework for the policy, to enable us to take into account the housing that is owned by local authorities, in line with the manifesto commitment and without restrictions that are inappropriate or unnecessary. We have also been conducting an intensive engagement exercise with local authorities to understand their views about the policy, and we will reflect on those as we develop the regulations. I reiterate my commitment to your Lordships’ House that I will bring forward the detail that noble Lords want as soon as we can.

I close my introductory remarks by thanking noble Lords for their scrutiny of the Bill and by emphasising what I said on Tuesday—that this will help shape the development of this policy. I also assure noble Lords that the Government will take into account all the points that have been raised as they take forward the legislation.

I now turn to the amendments, for which I thank the noble Lords, Lord Kennedy, Lord Beecham and Lord Kerslake, and the noble Baroness, Lady Bakewell. Parts of Amendments 61 and 62A relate to components in the calculation of payments. Clause 67 already allows for costs and deductions to be set out in the determination. These will be detailed in the determination, on which we will consult local authorities, their representatives and their relevant professional bodies. I assure noble Lords that in calculating the payment, we are committed to making a deduction in respect of the transaction costs for local authorities to sell housing, and in respect of the debt supported by those properties that are taken into account in a determination. We will continue to work closely with local authorities to establish how these figures should be calculated.

Parts of Amendments 61, 62 and 62A seek to deduct the cost of replacing properties from the payments required. Clause 72—and this may go some way to addressing the point made by the noble Baroness, Lady Hollis—already provides for the Secretary of State to enter into an agreement with a local authority to retain a portion of its receipts to fund new homes. The amendments would merely make deductions from payments and would not be able to require the delivery of the additional homes that the country needs in the same way that the agreements will. The amendments would simply allow local authorities to retain the funding. So the agreement process will ensure that local authorities will deliver the houses and will achieve value for money in doing so.

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[Baroness Hollis of Heigham]

Can the Minister also tell us whether all this information—and as a result, the Government’s estimate of the size of the levy and the contribution to be made by local authorities, according to their turnover and so on—will be available before we get to Report?

[Baroness Williams of Trafford]

My Lords, what is absolutely certain is that this is precisely what we will be consulting local authorities on. That is why both the conversations in your Lordships’ House and those with local authorities will be so important in making these determinations.

[Lord Shipley]

We are here on day five in Committee on the Bill and the Government are still part-way through a consultation. Would the Minister not agree with me that it would have been much better if the Government had acted sooner and had the information ready for consideration in Committee?

[Baroness Williams of Trafford]

My Lords, I can confirm that your Lordships’ frustration is equally felt by me.

[Lord Campbell-Savours]

Will the Minister confirm that this will all be in regulations, none of which we in this House will be able to amend?

[Baroness Williams of Trafford]

The most important part of this is that discussions with your Lordships and local authorities will inform the regulations.

[Baroness Hollis of Heigham]

If the Government are placing crucial policy decisions beyond the possibility of amendment in this House, because instead of being embedded in primary legislation they are going to be carried by SIs, any attempt to amend them in whatever form will produce synthetic outrage down the other end, and we will be told we should accept them whether we like it or not. This will not do. I absolutely understand that the Minister cannot be happy at the position in which she has been placed: she is essentially being asked to bring forward framework legislation, yet again, in which the heavy lifting will be carried out by SIs, which this House—which is supposed to scrutinise those SIs—cannot touch. Issues which could have been amendable in the appropriate way in primary legislation will be put beyond our reach.

[Lord Campbell-Savours]

That will put some of us in a very difficult position. Some of us always refuse to vote on fatal Motions, but we will have no option but to do so because of the whole way this Bill has been handled.

[Baroness Williams of Trafford]

One thing I will commit to is to meet with noble Lords before the draft regulations come in, on as many occasions as will be necessary to go through the various regulations that may be coming forward.

[Lord Foster of Bath]

I am grateful for the Minister’s offer to have such meetings, but of course they will probably take place long after the Bill has been enacted. She will be aware that the Delegated Powers and Regulatory Reform Committee has been highly critical of this aspect of the Bill. It has also been critical of the Government’s proposal that the negative procedure be used, rather than the affirmative procedure. I remind the Minister that the Committee said that the memorandum the department sent to the committee,

“justifies the negative procedure on the basis that ‘the range of values within which it will be possible to set the definition of “high value” will be limited by normal public law principles’”.

I confess I do not understand that, but the Committee goes on:

“We do not regard this as being even remotely persuasive”.

The Minister could at least commit the Government today to bringing forward an amendment to use the affirmative procedure as and when this ever gets before the House.

[Baroness Williams of Trafford]

To answer the noble Lord’s point, I am well aware of what the DPRRC has said about this, and I think he will be at least partially pleased when we respond. Perhaps I could make some progress, as I am aware that I am only part-way through what I wanted to say to a number of your Lordships. If any noble Lords want to come back again after I have spoken, they are very welcome to do so.

The noble Baroness, Lady Bakewell, talked about the selling off of bungalows in particular, as reported by the Joseph Rowntree Foundation. Councils will be required to make the payment to government in respect of their high-value vacant housing. Noble Lords, including those on the Lib Dem Benches, have made their views clear on this, but under the formula approach, councils will have discretion about whether individual properties are sold as they become vacant, and we will consider the views expressed by noble Lords on all of these elements as we develop the detail.

The noble Lord, Lord Best, asked when we will know what the formula is and how much local authorities will be required to pay. We will be consulting local authorities about the formula before issuing a determination, as I have said. We have been clear that decisions informing the determination under secondary legislation must be based on up-to-date information from councils. I have made the point about the huge amount of data and the real need to get that right.

I will spend a minute talking about the consultation process itself, because I know it is causing concern among noble Lords, and that points have been made about local authorities being engaged with this. Over the past few months, there has been a series of technical briefings, which I know many noble Lords have attended—for those who have not, I recommend them—about the various provisions in the Bill. We have also engaged closely with both local authorities and other stakeholders in helping to develop the high-value vacant housing policy and understand the potential impacts at local level. All stock-owning local authorities have been invited to at least one of the following events: a ministerial meeting with local authority leaders and/or members; a local authority chief executive discussion; or a round-table discussion between local authority and DCLG officials. In total, 180 contacts from 123 local authorities have engaged with the HVA process through one of these events. Going forward, we expect to continue to engage with local authorities and a wide range of stakeholders on the policy, because it is so important to get it right before making the final determination.

The noble Lord, Lord Kennedy, the noble Baroness, Lady Bakewell, and others talked about forcing local authorities to sell off properties. We have been clear that the country needs to live within its means and that we need to find the most efficient way of using public resources to deliver our manifesto commitments. As I have said, local authority statements of accounts show that there is over £200 billion-worth of value tied up in the 1.6 million local authority homes. We want to ensure that the value is used as efficiently as possible, and we know that more expensive vacant homes can be sold to provide additional housing as well as funding the discount for right-to-buy sales. This is an efficient use of assets at a time when we need more homes across all tenures. It is about increasing the overall housing stock, not reducing it. In London, where there is the greatest housing need, the legislation provides that local authorities which enter into an agreement will need to provide at least two new affordable homes for each home that is expected to be sold. I recall giving some of the detail of that the other day.

The noble Lord, Lord Kerslake, asked why the Government are not pursuing alternative ways of funding, for example equity loans. As the noble Lord, Lord Horam, said today and as I said last Thursday, the discounts will be on the same basis as the existing right-to-buy scheme. Equity loans would not provide that same offer to those tenants. The noble Lord also questioned why I could compare this to the Government’s sale of surplus public assets. I fully agree that there is a real need for additional housing in this country, but there is no need for any council whatever to hang on to expensive homes when it could build, at a fraction of the cost, new homes which meet its housing needs just as well, if not better. It is in this spirit that the Department for Transport has brought forward land for sale around King’s Cross that is valued in the department’s account at £345 million, and the Ministry of Defence announced plans in January to release 11 sites in England that could generate £500 million and provide land for around 15,000 new homes. We need to make sure that we make the most efficient use of our assets—that is the point I want to stress.

[Lord Kennedy of Southwark]

How is this an efficient use of assets? It seems to me a most cumbersome, inefficient tax and raid on council housing.

[Baroness Williams of Trafford]

I think the noble Lord and I will disagree on this but it is incumbent on owners, whether private owners, the Government or local authorities, to make the best use of their assets, whether that means selling expensive ones or not. I accept that we will have to agree to disagree on this but that is our view.

The noble Lord, Lord Kerslake, talked about the right to buy not delivering one-for-one replacements and questioned how the policy would do so. In the first year following reinvigoration, 354,000 additional homes were sold, and by the end of the second quarter of 2015-16 there were 4,117 new starts and acquisitions. That means that, to date, authorities are delivering a new home for every one sold.

[Lord Kerslake]

I am intensely aware of just how long we have gone on but I cannot let that point pass. It is essential that the Minister address the analysis in the NAO memorandum, which clearly identifies the challenge here. This would all be a lot easier if we could see a set of numbers that said, “Here’s the potential receipts, here’s the potential deductions from those receipts and here’s how it will balance with the cost of the discounts”. We might then be able to have a sensible debate.

I make one last point on what the Minister said. I am absolutely up for efficient management of stock and I am very much up for a duty on local authorities to manage their stock efficiently. But this is not about efficiency; this is about a levy to pay for a government policy.

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[Baroness Williams of Trafford]

My Lords, it is both but I take the noble Lord’s point. I am sure that, as time goes on, we will discuss those figures again and again and perhaps courteously argue about who is right and who is wrong. The noble Lord does not think that the numbers add up and I have just responded to that.

The noble Lord, Lord Best, talked about the sale of high-value assets raising £4 billion per annum. The amount of receipts raised will depend on a number of factors and decisions. The Bill sets out the framework, with further detail to be provided through secondary legislation, which I know noble Lords are frustrated about. However, the Bill has flexibility through the formula approach, which enables us to continue working through the details with the sector. Once we understand what the data tell us, we will be able to consider what the detail will be and, subsequently, how this will fund the two aims of the policy: right-to-buy discounts for housing association tenants and the building of new homes. Therefore, I am very grateful for all the points that noble Lords have made today.

The noble Lord, Lord Campbell-Savours, asked whether rents will triple in London. I know London is a very expensive place to live—nobody is denying that—but I would not expect rents to triple. As I have said, the important thing is that we will take the time to talk to those implementing the policy on the ground to guard against things happening that we would not intend.

The noble Baroness, Lady Janke, who is not in her place, talked about looking at best practice. As with other housing policy, there will be a technical consultation on the detail of the determination and we would expect the relevant professional bodies to include CIPFA, the LGA, the GLA and local councils. We will of course look at what innovative local authorities such as Bristol—it is a shame the noble Baroness is not in her place—are doing, as she suggested.

The noble Lord, Lord Campbell-Savours, asked how we can justify wide boys making a quick buck, making a point about landlords taking advantage of tenants. We are aware that there are people who will seek to gain from any policy and will find ways to circumvent any safeguards we put forward. None of us could fail to be affected by the story described by the noble Baroness, Lady Hollis, on Tuesday of the elderly pensioner reluctantly buying his home to see his grandchildren due to the unscrupulous actions of his daughter-in-law. We are alert to the ways through which some people may be seeking to gain from right-to-buy sales, both under the existing scheme and the voluntary scheme with housing associations. This is one thing we are considering as we progress through the pilot this year. We want to strike a balance between guarding against abuse and overlimiting the right of individuals to buy their homes through right to buy.

The noble Baroness, Lady Hollis, also mentioned the reduction in social rents being an additional burden on housing associations. However, rents in social housing have been increasing faster over the past five years than those in the private rented sector. If this change puts more money back in the pockets of the people paying the rents, we think it is the right thing to do.

[Baroness Hollis of Heigham]

My Lords—

[Baroness Williams of Trafford]

If I could just conclude, the noble Baroness can then intervene.

We are making changes in the interests of fairness to bring rent increases in the social sector back in line with those in the private rented sector. Housing associations and local authorities have already proved themselves more than capable of responding to the change.

[Baroness Hollis of Heigham]

My Lords, it would be helpful if the Minister, when she made the statement about the reduction in rents to the benefit of housing association and local authority tenants, had accepted that three-quarters of that money will go back to the Chancellor in reduced housing benefit. This is not a “helping tenants to afford their rents” policy; it is about reducing the housing benefit bill.

On a separate point, I know the Minister is trying to be helpful about the information we will no doubt get, but will we have all this key detailed information—the result of the consultation—before we get to Report, so that we do not have to rely on the statutory instrument proposal for stuff that should be in the Bill?

[Baroness Williams of Trafford]

My Lords, regarding whether the Chancellor benefits, my point is that this will be of benefit to tenants if their rents reduce. It will make a difference to a lot of tenants.

The noble Lord, Lord Horam, asked why we do not raise the local authority borrowing cap so that councils may borrow more. This was mentioned time and again during the consultation process leading up to the local government finance settlement. We listened to the authorities and £221 million of additional borrowing was allocated to 36 councils in England. That will support around 3,000 new affordable homes.

The noble Lord, Lord Kerslake, asked whether right-to-acquire tenants would have the right to buy under the voluntary deal. Minimum eligibility has yet to be determined for the main voluntary right-to-buy scheme, but we are currently working closely with the NHF and housing associations on the implementation of the agreement. For the pilot, it has been set at a minimum of 10 years, as the noble Lord will know.

The noble Lord, Lord Tope, asked what “high value” will be set at, which is a very pertinent question. Will it be at market price? I am aware, as noble Lords have pointed out, that it is important for the legislation but has yet to be set. The definition will be informed by the data that I have talked about, which we are collecting from local authorities and the market value survey. Although we have had some information on house prices and local authority stock across the country, we felt it was important to update this information as it will be pivotal to establishing how much individual authorities will have to pay. As noble Lords will know, the definition of high value will be set out in regulations—I hear a groan going up across the House as I speak. We are currently giving careful consideration to the fairest and best way to set that definition. In doing so, to address the point made by the noble Baroness, Lady Bakewell, we will have regard to factors such as property size and geographic location. I genuinely welcome any further thoughts that noble Lords may have on this point.

The noble Earl, Lord Lytton, talked about investment in social housing being short term. We are doubling our investment in housing over this Parliament to more than £20 billion over the next five years. This is the largest housing programme by any Government since the 1970s. Under it, there will be 100,000 affordable homes to rent and 400,000 affordable homes.

The noble Lord, Lord Tope, talked about this as a levy, a tax that does not relate to the actual sale of high-value vacant stock. Local authorities prefer the use of a formula to determine payment to basing payments on actual sales. It will give local authorities greater certainty and predictability, which will help them better to manage their finances, and it will provide greater flexibility for them to choose what property they sell to make the payments.

The noble Lord, Lord Shipley, talked about his red line issue. This is part of our wider efforts to help anyone who works hard and wants to get on the property ladder to do so. I understand his concern over the links between the two policies, but it is important to remember that receipts from these sales will be used to fund the building of more homes by housing associations and local authorities, to increase overall housing supply all over the country, so that we reduce the regional imbalance of housing supply—an issue raised by the noble Earl, Lord Lytton.

[Lord Shipley]

I just want the Minister to understand the importance of this policy. Our red line is the compulsory or forced sale of high-value council homes when there is a need for them in the locality. That is the red line. The fact that part of the receipts might be used to build a replacement or support the purchase by the tenant of a housing association property is secondary to the issue of a local authority having the power to decide whether there is a need for that property. I hope that the Minister understands the importance of that.

[Baroness Williams of Trafford]

I understand what the noble Lord says, and if there is particular need in an area for a specific type of housing, it is within the local authority’s gift to issue the money, as opposed to selling the property. The whole point is about increasing the housing stock across different tenures and different parts of the country.

Finally, to address a point made by the noble Baroness, Lady Hollis, about stock transfer, the policy will affect the 165 councils that own housing and operate a housing revenue account—the noble Lord, Lord Kerslake, helped here, and he is absolutely correct.

[Baroness Hollis of Heigham]

Am I right to say that those 165 local authorities will be cross-subsidising not only the right to buy on their own patch but the right to buy in the other 300 or so housing authorities in the country?

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[Baroness Williams of Trafford]

The noble Baroness is correct that the policy will apply only in those local authorities that operate their own housing revenue account.

I hope that my responses have provided some reassurance to noble Lords on some points. The Government are committed to ensuring that the calculation of payments includes deductions in respect of the transaction costs for the sale of housing and in respect of the debt supported by the housing that is expected to be sold. I hope that noble Lords are also reassured that we are committed to ensuring that a portion of receipts will be used to deliver new homes, and that the agreements process will provide as much flexibility as possible for local authorities to deliver as many new homes as they can. The amendments would not guarantee the delivery of the new homes that are desperately needed in the same way as will the agreements process. I hope that, with those comments, the noble Lord will feel free to withdraw his amendment.