Housing (Built Environment Committee Report)

Earl of Lytton Excerpts

Tuesday 8th November 2022 Lords Chamber

[The Earl of Lytton (CB)]

My Lords, it is always a pleasure to follow the right reverend Prelate. I declare my professional interest as practising chartered surveyor, and I follow the noble Lord, Lord Moylan, in saying what a wonderful chairman we had in the person of the noble Baroness, Lady Neville-Rolfe, for the production of this report. Its sharpness—the edge that it has—is her hallmark. What a privilege it has been to serve on the Built Environment Committee and to work with colleagues. I add my thanks to our clerk, policy analyst and committee operations officer for their untiring efforts.

For me it was a real pleasure to come across Professor Paul Cheshire again. He was one of my lecturers when I studied at the College of Estate Management 50 years ago. I just hope he felt that some of the fairy dust and some of his wisdom had sunk in.

I warned our chairman, the noble Lord, Lord Moylan, that I might be making a bit of a departure. I will leave the bulk of the report to speak for itself because I think it largely does that. I should like to address a little of what I might call the size of the remaining iceberg that lies beneath the surface. I may be slightly nearer to the noble Baroness, Lady Thornhill, than she might at first suppose.

We concluded that behind delivery shortfalls against target there is some lack of coherence in government policy in relation to delivery, particularly in the area of planning, which has been referred to. It is not that the Government do not have clearly stated targets—they clearly do—but the mechanism for getting results seems in disarray. A series of patch and repair operations has been undertaken over many years with an absence of thoroughgoing assessment of the implications in a very complex interleaving of tiers of government, executive agencies, international commitments, national priorities, societal and special interests, along with significant infrastructure challenges, not least when you have to meet them upfront as part of a development process. This may be due to the number of departments involved but also to the underresourcing of planning departments. They are matched by increasingly financially powerful volume housebuilders. They have been referred to in other circumstances as showing oligopolistic tendencies.

I think there is a wide perception of minimal corporate ethics in a sector that sits uncomfortably close to the political elite in the sponsorship of party conferences, political donations and photo opportunities for Prime Ministers and others wearing hard hats and high-vis jackets emblazoned with corporate logos. These might not be harmful of themselves, despite appearances, but there is obvious potential for what might be called high-level offline activity.

Closer to home, and with resource-starved authorities in high-value areas, there is clear evidence that these influences are being brought to bear in policy-making at local level, often—I suspect, and this is certainly the suspicion of many citizens—in priority to the express wishes of communities. After all, local planning officers can be effortlessly outgunned by skilled legal teams, even without recurring aspects that the average citizen would perceive as fundamentally dishonest. Strategic housing allocations are made but then built out at a dribble, thus perpetuating high and growing house prices and placing forward housing rollout in the hands of unaccountable private companies.

In turn, this leads to further manipulation and horse dealing over available sites. Railroading of developments is often done via ruinously expensive appeals and inquiries. Despite clear local and neighbourhood policies, citizens’ wishes are being overridden. As the noble Lord, Lord Moylan, pointed out, SME operators have been squeezed; they simply cannot compete in this environment. The public perceptions are negative, mistrustful and disbelieving of the conditions and controls, especially Section 106 ones, that they are told local authorities are able to impose.

Certainly, in my own area, one does not have to join up many of the dots to understand what has been going on over the last 18 months between the majority party on the council and a series of well-funded developers. Indeed, on the current matter of water neutrality, which is well up the agenda, it is beginning to look as if the clear principles set out by Natural England may be up for grabs via a system of permits according to a tariff, with long-term but ultimately unenforceable requirements of things such as low-flow taps and diminutive bath-tubs. Of course, none of these will diminish the core problem of growing abstraction and the resultant damage to environmental assets—at least, not any time soon.

Adequate delivery risks failure, not just in build-out rates and the quality of place-making and durability of homes but in less physical ways—for instance, rent charges, where a new freehold house is tied into annual payments for maintenance and management of common areas or public realm assets. That is the roadways, hard and soft landscaping, storm water drainage arrangements, play areas and maybe security systems and lighting—things that have not been adopted by the local authority. These charges are prone to being ratcheted up and can easily reach levels at which mortgage companies may decline to lend. This has earned the name “fleecehold”. Such additional charges, as compared with the generality of homes in a district as a whole, cause value writedowns and selectively unfair treatment. This is one of the unsatisfactory outcomes we are dealing with.

During my own researches, I happened upon one local authority that had set up a company to own and manage these rent charge opportunities, explaining as it did so that it would make a profit of several million pounds in the first few years of operation. This is from a council that decides the planning merits, sets the conditions and planning contributions, writes the Section 106 agreement and has the power to adopt public realm assets or not, as it chooses.

I could go on and explain—but I will not—how similar cost-recovery schemes may in due course feed into new home owners paying disproportionately for wider societal issues such as water neutrality, as I mentioned, or, perhaps more topically still, biodiversity net gain, and how the administration of these can easily cross the line between obligations, objectively fair administration and the appearance of disreputable practice. The entire delivery process is therefore between rocks and hard places, and sits above a crevasse.

The HBF—the noble Baroness, Lady Thornhill, referred to this—also sent me the report. That set out 12 critical additional burdens on the housebuilding sector, which cumulatively would add £20,000 to the build cost of every new home. That was an average; the range was £19,000 to £21,000. If that is correct, then affordability will go out of the window and, as the HBF suggests, development viability with it. There is just too much being taken out of the system.

I hope the Government will take careful note of the issues for meeting housing demand that we have reported. What we have set out are really the headlines; there is a good deal more subtext underneath. We need to recalibrate and facilitate better social housing build-out and, as the noble Lord, Lord Moylan, has said, a better situation for small and medium-sized enterprise. That will require a substantially different model because, as I see it, resources from housing development and the housing delivery process are being dissipated.