Housing and Planning Bill

Lord Beecham Excerpts

Tuesday 26th January 2016 Lords Chamber

[Lord Beecham (Lab)]

My Lords, I join other noble Lords in congratulating the two maiden speakers tonight, the noble Lord, Lord Thurlow, and the noble Baroness, Lady Thornhill—despite, in the latter’s case, what Watford have done to Newcastle United three times this season. Their contributions to this debate have been extremely constructive and helpful.

Eighty years ago, a book was published entitled The Strange Death of Liberal England. The Bill will help to encompass the strange death of social housing. It is strange because councils and housing associations have played a critical role in the provision of good-quality, responsibly managed, affordable housing for rent, and it will be fatal because, inexorably, through the right to buy at significantly discounted prices and the impact of enforced rent reductions, the social rented sector will decline.

I understand why many housing associations agreed to the so-called voluntary deal over right to buy, but they made a grave mistake. With their small majority, the Government would have struggled to impose this radical change on the working of the sector. I predict that if over time they become dissatisfied with the progress of the new right to buy, it will be made compulsory, as it already is for council housing. Needless to say, no such right is contemplated for private sector tenants, now 20% of all householders—twice the proportion of council tenancies in the overall housing stock.

It is, of course, legitimate and right to facilitate the perfectly reasonable aspirations of people wishing to own their own home, but not at the cost of those who do not have such aspirations or the financial wherewithal to meet them. Yet this is what will happen, while the beneficiaries of starter home purchases and of right-to-buy discounts will make a tax-free gain on resale after just five years.

Just how many people will be able to afford the so-called affordable homes—a point raised earlier in this debate? In Newcastle, there are 5,923 applicants on the council’s housing register, 95% of whom earn less than £20,000 a year. The maximum mortgage they could achieve would be £70,000. The Minister visited Newcastle recently. Indeed, she visited my ward, where a new housing estate is being built. She was very impressed with it, and rightly so. The houses are being sold for £170,000, which puts them well beyond the range of the people on our housing list, although in that scheme the council has been able to ensure some houses at reasonable affordable social rents. The opportunity for similar schemes in future will be denied the city, its residents and other authorities.

The last Labour Government could legitimately be criticised for failing to secure more new council housing, although their overall record on new building was reasonable and certainly better than under their successors, who, incidentally, cut housing investments by two-thirds on coming into office in 2010. The noble Baroness, Lady Eaton, referred to a sharp fall in housing completions after 2008. The economy had a sharp fall globally after 2008. The first 100,000 houses built under the coalition Government in their first year were of course started before they came to office—and, as we have heard, their present record is of course quite abysmal.

But in any event, people all too readily forget the Labour Government’s massive investment in improving the housing stock, not least under the aegis of the Homes and Communities Agency, and there is nothing at all in the recent comprehensive spending review for the provision of social rented housing. Yet investment in such housing does not embody a subsidy. As my honourable friend Clive Betts pointed out on Report in the Commons, housing revenue accounts, like councils themselves, have to balance their books. The only element of subsidy at present is the right-to-buy discounts, to which the Bill will add the 20% discount on starter homes. The noble Lord, Lord Horam, rightly called for permission to borrow to be extended to promote council building. I very much welcome that suggestion and I hope that the Government will listen to one of their more senior and experienced Back-Benchers in that respect.

Extending the right to buy to housing association tenants, initially on a voluntary basis, has to be seen in the light of experience in the council sector so far, where for every nine houses sold only one has been replaced, and where a higher proportion of those sold has ended up in the private sector, with higher rents and a correspondingly high impact on housing benefit. Moreover, 91% of sales are deemed unaffordable to people on the national average income of £26,000 a year—which, if that represents the household income, is less than the threshold for the pay-to-stay provisions of the Bill, to which I will return later. Even the CBI and leading property agencies have opposed the Government’s measures in this respect. The Institute for Fiscal Studies referred to:

“The coalition’s less-than-impressive record in delivering replacement housing under the existing right-to-buy”.

It warned of the risk of,

“further depletion of the social housing stock”.

Of course, the Government again talk of replacement, now in deference to their candidate for the London mayoralty, at the rate of two to one in the capital. But that will include the new starter homes, which might represent a physical replacement, but, at costs of up to £250,000 or £450,000 in London, are unlikely to accommodate many, if any, of those on the current long housing waiting lists. Crisis reports that families on or below the so-called national living wage will be unable to afford starter homes in all but 2% of council areas, and in only six council areas will people on average wages or less be able to take advantage of the scheme. In any case, where, I ask the Minister, will these new homes be located—and, as my noble friend Lady Blackstone asked, will the Government monitor the incidence of where these replacements take place?

One of the underlying effects of the government policy that will be made worse by the Bill’s provisions in relation to pay to stay and security of tenure, adding to the existing impact of the bedroom tax, is the effect not only on individuals but on communities. People will be expected or driven to seek affordable accommodation—affordable in a real sense to them, not as defined by some centrally contrived formula—in a different area from where they currently live. Clearly, it will often be difficult, especially in rural areas, to find such alternative homes in the social or even the more expensive private rented sector. The National Association of Local Councils says that it is,

“amazed at the level of rural proofing of these proposals given the government’s response to the Cameron review”,

and calls for an amendment to provide for a rural-proofing review after two years.

Several of your Lordships referred to the problems of rural areas. My noble friend Lady Royall called for an exemption from the right to buy; the noble Lord, Lord Cameron, expressed scepticism about the impact of starter homes; the noble Lord, Lord Teverson, talked about secure homes; and others touched on the problems of rural areas. But individuals and families in both urban and rural areas will not only have to move home; they will have to change their children’s schools and their GP, face longer travelling times to their jobs and start life again in a new community. Ironically, the members of better-paid households may be the more likely to engage in the life of their existing community—a point made by the right reverend Prelate the Bishop of Rochester and the noble Baroness, Lady Thornhill, and expressed implicitly in the very moving speech of my noble friend Lord Bassam.

Moreover, as we have heard, levels of household income at which pay to stay kicks in are very modest. At £30,000 a year, two people on the national minimum wage in a household will face a large rent increase. As we move to a proper living wage, the London figure of £40,000 will trigger the same effect. A pay increase or a better-paid job will incur a higher rent, which will have the effect of penalising endeavour by, in effect, a tax increase—a point made by my noble friend Lord McKenzie. The presence of other family members who have an income—a son or daughter in work or a parent with a pension—may add to the problem. What will be the effect on incentives? As with so much else, councils will have no discretion in the matter; it is yet another exercise in central government dictation at a time when the Government speak grandly about devolution.

What is to happen to specially adapted properties? For that matter, exactly what are the Government going to do about supported housing schemes, about which serious concerns have been voiced—and voiced again today by the National Housing Federation and Women’s Aid? If I heard her correctly, the Minister indicated that they may not be affected by the proposed legislation. Perhaps she could clarify that point when she replies to the debate.

Finally in relation to social housing, there are grave concerns about where the proceeds of sale under right to buy or in relation to vacant high-value homes will be applied. Clearly this will present problems for London and perhaps other areas. To what extent have the Government consulted about this and where do they imagine the impact will fall? The Conservative Member of Parliament Mark Field declared that he worried,

“that forced sales will deplete stock, and that once a windfall has been pocketed, the property concerned will simply be rented out to a high earner”.—[Official Report, Commons, 12/1/16; col. 732.]

Apparently this had already happened in many housing estates in his constituency. In short, he summarised the fears of an eventual house price bubble.

There is one other aspect which, for the last few years, has perhaps distorted the housing debate, and that is the very low interest rates which have fuelled the enormous increase in house prices. Sooner or later rates will rise. What impact will that have on the demand for house purchase, on the ability to buy of even those benefiting from the discount on starter—allegedly affordable—homes and on the market generally? I well remember when Labour took control of Newcastle City Council. In 1974 we bought a newly developed private housing estate from developers who simply could not find buyers. Eventually, of course, they were all sold under the Thatcher Government’s right-to-buy scheme, with virtually no replacements. The Council of Mortgage Lenders warns of the impact of the starter homes discount and the right to buy on the “lenders’ appetite to lend”.

I endorse the concerns expressed by my noble friend Lady Whitaker about Gypsies and Travellers, and I deplore the failure of the Bill to tackle homelessness. Those observations were also supported by the right reverend Prelate the Bishop of St Albans.

While I welcome the Bill’s measures in respect of rogue landlords, it is regrettable that it fails to provide greater security for private tenants—and, as my noble friend Lord Young reminded us, it is simply astonishing that the Government voted down an amendment to secure that all rented properties must be fit for human habitation.

The planning sections of the Bill also raise significant issues. The usual suspects in the property industry proclaim their usual mantra, blaming local planning authorities for the dearth of new building, while presiding over around 500,000 unused planning permissions and, as the noble Lord, Lord Palmer, pointed out, holding large areas of land without taking the opportunity to develop them.

Building starts, the Town and Country Planning Association reveals, fell by 14% between April and June last year. It points out that although the Bill creates a presumption in favour of starter homes and exempts them from Section 106 and community infrastructure planning requirements, nothing is said about design, space or energy requirements. There is an issue not just about the number of homes we need, but about what we are building. We already have the smallest units of any comparable country, and the coalition downgraded the energy efficiency requirements. On this, the Government in general and the Bill in particular have nothing whatever to say.

The trend of bypassing both local authority and community interests, which has become an increasing feature of this Government’s policy, notwithstanding their earlier promises to the contrary, is continued in the Bill.

Under the nationally significant infrastructure projects regime, housing will, in future, be permitted additional to that related to the relevant infrastructure project, with no limit being set out in the Bill. The TCPA argues that any housing in a nationally significant infrastructure project scheme should be incorporated only if allocated in a local plan.

The TCPA also questions the single consent scheme established by Clauses 136 and 137, under which the Secretary of State may grant permission in principle in respect of land allocated for development. This proposal is to be the subject of consultation. Perhaps the Minister will indicate when this will be concluded and whether the outcome will be available before we reach Report. Will the Minister clarify the effect of Clause 136? Will planning authorities be able to specify whether or not a site is subject to PIP, or will the Secretary of State be able to require them to specify housing land for this purpose? In any event, as the TCPA points out, land allocation is not the same as planning consent; it is the first step in a process that needs to involve detailed working through. There are also questions about this so-called zonal planning’s impact on a wide range of issues—from commercial to waste, or even perhaps fracking. What, if anything, will be excluded from the PIP process?

The TCPA raises further questions about the effective outsourcing of the processing of planning applications to alternative providers under Clause 146. Some councils choose to do this given the huge pressure on their budgets and the difficulty of retaining sufficient staff. But the Bill goes beyond that process and, crucially, envisages that the developer may appoint a designated person and, alarmingly, that the Government may by regulation allow that person’s advice to be binding on the local planning authority. This is wholly unacceptable both as to the substance and the procedure that the Government are adopting, which is, as we have seen so many times in this Bill, to proceed by way of secondary legislation.

This brings me, Members will be relieved to hear, to some closing observations on the Bill and, in particular, on the way the Government have handled it. The Bill grew in length exponentially between Committee stage in the Commons and the two days of Report and Third Reading. Substantial amendments were tabled on planning, the regulation of social housing, the power of housing associations to charge high-earning tenants higher rents, security of tenure and more besides. Some of these measures were, and are, highly contentious.

The Government’s contempt for the process of adequately scrutinising legislation—a topic with which this House has been much concerned of late—is ever more apparent. It is compounded by yet another example of the woefully inadequate impact assessments that have so often been the subject of criticism across the House and in the Secondary Legislative Scrutiny Committee. It is made even worse by granting to the Secretary of State the power to ordain secondary legislation—an issue raised by my noble friend Lady Andrews and the noble Baroness, Lady Gardner. I have lost count of the number of matters to be carried forward by orders and regulations. Perhaps the Minister could remind the House just how many they are.

This Bill needs detailed and informed scrutiny, hopefully leading to amendments. I commend the statement by the noble Lord, Lord Porter, on behalf of the Local Government Association, which he chairs, and from the association’s president, the noble Lord, Lord Kerslake. They voiced concerns and announced the association’s intention to seek changes. The House, with its breadth of experience and skills—amply demonstrated tonight—will no doubt listen to the reasoned case made by the Local Government Association and others. I hope, in turn, that the Government will respond constructively. I will not, however, be holding my breath.