Lord Beecham
Main Page: Lord Beecham (Labour - Life peer)Housing and Planning Bill
Lord Beecham Excerpts
Lord Beecham
“( ) The total payment required from all affected local authorities in any financial year shall not exceed the total grant paid in that year to private registered providers in respect of right to buy discounts.”
Lord Beecham (Lab)
My Lords, I begin my speech in support of Amendment 63, in my name and that of my noble friend Lord Kennedy, and the other amendments in this group by referring to what passes for the impact assessment of the Bill. Under the rubric of “Problem under consideration”, it states that the provisions of the Bill,
“require councils to make a payment to the Secretary of State based on their high value … housing”,
which is expected to become vacant during the financial year. It does not say how “high value” is to be defined or calculated, which is expressly to be determined—surprise, surprise—by secondary legislation. Nor does it define what would be deemed to constitute “an expectation” and when that is supposed to crystallise. It goes on to state that,
“a formula will be used to calculate the payment each stock owning local authority is … to pay”,
for this will be required of local authorities whether or not the property is sold. As we have heard, the money will go to Her Majesty’s Government for onward transmission to housing associations to finance the right to buy. No formula is proffered in the impact assessment. Graciously, it states that local authorities will have to consider selling their high-value housing when it becomes vacant but will have “some flexibility” to decide which properties are sold. This generous concession is supposed to dampen the impact of the effective nationalisation and then privatisation of the housing in question. It does not indicate how much flexibility will be allowed.
The Government do, by way of an amazing act of largesse, say that a portion—unspecified—of receipts will be used to build more homes that reflect housing need. Can the Minister tell us how much flexibility will be allowed and in what circumstances? How and when will the Government determine the size of the portion of receipts to be used for building more homes? Will the Government prescribe the cost of such homes, their location or their tenure? If built as new council homes, will they be subject in turn to the right to buy?
The impact assessment asserts that by managing their stock more efficiently, something with which the Bill does not, as such, purport to deal,
“local authorities will release value tied up in such properties and this can be used to fund more homes which reflect the housing need”.
This bald statement does not deal with the destination of the proceeds, which is the Government, nor does it exclude the possibility of the proceeds being used for purposes other than funding homes. Indeed, since the Government would be using their levy on councils in respect of high-value homes to fund right to buy, it is hard to see how the proceeds could be used in any substantial amount for that purpose.
The summary of benefits and costs in the assessment states that:
“The determination process will provide … certainty for local authorities about the level and flow of receipts to be generated”.
Can the Minister provide the House with an example of how the process will work? Do the Government propose to deal with it in regulations? If so—once again, I have to ask—will we see the draft regulations before Report?
The summary in paragraph 4.2.8 goes on to assert:
“Data will be used to inform the setting of the high value threshold and the assumptions underlying the calculations in the determination”.
What data? Whence derived? When made public? Will there be discussions with individual councils about the threshold and any mechanism for appeal? Paragraph 4.2.10 acknowledges:
“Local authorities are likely to incur some costs associated with the sale of vacant property”—
a statement of the blindly obvious—but councils will no doubt be deeply relieved to note that:
“Consideration will be given to the deductions that should be made from the payment to the Secretary of State to reflect transaction costs associated with the sale of vacant properties”.
Have the Government made any estimates of such costs? Will this process involve secondary legislation to clarify the matter?
Paragraph 4.2.11 declares:
“A portion of the receipts will be used to provide more housing, reflecting housing need”.
What sort of housing? Housing for first-time buyers? Housing for rent? If for rent, what levels of rent? Housing in the authority area or perhaps beyond it? Above all, what sized portion? It further states that,
“the Secretary of State and a local authority may enter into an agreement to reduce the amount the authority has to pay so that new housing can be provided”.
Provided by whom? Does the Minister envisage, for example, an annual agreement based on an estimated number of sales at an estimated price? What would be the minimum number and minimum expected yield to make such an arrangement feasible? In similar vein, how feasible is it to require in London, as the same paragraph does, that,
“at least two new affordable homes are provided for each vacant high value home that is expected to be sold in the relevant year”?
That question has been raised more than once in debates thus far. Does not that wording suggest that councils are expected to make provision on the basis of an expectation rather than an actual sale? That sounds rather like a potential leap in the dark given the obvious uncertainty about numbers, price and timing, both in respect of sales and the proposed new building. How many sales and consequent replacements does the Minister believe would be a workable minimum to secure best value in terms of those replacements?
In five and a half years as a Member of this House, I have seen some poor impact assessments, but I do not recall any as utterly useless as this. I do not blame the Minister for a moment for that—she is probably suffering from the effects of an inadequate impact assessment as much as any of us. There is no assessment of the number of properties liable to be affected, no assessment of the possible amounts to be realised, no assessment of the number, type and costs of replacements and no indication of how the scheme might work in metropolitan areas where the housing market crosses local authority boundaries.
Shelter has done some calculations which the DCLG either has not done, which would be grossly negligent, or has done but apparently has failed to publish, which would be tantamount to concealing important evidence. These show for authorities an estimate of the number of houses that might fall into the high-value category. The Shelter study showed that in Newcastle, which in the words of a council officer will be badly hit, 1,611 council homes fall into the Government’s previously released high-value threshold. This will equate to 82 forced sales a year—in fact, the council believes that the Shelter figures are an underestimate. Moreover, even if a council were to transfer its stock to an external housing provider, it could still be issued with an annual charge based on the Secretary of State’s estimate of what would have been the annual turnover of high-value stock. This is yet another example of the Government giving the lie to their claims to be localist. As the Conservative-led Local Government Association has pointed out:
“Councils already consider the best use for their assets and any new duty to sell stock must be balanced against local housing need. Local authorities should retain all receipts from the sale of … high value homes and from council Right to Buy in order to invest locally in building new homes crucial to reducing waiting lists and welfare spending. The Bill should be amended to give councils maximum freedom to manage their own housing stock and to locally retain”—
the LGA’s split infinitive, not mine—
“capital receipts for reinvestment in new and existing housing, as a minimum retaining sufficient receipt to replace every home sold”.
This has been the gist of two or three speeches from the current chair of the association, the noble Lord, Lord Porter.
The LGA does not support the proposals to levy payments on the estimated value of higher-value properties, asserting rightly that the Government could decide,
“how much it would like to ‘tax’ each council with housing stock”,
and no doubt define what constitutes high value for the relevant area.
However, in addition to all these difficulties about principle, process and finance, there are more fundamental concerns. What steps, if any, will the Government take to avoid high-value homes joining the buy-to-let sector? What consideration have they given to the need for larger accommodation for large families or households with a disabled member requiring extra space, such as is currently the subject of litigation in respect of the bedroom tax? There is a case before the courts involving a third room in which necessary equipment has to be provided for a disabled member of the household. Would a household such as that potentially be subject to the treatment of high-value properties? Generally speaking, the larger the accommodation, the higher the value will be. In Newcastle, we have only 83 council properties with five bedrooms, 28 applicants with a housing need for them and a turnover of around only five a year. Will the charge be levied on those irrespective of the impact on available housing for those larger families, even on the relatively small numbers which we have to deal with? There will also be areas where bungalows will in high demand for similar reasons—very often occupied by elderly or disabled people.
Our amendments in this and subsequent groups deal with a wide range of issues arising from the Government’s simplistic and un-thought-through policies designed, in my submission, as electoral bait. Amendment 63 is aimed at the national position and would require the total payment from councils in any financial year to be limited to the total grant to housing associations for right to buy. That very provision underlines one of the most basic flaws in the whole concept: right to buy of itself creates no new homes. To the extent that the exercise of the right raises money, it will do so at the expense of the provision of council housing with no guarantee of local replacement and, inevitably, the eventual transition of a large percentage of properties to buy to let.
Amendment 64 would give a local authority rather than the Secretary of State the right to define what constitutes “high value”, while Amendment 65 would limit the number of high-value properties subject to the provisions of the Bill to 10% of the total local authority stock in a given area, thereby effectively capping the impact of the scheme in localities.
Importantly, Amendment 66 defines “high value”—something which the Government have failed to get round to doing—by excluding properties for which the cost of building a replacement with the same number of bedrooms in the same local authority area is greater than their value. Finally in this group is Clause 67 stand part.
This concept—borne of, at best, ill-conceived populism and, at worst, electoral opportunism—is about buying votes, not about building houses. It is shoddy, ill thought-out and ill-drafted legislation. We are asked by the Government to approve it in the absence of evidence of how it would work and what its impact would be. I urge the Minister to acknowledge its deficiencies and take it back to the ministerial drawing board or to whatever oxymoron of a right-wing think tank thought it up. This is a time not for Policy Exchange but for a change of policy. I beg to move.
Lord Lansley (Con)
My Lords, I intervene briefly on this group of amendments. I have listened with care and interest to the debate on the previous group and was hoping to contribute to that, but I think it is perfectly appropriate to do so now.
Lord Beecham
Actually, the Companion allows that. Because we are in Committee, noble Lords can speak on any aspect at any time, if that is any help.
Lord Lansley
I am learning the advantages of being in your Lordships’ House as opposed to another place. This is clearly one of them.
I am prompted not least by the introduction to the debate of the noble Lord, Lord Beecham. I can well understand his point of view about the absence of detail that we hope to see in regulations. I share the collective view across the House that we would like to see those regulations in order to understand how the architecture of the Bill will be shaped before we come to the decisions that we need to make on Report. But the absence of those regulations and that architecture affords an opportunity for the noble Lord to ask a lot of questions. Indeed, the amendments, in so far as they probe these issues, simply relate to a sub-set of the issues that potentially need to be covered in the regulations.
My personal view is that none of the amendments in this group would help us in any way because we need to see the whole shape of the regulations in order to understand this clause. From the Government’s point of view, there is considerable advantage in the flexibility provided by regulation in this area, rather than having too much rigidity in the system. I say that because I am prompted by what the noble Lord said: that this was about electoral opportunism rather than building houses. Actually, this is electorally popular. I have no doubt about that. The right to buy was popular in its time and is popular now, and the right to buy for housing association tenants will prove popular. However, the issue is about building houses.
Lord Lansley
In a way. I certainly do not propose to engage in a semantic debate about what the policy is described as. We know what it is and it will rightly be regarded by housing association tenants as the creation of a right to buy. It may be circumscribed in certain ways, not least by housing associations themselves under a voluntary agreement. But everyone will know what it is, and that is what they will be looking for.
On the latter point, I must say to noble Lords that I do not think I have to judge whether the policy was popular: it was. People voted for it and, frankly, at the last general election they voted for right to buy again. I do not think we need to have that debate. Indeed, that was not my purpose in speaking. I was addressing the issue that, actually, my noble friend Lord Horam made perfectly clear in a previous intervention. He was absolutely right. As I said at Second Reading, this is about building more houses. If we are to solve all the problems we are debating, we will solve them more readily if we are able to increase the number of houses we build. Then, we will not be trying to parcel out who lives in which home and under what tenure—as appears sometimes to be the purpose of these debates—rather than giving more people more opportunities to have whatever home they want under whatever tenure they want. The more homes we build, the more likely we are to be able to satisfy more of those ambitions.
Completely contrary to what the noble Lord just said, this is about building more homes. The local authority may sell houses, but those houses do not cease to be occupied. They will go into the market. That value, realised through the right-to-buy discount, will enable people to own the homes they are occupying. The housing association will take the market value and will, as a consequence, be increasingly equipped to invest in further new housing in the future. There is that benefit.
At the same time, the Government have an opportunity, and this is where the flexibility in the architecture of the Bill comes in. The Government will have flexibility in certain circumstances to say, “No, we can actually do more by way of building more homes where we most need those homes to be built if we reach an agreement with a local authority to build more homes, through which we reduce the deduction—the payment it has to make”. That is why the single example of Greater London in the structure of the Bill is indicative. Frankly, one for one would not in itself be sufficient to justify substantial deductions on the payment.
In so far as there is a given amount that is required to be paid over to housing associations that arises from the discounts, such payments might therefore have to be met by the Government out of general taxation. I see nothing in the Bill that requires the two sums to be exactly the same. That flexibility allows the Government to enter into agreements with local authorities. There is a clear incentive for local authorities to come forward with proposals that would allow them to build more homes than one could otherwise anticipate being built as a consequence of simply transferring that money through to the right-to-buy discount. The consequence, one way or another—through the housing association route, or the local housing authority arriving at an agreement to build more homes—is that more homes should be built. That is devoutly to be wished for.
What will help us to explore the issues arising out of the discussions in Committee is to know more about Clause 72. What do these agreements with local authorities look like? For my own part, it is important to be able to see a practical example. I declare an interest as an unremunerated chair of the Cambridgeshire Development Forum. We want to see houses being built. We need more affordable homes. In my time as Member of Parliament for South Cambridgeshire, I saw the housing waiting list in my constituency more than double. We have a fast-growing area. We have rising land prices and property prices. We have a lot of demand for key worker housing and affordable homes. In that sense, we are very much like the most pressed and needy areas of London. My noble friend talked about the changing geography of London and that is absolutely right. There are places outside London that exhibit characteristics very like some of the most stressed parts of London.
In encouraging the process of fleshing out between now and Report, I say to my noble friend that it is not just about fleshing out the regulations; it is about engaging in conversations with local authorities. I would be happy if my noble friend would allow such a conversation to take place between her department, South Cambridgeshire District Council and Cambridge City Council and for me along with colleagues to be part of that. We should discuss the potential for these deductions and what they can deliver. The Government are right to believe that they should have the flexibility to give local authorities leeway regarding the assumptions that would lead to payments into the right-to-buy discount if they are building more houses and showing the additionality of being able to do so.
For that reason, there has to be flexibility in the architecture of the Bill regarding, on the one hand, the ambition to build more houses through local authority agreements that directly correspond financially to a flexibility in how much money is asked of individual local housing authorities; and to what extent that money corresponds with the money provided in right-to-buy discounts.
Lord Beecham
Why not leave the decision to local authorities within whose boundaries these high-value properties are situated? How can it be justified to levy on those local authorities a payment when the property is not yet vacant?
Lord Lansley
I am grateful for that because I had not realised it until I listened to the Bill being discussed earlier today. The answer is that, insofar as the local authority seeks to achieve not just replacement new homes for the dwellings that are sold but to do more, the consequence in financial terms has to be borne by the Government, so the Government are a partner in this proposal. It does not automatically follow, as one of the amendments in this group implies, that the amount of money that is derived from local authorities through the payments that are required under Clause 67 has to correspond with the amount of money that is provided to housing associations under the right-to-buy discount. If there is a difference, and in particular if there is a shortfall, it is down to the Government to cover it. Frankly, I think that the Government, through agreements reached with local authorities, should have the flexibility to create such a shortfall and to fund it differently.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Williams of Trafford) (Con)
My Lords, I thank noble Lords who have spoken in the debate and the noble Lords, Lord Kennedy and Lord Beecham, for their amendments. I welcome the suggestions on how we could limit the payments that are required, and their consideration of the potential impacts that the policy could have on local authorities. As I said before lunch, I also welcome their arguments on alternative ways of defining high value for the purposes of the Bill.
I understand the criticism of the impact assessment made by the noble Lord, Lord Beecham, but it was intended as an outline, not as a detailed value-for-money assessment. Alongside the impact assessment accompanying the Bill, we have worked in partnership with the Better Regulation Executive to produce regulatory impact assessments for all measures, including all reforming regulation on business or civil society. This is in line with the Government’s Better Regulation Framework Manual and these assessments are subject to independent scrutiny by the statutory Regulatory Policy Committee.
The regulatory impact assessments were not appropriate for the extension of right to buy and HVA measures. The extension of the right to buy to housing associations is voluntary, not regulatory, and the sale of local authority HVAs affects only the public sector. Of course, we are fully aware that we need to go through all the detailed steps of option appraisal and value-for-money analysis. We agree that this is necessary to ensure that Ministers’ decisions are informed by a full value-for-money analysis. That is why we have done very extensive and—as the NAO acknowledges at paragraph 3.17 of its report—internal analysis. We have clear processes to require this internally.
The work we have done includes policy costings in line with OBR/HMT guidance, an economic assessment of right-to-buy extension, which underpinned a bid in the SR for the pilot scheme, ongoing analysis of the costings, the impact of the sale of HVAs and the commissioning of new data to support this, analysis of financial flows and an inequalities impact assessment. We will publish further detail later this year. In the case of right to buy, this will be jointly with the HA sector, as the details of the voluntary agreement are developed, including though the pilots. In the case of HVAs, this will be alongside secondary legislation following Royal Assent. I reiterate that noble Lords’ contributions will inform these considerations, as will the thoughts from the other place and our engagement with local authorities and the other stakeholders.
Before I address the amendments in detail, I shall provide a general response to, and defence of, these measures, and in particular Clause 67. This chapter on the sale of vacant, high-value local authority housing is one important contributor to the Government’s aim of increasing home ownership and housing supply. The Government are taking the lead in managing public assets, selling where it is right to do so, and local authorities should do the same. We talked about this at length this morning. We want local authorities to sell their high-value vacant housing so that the value locked up in those properties can be released. This value will be used to fund the right-to-buy discounts for housing association tenants and the delivery of additional homes.
I know that there are a number of concerns about the policy.
Lord Beecham
What is the proportion between the right-to-buy discount and the provision of new homes?
Baroness Williams of Trafford
Well, we are all fairly frustrated about this, I think it is fair to say. I have to keep telling noble Lords that I am not ready to give the details. But as your Lordships know, I will do so as soon as I can.
Lord Foster of Bath
I share the noble Lord’s view that this is not an attack on the Minister, who has been clear that she is doing her very best to provide the information. However, I do not share the noble Lord’s view that we should wait for a period before the Minister brings forward the information she has promised. The timetable of work that is being done is available today. The department will have that information. I hope the Minister will be willing to say that, by the next meeting of your Lordships’ Committee on the Bill, we will have the information on where we are at each stage.
Given where we now are, I also hope the Minister will further reflect on the view that has been expressed by many people, including the Delegated Powers Committee, that many of the bits of secondary legislation that will come before us, which it is currently proposed to deal with under the negative procedure, should now be moved, by a government amendment, to the affirmative procedure.
Lord Beecham
My Lords, will the Minister report to the Government that this House very much regrets the impossible position in which she has been placed by the Government, has every confidence in her good intentions but regrets that she has been unable to fulfil them because the issue is entirely out of her control, and has confidence in her but has no confidence thus far in the way the Government are proceeding?
Baroness Williams of Trafford
I thank noble Lords for their words, particularly my noble friend, given that I have not been here for 11 of the past 13 years. This is a very complex Bill and how to proceed with or without some of the secondary legislation that goes with it is quite new territory for me. As the Bill is so necessarily complicated, I imagine that with it will go an awful lot of secondary legislation. I will definitely commit—I have already promised and I do not intend to break my promises—to the noble Lord, Lord Foster of Bath, that that timetable will be with noble Lords in the next week or so. That is on the record now: the timetable of secondary legislation will be with noble Lords in the next week or so.
In defence of myself, in a sense, and certainly of officials, I make a plea to noble Lords to avail themselves of some of the technical briefings that are going on as the Bill proceeds. They are incredibly useful for getting some of the detail. I know most noble Lords here have attended the briefings, but please continue to do so.
Baroness Williams of Trafford
The days blur into one a bit, my Lords, when we think about the days we have spent debating.
I wanted to respond to the question of the noble Lord, Lord Beecham, about the appeal mechanism. The process for setting the payments is set out clearly in the Bill. The determination under Clause 67 will set out the formula and the payments, and the Government are required to consult before making a determination. Once the draft determination has been prepared, local authorities will be given the opportunity to check the figures and raise any queries with the Government. I know that that is not essentially an appeal process, but there is a toing and froing of views before the actual determination is made.
I turn to Amendment 63. I should make it clear that the policy has two aims: first, to fund the extension of the right to buy to housing association tenants; and, secondly, to build much-needed new homes. I reassure the noble Lords, Lord Kennedy of Southwark and Lord Beecham, that we have no intention of using the funding for any other purpose.
The second aim, the funding of new homes, is the reason why I do not want to restrict the payment that local authorities make to the Government simply to the same amount as the right-to-buy discounts for housing association tenants, as Amendment 63 would do. There may be times when local authorities do not want or are unable to deliver new homes, and I do not want to compel them to build more homes if they do not have the plans or processes in place to do so. As my noble friend Lord Lansley said, I want the flexibility in those circumstances for the Government to use that portion of the receipts to deliver new homes through other channels. Therefore, it will need to be paid to the Government. Flexibility will be essential to ensuring that the new homes needed are built.
Lord Beecham
Just to clarify, does that mean building new homes potentially in a different locality from that in which the money has been raised?
Baroness Williams of Trafford
My Lords, it could be, but the overall thing is that we will be adding to the stock of homes in this country.
Turning to Amendment 64, the changes proposed would be a significant task for local authorities, for which they would need considerable guidance. The biggest difficulty would be how to ensure that any methodology used across the 165 stock-holding local housing authorities was applied fairly, consistently and transparently. We have collected data from all stock-holding local authorities to enable a consistent methodology to be applied to determining the high-value threshold. That does not mean that we would set one high-value threshold for the whole country. Noble Lords have probed this on several occasions today, and I want to confirm again that we have the flexibility in the legislation to define it in different ways for different areas, as we know that house prices vary vastly across the country. However, it would mean using the same data and the same principles to apply a consistent approach to setting the definition of high value. The amendment would effectively transfer the onus of defining “high value” from—
Lord Beecham
My Lords, as ever, it has been an interesting debate—necessarily, I am afraid, longer than any of us would have liked but there is a huge amount of detail and a great many concerns about the Bill.
I thank all Members for their contributions, particularly my noble friend Lord Campbell-Savours, who regaled us with some very worrying details of life in Westminster. However, I caution him sometimes to take Zoopla’s valuations with a grain of salt; for a short period my own house in Newcastle, a pleasant four-bedroomed semi, was valued by Zoopla at £5.96 million, which would have made it by a considerable margin the most expensive house in the city. When I pointed out that this was possibly slightly overdone, Zoopla corrected it, and I have been going round ever since saying that I have just lost something over £5 million on the value of my house. So one has to look carefully at some of the figures. However, I dare say that the rest of my noble friend’s figures were robust.
The Minister has again earned the thanks of the House for the way in which she is endeavouring to deal with an almost impossible task. If anybody deserves some promotion and recognition among Ministers who serve in this House, she qualifies, and I expect my 10% of any increased salary for acting as her agent when that matter arises. However, I take issue with some of the conclusions that she has come to and indeed some of the replies that she made. She talks about selling the properties where it is right to do so. The question is: who determines where it is right to do so? The answer is not the local authority, which has knowledge of the local community, but, effectively, the Government. That is a ridiculously formulated conclusion because it does not put what should essentially be a local decision in the hands of anybody accountable to the local community but gives it to some machinery established by central government.
The Minister was unable—presumably because the information is not there—to give any indication about the balance of how the levy money would be spent between facilitating housing association right to buy and new build. This may be part of the information still being compiled in some office somewhere in the city, but it is crucial that we know what the intended balance should be between those two distinct options for the use of the money which will be derived either from sales, which is in the view of many of us bad enough, or even worse, from the Government anticipating sales long before perhaps they have occurred and requiring payment from the local authority. Given the position of local authorities, it is difficult to see how that levy could be funded. Perhaps subsequently we might have an indication from the Minister or the Government in general as to how they envisage authorities being able to fund such payments in advance of a sale.
The Minister was critical of Amendment 66, which deals with replacing such expensive housing. I cited the position in Newcastle, which I suspect will be similar in many other authorities, where a small proportion of properties in council ownership are large properties because of the need for five bedrooms, perhaps because the family is large or because there are special needs in relation to providing for disabled people—perhaps a carer needs to be on the premises, and so on. If all of these have to be sold as they come on the market, in Newcastle’s case, as I have indicated, we have roughly 28 applications a year for these properties and a turnover of only five a year. So on average it will take five and a half years now to accommodate applicants for accommodation of that kind. If the properties have to be sold—and only a handful become vacant every year: five a year—there is virtually no chance of that demand being met. I do not know whether anybody has given any thought to that difficulty. I suspect that roughly similar proportions would be found in many other authorities.
I invite the Minister to ask her officers, or whoever advises the Government on these matters, to look very specifically at the demand for that kind of large accommodation. Of course, there are other higher-value properties which are not of that size, but I ask that she look at the question of larger properties needed for larger families or for people with particular needs that must be met with that space and at how that would fit into the present proposals. At the very least, perhaps the Minister could look at a possible government amendment to deal with what would be a very real situation. The numbers are not large but the period is long for people with a need which might not otherwise be met. Having said that, I beg leave to withdraw the amendment.
Lord Kerslake
I am grateful to the noble Lord for his intervention. However, if the Government were really worried about allowing flexibility for individual difference, we might not be debating this top-down policy at all.
Let me deal with the point that the noble Lord raised. The commitment from the Government is to achieve one for one; it does not say one for one in one part of the country and not one for one in another part of the country. It is reasonable to say that, within the boundaries of a local authority, there will be areas of high demand for new, affordable housing that the local authority will want to meet. I do not think we would be comfortable with a situation where some parts of the country made no effort to replace one for one and were given a retention of funding without that requirement while, in other areas, we did expect it. In my view, it would go against the stated intent of the Government to achieve one for one. One for one in a particular neighbourhood may not be exactly right but one for one in a local authority, or indeed in a combined authority, would absolutely be a reasonable expectation of this policy. Indeed, as I said, that is the stated government intent here.
I will conclude by making a number of points. Putting it in the Bill should overcome whatever doubts there are about the intent. I have raised some concerns about how possible it is to achieve this in the current financial regime. The Minister has quoted statistics, which I have some concerns about, as she knows, to show that it is already being achieved. If it is, there should be no difficulty in putting it in the Bill. If we are already confident that it can happen, putting it in the Bill should not create any difficulties at all.
A huge number of people are anxious about this issue and a huge number doubt the Government’s true intent in relation to affordable rented properties, or indeed affordable properties at all. Putting it in the Bill would put beyond doubt the Government’s intent. It would make it clear that they are serious about the policy of one for one. Contrariwise, if it is not in the Bill, people will draw their own conclusions. These are reasonable amendments that would do what the Government say they want to anyway and, crucially, provide the necessary funding for local authorities.
Lord Beecham
Does the noble Lord think that it would be desirable to include in any such arrangement a period within which that replacement has to be made, or does he think that it should be left open? It strikes me that some moderate period would be sensible. In respect of newly built property, does he think there should be at least a limited exclusion of a further right to buy if it has been provided for rent?
Lord Kerslake
My Lords, those are two important details that we could reasonably look at in the Bill or, had we the regulations in front of us, reasonably consider in regulations. The important point to make is that the absence of the regulations is compounding complexity on complexity. This is our difficulty here. We have a stated intent of government, but nothing in front of us that tells us how that intent will be delivered. Yes, there is an issue of timescale—we currently have three years; that may or may not be the right timescale for an expanded programme and should be consulted on with local authorities—but one thing that in my understanding is an irreducible intent of government is one for one. That is why it should be on the face of the Bill. I beg to move.
Lord Beecham
“( ) it is not managed by an existing tenant management organisation, as defined by the Housing (Right to Manage) (England) Regulations 2012, and managing 1,500 or fewer local authority tenancies,”
Lord Beecham
My Lords, the Bill’s provisions in relation to higher-value council properties and pay to stay—I beg your pardon; I think I may have the wrong group. Let me just check.
I am sorry, I got slightly confused after so many hours in the Chamber. I dare say I am not alone in that. I was right to start where I began.
The Bill’s provisions in relation to higher-value council properties and pay to stay, which we are dealing with later, but not today, are predicated on a myth; namely, that council housing is subsidised by the taxpayer. In reality, housing revenue accounts have to balance their books, matching their expenditure to their income, and we have heard that the Government are deliberately reducing that income by their imposed cuts on rent levels for the entire social housing sector—councils and housing associations alike. As I have said, this single action will cost the sector billions over time. In Newcastle’s case alone, it will cost £593 million that otherwise would have gone into maintaining or improving the existing stock and investing in new homes. Similar effects will be felt at different levels by housing associations.
The ostensible reason for selling high-value homes is that this will release money with which to build new ones—but, as we have heard, in reality most of it will go to the Treasury, ostensibly to facilitate right-to-buy housing association properties. This is not likely to lead to new building, let alone to new building in the locality whence the sales proceeds derive. I refer again by way of example to the situation that this will create in Newcastle. I suppose I ought to remind the Committee, if it needs reminding, of my interests as a councillor in Newcastle and generally in local government. Newcastle has some 26,000 council houses, 1,651 of which would fall under the Government’s definition of “high value”, according to Shelter—I particularly like the “1” in that figure—although I understand that the city council believes that the number could be greater.
On the Shelter figure, some 82 higher-value homes a year could be the subject of forced sales in the event of their becoming vacant, or deemed sales if they do not, which would generate a very substantial payment—on this sort of figure, something like £1.2 billion, if one took a median figure of a two-bed house at around £155,000. There are proposals for different levels of assumed value in London and elsewhere, and the Shelter list indicates a range in Newcastle for two-bedroomed houses of £125,000-£155,000 and, for larger houses, a figure of £250,000. Clearly, very substantial sums could be raised by the sales of these 82 homes—or, as I say, a likely larger number, obviously yielding a larger amount.
This group of amendments identifies a series of house types that will be exempt from this levy. Amendment 66, in my name and that of my noble friend Lord Kennedy, would exempt housing managed by existing tenant management organisations, to which we have had some reference already in Committee—the very kind of organisation that one might have thought would be attractive to the Government and indeed to the Policy Exchange think tank that spawned the concept.
Amendment 68 would require regulations to provide that housing forming part of a housing regeneration scheme, or consisting of specialist housing or recently improved housing, should be excluded. It defines housing regeneration schemes and describes specialised housing as that designed or intended for occupation by the elderly, people needing care or support with mental health problems or learning disabilities, or that with other features designed to make it suitable for use by disabled people. These are clearly priority areas that should be protected. Equally, the amendments propose that where properties have recently been improved or substantial repairs have been being carried out in the previous two years, where again, clearly, the local housing revenue account will have contributed substantially to the current state of the property, they should also be exempt.
The amendment chimes well with the views of Nottingham City Homes tenants, about whom we have heard from the noble Baroness, Lady Bakewell, who clearly have written to a number of Members of the Committee. The chairman is a tenant of 40 years’ standing, who asserts in her letter:
“Our properties have been adapted for tenants with disabilities. If they are sold then other homes will have to be adapted too, at extra cost”.
Clearly that will be a burden on the local authority housing revenue account, and the benefit will accrue to the Government or those who buy the home if it is sold on the market. She makes a telling point:
“There will no longer be any affordable council housing in certain neighbourhoods—council housing will be marked out as something that is only in poorer areas”.
That trend is already under way. The street in which I live, in my non-£5.9 million house, is a nice street in a residential area of Newcastle, at the bottom of which there used to be a block of council flats. All those council flats have long since been given over to other tenures.
Baroness Williams of Trafford
My Lords, I thank the noble Lords, Lord Kennedy, Lord Beecham, Lord Best, Lord Kerslake, Lord Shipley and Lord Berkeley—in his absence—and the noble Baronesses, Lady Bakewell and Lady Grender, for their amendments. I welcome this opportunity to discuss their suggestions for possible exclusions from the housing that is to be taken into account in calculating the payments required from local authorities.
The legislation already includes the ability for the Secretary of State to exclude categories of housing from the calculation through regulations. Regulations will provide flexibility to ensure that if circumstances change over time or a need for different exclusions is identified in the future, this can be easily addressed by adding to, amending or removing exclusions in the regulations. We will carefully work through the suggestions that have been put forward, considering the points noble Lords and others have raised, while balancing the need for the policy to support the delivery of right to buy to housing association tenants.
Any exclusions of types of housing that have been suggested today would reduce the amount of money that would be available to increase overall housing supply and to extend home ownership, as the Government committed to in their manifesto. Therefore, we will be considering the data that have been submitted by local authorities, which I referred to earlier, covering the 1.6 million council properties, to identify the potential impact that these possible exclusions would have on the funding available to deliver our priorities.
While no decisions have yet been made, I assure noble Lords that we will be carefully considering the views expressed in your Lordships’ House and the other place and through our engagement with local authorities and other stakeholders when making these decisions. With this in mind, I hope that noble Lords will support our ongoing engagement with local authorities in looking at possible exclusions, and will agree to withdraw or to not move their amendments.
Turning to the detail of the amendments, Amendment 66C, tabled by the noble Lords, Lord Kennedy and Lord Beecham, concerns tenant management organisations. We are collecting data and engaging widely to inform the types of housing that will be excluded from the policy, but homes managed by TMOs that are in scope of this legislation must be owned by councils. We think that councils should not keep hold of their vacant housing, the value of which could be released to fund both the building of additional homes and the extension of right to buy to housing association tenants. Excluding housing managed by TMOs would result in less funding being available for these two aims.
Lord Beecham
Does that not effectively spell the end of tenant management organisations, and are they not a form of dealing with housing which is rooted in communities and self-management?
Baroness Williams of Trafford
Would the noble Lord explain why he thinks that this would be the end of TMOs?
Lord Beecham
Because if the properties become high-value ones, on becoming vacant they will be sold. The whole concept of a tenant management group—a sort of co-operative, if you will—managing the property will not last.
Baroness Williams of Trafford
My Lords, if the property were sold, surely the TMO would exist for different types of tenures.
Lord Beecham
I cannot see how that is going to happen. As people move out, the people who move in will be buying the house: they will not be part of a tenant management organisation at all.
Baroness Williams of Trafford
My Lords, that is not the intention at all, but I am very happy to take that away and have a think about it. I would not want to spell the end of tenant management organisations, because they fulfil a vital role.
It is important to say at this stage that under the formula approach, if a local housing authority has discretion not to sell properties and does not want to sell a particular property—for example, one managed by a TMO—it should choose not to do so, provided that it makes the payment to the Secretary of State. I accept that that does not answer the noble Lord’s point. Perhaps he could just let me think about this—although it may be too late, as I cannot think very well at the moment.
Amendments 67, 67B, 68 and 69 seek to exclude various types of housing when calculating the payments required from local authorities, including newly constructed or renovated homes, homes in regeneration areas, recently improved housing and specialised housing. Amendment 68A, in the name of the noble Lord, Lord Best, would exclude dwellings that become vacant as the result of a transfer to alternative social accommodation from being taken into account. I assure noble Lords that we will look carefully at all these suggestions and consider the points that have been made today, while balancing the need for funding from the sale of high-value vacant homes to support the delivery of right to buy to housing associations.
The noble Lord, Lord Best, is concerned about two social tenants being unable to exchange properties. I can reassure him that the two tenancies do not come to an end, so a vacancy is not created. I therefore confirm that, in these circumstances, mutual exchanges will not fall into the scope of the policy. The legislation allows the Secretary of State to specify other cases where housing would not become vacant for the purposes of the chapter.
Lord Beecham
My Lords, I am glad that the noble Baroness recognises that debates will take place next week. I hope that we will have proper time to complete our deliberations on the Bill and will not be asked to sit until the early hours of the morning, as is apparently being currently threatened. That is not in the interests of good legislation or the House. More particularly, if I may say so, it is not in the interests of the noble Baroness, who has once again single-handedly represented the Government today for about six-and-a-half hours. Those responsible for government business should ensure that she has some support at the Dispatch Box—with respect, not just alongside her—in discharging the responsibility of dealing with this very important, complicated and controversial Bill. We are indebted to her for her patience, good temper and, if not for the substance of her replies, at any rate for her genuine attempts to reply to the variety of comments made across the Chamber. I hope that she has a restful weekend, and that those who are responsible for government business wake up to their duty to see that she continues to be able to have restful periods, not just at weekends, after the extremely arduous performances she has been called on to carry out.
Having said that, I will be relatively brief—for me. I congratulate all noble Lords who have contributed to this particular debate: the noble Baroness, Lady Grender, my noble friend Lady Hollis and, in particular, the noble Lord, Lord Carrington. The noble Lord shed relevant light on an aspect of the problem which affects London, but perhaps also other places. I suspect that places such as Oxford and Cambridge may be in a similar position.
I am particularly indebted to the noble Lord, Lord Best, who has once again proved that the best is not the enemy of the good, but is certainly the enemy of the inadequate, which is the only way that the Bill could be described. I entirely endorse what he and others said about tenant management organisations and the impact of the bedroom tax, which has driven people out of properties which will presumably now go for sale. In my authority and many others, people are waiting to move into such properties. The paradox is that the rationale for the bedroom tax was to facilitate people moving into those properties, but if they go under the right to buy, there will be no requirement for the occupiers to occupy every room. If it is a three-bedroom house, it will no longer be expected to accommodate three people. That makes nonsense of the Government’s whole approach in that respect.
In its briefing, the National Federation of Arm’s-Length Management Organisations reminded me that the Prime Minister, launching his party’s 2015 election manifesto, made it clear that homes bought under right to buy would be replaced on a one-for-one basis in the same area with normal affordable housing. Those were the Prime Minister’s words, which the Bill does not achieve.
Finally, I refer to a particular situation that arose in my own ward and demonstrates the downside of what we have been discussing. In my ward, I was honoured by the naming of a small development of 12 very well-designed bungalows for elderly people; they had walk-in showers and everything fitted for elderly people who might have a disability. They named it Beecham Close, after me. I was very touched on that occasion—some people might think I am fairly touched anyway—and seeing the pleasure that people got in that splendid accommodation was very heartwarming. The notion that those properties, if they become vacant, might then be sold—and they would be sold at a premium, with all the features that I described—not necessarily thereafter to the people for whom they were designed, strikes me as a really sad commentary on the Bill. With that, this Beecham will close. I beg leave to withdraw the amendment.