Building More Homes (Economic Affairs Committee Report)

Lord Beecham Excerpts

Thursday 2nd March 2017 Lords Chamber

[Lord Beecham (Lab)]

My Lords, I should perhaps explain why I am speaking at this stage in the debate as opposed to where I was listed. It is not just because I can follow the noble Lord, Lord Shipley, and the right reverend Prelate the Bishop of Newcastle in an example of Newcastle united. It is, sadly, because my noble friend Lord Kennedy has had to return home because his father-in-law has died and he needs, of course, to be with his wife, my noble friend Lady Kennedy of Cradley. I am sure noble Lords will wish to extend to her our sympathy and our condolences on her loss.

The clue is in the title: I refer to the 104-page White Paper with its glossy cover, published this month, a year after the House began its protracted scrutiny of what is now the Housing and Planning Act. The title is Fixing our Broken Housing Market. It tells us something about the Government’s attitude to housing that they should apparently see what is, at its heart, as the right reverend Prelate the Bishop of Newcastle pointed out, a major issue of social policy primarily in terms of the market. Of course, the market is part of the issue, but it is not the only aspect that has to be addressed fundamentally.

We should not, I suppose, be surprised. Where, to give him his due, Harold Macmillan long ago recognised the need for more and better housing, much of it in the public sector, in the Thatcher era an obsession with tenure developed, more particularly an obsession with home ownership, even where that was at the expense of those who were not able to afford to buy a home. So we had, and have, the right to buy, which has led to 35% of council homes that were sold now being in the private rented sector without adequate replacements and at a greater cost to the Exchequer in welfare benefits.

Moreover, affordability is defined by reference not to the income of tenants or would-be buyers but in percentage terms. “Affordable” is defined as 80% of the rents and prices of privately owned properties, artificially inflated as they are by an excess of demand over supply. The right to buy is being extended to housing association tenants, for the moment, at least, in a voluntary scheme, further decreasing over time the availability of genuinely affordable homes to rent.

I congratulate my noble friend Lord Hollick and the members of the Economic Affairs Committee, six of whom have participated in this debate, on a compelling report, which was published in July. As the noble Lord, Lord Forsyth, pointed out, it took the Government five months to reply with, in effect, three pages of responses to what they describe as the report’s recommendations. The response does not, however, reply to comments in the report which do not contain specific recommendations. In fairness, some matters are touched on in the White Paper but, for example, the report comments at paragraph 253:

“It is wrong to create specific tax rules, as is the case with recent changes to capital gains tax and inheritance tax, around housing”.


That matter was raised by, among others, the noble Lord, Lord Turnbull, and my noble friend Lord Chandos. To this, no reply is made.

The report goes on at paragraph 254 to affirm, correctly, that “Council tax is regressive” and to recommend:

“The bands should be amended so that owners of more expensive properties”—


I declare my interest as the owner of a house which is worth perhaps 12 or more times what some of my constituents’ homes are, despite being in only band F—

“so that owners of more expensive properties contribute proportionately more than owners of less expensive properties. This should be done in a revenue neutral way”.

I mentioned that interest. I should also remind noble Lords that I am a member of Newcastle City Council and an honorary vice-president of the Local Government Association. Perhaps I could advise the right reverend Prelate the Bishop of Newcastle that in my ward and others work is being done to provide affordable social housing, although not in the numbers that we would ideally like to see.

The proposal is dismissed on the grounds that,

“it would require a wholesale council tax revaluation”.

Indeed it might, given that it is 25 years or more since any revaluation took place. But surely, given the huge increases in house prices over the years, some additional bands at the top and bottom ends of the scale would not be unreasonable, even if the overall yield was not increased, which should be the objective.

The report recognises the need for a substantial increase in the number of houses to be built. We have heard several of your Lordships point out that the Government’s figure is less than is desirable or achievable. But of course we need to build not just houses but communities, of mixed tenures, including social housing, built by councils, housing associations and housing co-operatives, with provision for special needs, such as those of the elderly or disabled, and with the necessary physical and social infrastructure that creates a sense of place. To return to an issue I have frequently had occasion to mention, we must build to higher standards of space and energy efficiency than has been the case for many years. Comparisons with what, for the moment, we can still call our European partners do not show us in a good light.

We need to revive Parker Morris standards, which have been significantly diluted over recent years. Of course, we also need to ensure access to green spaces and educational, recreational and medical facilities. The White Paper devotes only a couple of pages to these issues under the heading of “Sustainable Development and the Environment”. The right reverend Prelate the Bishop of St Albans made a strong point about the particular needs of rural communities.

The committee’s report—understandably, given its remit—concentrates on numbers, and rightly refers, in chapter 5, to the benefits of, and the need for, more building by councils and housing associations, having pointed out in chapter 2 that government policies on the right to buy and starter homes conflict with their wish to increase the supply of affordable homes to rent. It points out that enabling councils to build homes for sale can help to finance building and refers to the imposition of cuts in social housing rents for both councils and housing associations, with damaging results for the capacity of both to invest in existing or new stock. I have mentioned the effect in Newcastle, where the 1% cut in rents will over time cost £590 million. The noble Lord, Lord Turnbull, and one of the right reverend Prelates made the same point about the impact of this measure. The report says that one housing association will lose £138 million in four years. The cuts benefit the Exchequer, since they will reduce housing benefit, but they aggravate the housing problem.

Critically, the report supports the right of local authorities to borrow to build social housing, a point strongly endorsed by the noble Lords, Lord Sharkey and Lord Kerslake, but to which the Government made no response. At paragraph 220, it makes a welcome call for the Government to allow councils,

“to borrow under the prudential regime to build all types of housing”.

They would, after all, be investing in assets which over time will increase in value.

Interestingly, the committee is critical of recent government policy on the private rented sector. Paragraphs 94 to 98 refer to polices such as restricting tax relief on financing costs of rental property to the standard rate; introducing a higher rate of stamp duty on purchases of additional private rented properties; reducing tax allowances for wear; and exempting gains on residential properties from a reduction in capital gains tax. It refers to the warning of the Council of Mortgage Lenders that the impact of these changes will increase the cost and limit the availability of private rented homes, while the committee itself is concerned that changes, including stamp duty land tax, could inhibit investment in the build-to-rent sector, where apparently there is potentially between £30 billion and £50 billion available from institutional investors.

Crucially, the committee recommends that the target for new build should be 300,000 annually for the foreseeable future and it dismissed, as some noble Lords did, the Government’s target of l million by 2020 as insufficient. In addition, it proposes that councils should be able to vary planning fees, a matter that has been the subject of comment by the noble Baroness, Lady Eaton, and others, and levy council tax on properties not completed within a set period. The committee’s report makes a notable contribution to a debate of the highest importance to millions of people who aspire, perfectly reasonably, to live in modern, affordable housing with a genuine choice of tenure. It deserves a better reception from the Government than is reflected in last year’s Housing and Planning Act or this year’s White Paper. I hope that the Minister, in his reply, will take the Government’s declared position somewhat further than now appears to be the case.

By sheer and timely coincidence, I attended a meeting this morning with the noble Lords, Lord Horam and Lord Shipley, at which Shelter launched its report on civic building, which is available on its website. It has interesting ideas on the very subject we are debating, and a title as telling as that of the White Paper. Two statistics were mentioned which highlight some of the problems we face: 83% of people cannot afford to buy new homes at current prices, and 50% of people who can afford it and do buy encounter problems with the property. The building industry is not just not building enough, it is apparently not building well enough. That is also something that needs to be addressed.

One other issue received particular emphasis. Colleagues who attended will agree that probably the highest amount of attention and concern was given to the cost of land, and the requirement on public authorities to sell to the highest bidder. This is not addressed in the White Paper. Will the Minister indicate whether the Government will at least be reviewing this? I have been critical of the White Paper but it is an improvement on what has gone before—it would be difficult for it not to be an improvement on what has gone before—but much more needs to be done. The Committee’s report offers sound advice on how to tackle the range of issues that need to be addressed in the interest of providing decent, affordable homes for all who need them, whatever age they are or whatever status they have in society, as part of a programme involving local communities, local people, local authorities and the building industry to reignite an approach to housing that will lead to substantial numbers of good houses being built and made available. Importantly, we need communities of mixed tenure which strengthen the bonds of our society.