Local Authorities: Essential Services

Lord Best Excerpts

Thursday 24th January 2019 Lords Chamber

[Lord Best (CB)]

My Lords, I am grateful to the noble Lord, Lord Scriven, for initiating this debate and for his excellent opening speech. I declare my interests as a vice-president of the Local Government Association, of the Town and Country Planning Association and of the Chartered Trading Standards Institute.

My contribution concerns the essential housing services provided by local authorities and the related planning and development services. Our helpful Library briefing for this debate notes that these services have been subject to the largest reductions in expenditure over the period 2010-11 to 2016-17, as set out in the National Audit Office report last year. Spending on housing and related services is down by roughly 50% over that period, and yet, on the housing side, the requirement for local authority input to the provision of decent, truly affordable accommodation has grown significantly. This shows up, not least, in the rise in the number of those assessed as homeless and entitled to temporary accommodation, which is up by over 33% over this six-year period.

I commend the Government’s actions in several respects in supporting local government housing services. The rough sleepers strategy to help the street homeless contains important building blocks for tackling the desperate situation we see all around us, and resources for initiatives like Housing First are very welcome. The Government’s commitment to halving homelessness by 2022, and ending it by 2027, will require more central government support—particularly for the preventive work heralded by the Homelessness Reduction Act, which I had the pleasure of taking through your Lordships’ House in 2017.

In time, prevention pays dividends, as we have seen in Wales, and will be more than helpful to council budgets in reducing the wasteful costs of temporary accommodation. However, serious investment is going to be needed in the short term to stop more people becoming homeless. I note the impact on housing provision of underresourced planning departments, and of drastically diminished support for trading standards officers and environmental health officers, who are expected to enforce key aspects of housing legislation. But I want to concentrate today on the present and future role of councils in directly providing new homes for their local communities.

The excellent announcement last October that local authorities will be able to borrow on their housing revenue accounts, freely within prudential constraints, opens up some exciting possibilities. As we all know, there is a desperate shortage of accommodation to rent at so-called social rents, and the continuing impact of right to buy on council housing means an ever-decreasing stock of these homes. It clearly makes little sense for a council landlord to sell properties to the occupiers at big discounts, only for the council to be forced by the need to fulfil their housing obligations into reacquiring the same homes for vastly more than they received when they sold them. Ealing Council, for example, reports spending £107 million to buy back 516 right-to-buy council properties, for which it had received only £16 million when it sold them. Just as silly is for councils to find themselves renting back the council homes they sold, at three times the previous council rent, in order to house their homeless families. In London, some 40% of properties sold under the right to buy are now in the hands of private landlords.

I have argued, unsuccessfully, for amendments to several housing Bills both to give councils discretion over the levels of discount they give to tenant purchasers and also to allow all of the sales proceeds to be retained by councils rather having than a big chunk go to HM Treasury. But while current generous right-to-buy arrangements continue as now, in many areas building new homes to solve affordable housing problems will be like trying to fill the bath with the plug out. These are battles yet to be won.

But, with the caps and ceilings removed from their borrowing capacity, should local authorities now embark upon ambitious programmes of new council house building? Some councils are geared up for expansion and are ready, willing and able to go. However, even for the authorities that have neither transferred responsibility of their stock to another body nor delegated housing functions to an arm’s-length management organisation, their capacity to become a significant developer of new homes is likely to be very limited. After so many years of undertaking little or no council house building, naturally most councils do not have a skilled professional staff to take on programmes of new building. I fear the only way to get back into this business relatively quickly would be for authorities to lure the necessary people out of the housing associations to become council employees—no doubt at higher salaries. This sounds inflationary and unhelpful.

Meanwhile, the housing associations that wish to expand face constraints of their own. If they are to produce genuinely affordable accommodation, their much-depleted levels of grant need to be higher, but they also need to have enough borrowing capacity. I suspect, post Brexit, a housing downturn is quite likely. That will mean many housing associations that have been expecting to sell quite a large number of the homes they build—in order to achieve profits that can cross-subsidise their affordable homes—will be switching their market sales properties into market lettings. This will mean that, without getting their money back from sales, they must increase their long-term borrowing correspondingly. But since there are limits on how much each housing association can borrow from the banks and institutional lenders, this is going to put a brake on their development plans.

Here is where I would hope the perfect partnerships could emerge, particularly where an authority owns some suitable land. Rather than the council teaming up with one of the volume house builders—I know how tempting that is for cash-strapped local authorities keen to receive lots of new homes bonuses from social development—is there any reason why councils cannot use their new-found borrowing capacity to onlend to the housing associations that are already geared up to do a lot more without the lending constraints imposed by the private lenders?

There is no doubt that times have been tough for local authorities keen to deliver essential housing services for their local populations, and recent announcements of extra government support are very welcome. Some local authorities will now be borrowing more to build a new generation of council housing. Many other authorities, I strongly suggest, could now be forging powerful, positive partnerships with housing associations in their areas. It would be great if the always-helpful Minister could confirm that councils can use their all-important new borrowing opportunities to enable their partner housing associations to achieve, with them, thousands of truly affordable, high-quality new homes for their local communities.