Levelling-up and Regeneration Bill

Lord Best Excerpts

Committee stage
Thursday 20th April 2023 Lords Chamber

[Lord Stunell (LD)]

I think the spirit moved. It is good the right reverend Prelate spoke first in this case.

[Lord Best (CB)]

My Lords, I rise to speak particularly to my Amendment 438, but I will preface my remarks by saying how much I have appreciated this debate and the contributions from the noble Baroness, Lady Taylor of Stevenage, the noble Lord, Lord Stunell, and the right reverend Prelate the Bishop of Leeds. We have explored this issue in a comprehensive and useful way, and I greatly appreciate that.

I draw noble Lords’ attention to the Affordable Housing Commission report, which came out in the middle of Covid and was therefore buried and forgotten by everybody. The AHC report, which noble Lords can find via Google or their favourite search engine, was a pretty big effort, thankfully funded fully by the Nationwide Foundation—the Nationwide Building Society’s foundation—with a secretariat from the Smith Institute; I had the honour of chairing this. The report is a pretty meaty document and worth those who are interested in this subject following through, but that was a great debate on those amendments, and I support the essence of all of them.

My amendment 438, to which the noble Lord, Lord Shipley, has kindly added his name, seeks to remove from the statute book an obnoxious, offensive legislative measure which has hung over local authorities since the passing of the Housing and Planning Act 2016. I reiterate my declaration of interest as a vice-president of the Local Government Association. Back in 2016, I was the LGA president and along with allies from all parts of the House, including the noble Lord, Lord Porter, with his local government expertise, and the noble Lord, Lord Kerslake, we fought—unsuccessfully—to remove these awful sections from the 2016 Act.

What does this part of the Housing and Planning Act 2016 say, and why is it so troublesome? The key section imposes obligations on local authorities to sell their most valuable council housing when tenants move out, rather than reletting the property. It does so by requiring local authorities to pay a levy to the Secretary of State equivalent to the market value of the best council housing when it becomes vacant, multiplied by the estimated number of vacancies for the next year. To raise the money to pay this levy, local authorities would obviously have no option but to sell their most valuable homes. Most of the proceeds from these compulsory sales go straight to the Secretary of State, who, in a convoluted twist, would use the money to compensate housing associations for selling properties at large discounts to their tenants under an extension of the right to buy.

The effect of this extraordinary measure, had it ever been implemented, would have been highly damaging both for local authorities trying to meet the acute need for social housing in their areas and for the families desperately waiting for a home. Council housing would be further stigmatised and labelled as only for those with no hope of anything better, and with fewer re-lets, pressure on the remaining council stock would be even more intense than it already is.

Buyers of the housing which councils would be forced to sell would very often be private landlords who would let to similar occupiers but would charge market rents, thereby imposing twice the burden on the Exchequer for tenants in receipt of benefits. I was glad to catch up with the latest statistic from the noble Lord, Lord Stunell: that 50% of properties sold under the right to buy have been moved into the hands of private landlords and, obviously, let at rents that are twice as much, if not more.

To add insult to injury, the 2016 Act also empowered the Secretary of State to top up this raid on council resources by requiring local authorities to raise the rents to market levels for any tenant foolish enough to increase their income above a fixed level. The extra rent would not go towards management and maintenance of council housing but instead would be remitted to the Secretary of State as a windfall for the Government.

I moved an amendment opposing the measure and it was carried by a huge majority in this House. I even featured on the BBC documentary on the work of the House of Lords. Although it remains in law, it is another ingredient in the 2016 Act that thankfully has not seen the light of day.

Returning to the compulsory sales of higher-value council housing, as is addressed by the amendment, we can now see what a disaster this would have been—but the offending measure remains on the statute book. In reality, this sword of Damocles hanging over councils is no longer a major threat since Government Ministers have made it clear that they have no intention of using these draconian asset-stripping powers. Indeed, I am confident that Ministers understand the imperative for more, not less, social housing provision.

It was, no doubt, the work of an enthusiastic but naive special adviser coming up with a cunning wheeze to extract the cost from local authorities of securing new right-to-buy sales by housing associations. Today there would be little appetite for such shenanigans which would reduce the stock of available social housing, following the right to buy’s removal of 2.8 million council homes and the subsequent higher costs of using the private rented sector instead. Indeed, the right to buy has now been abolished in Scotland, and Wales is following suit.

Councils have welcomed the Government’s recent move enabling them to retain 100% of right-to-buy receipts for 2022-23 and 2023-24. With long waiting lists for social housing and the private sector becoming more and more unfeasible for many households, that announcement should support councils trying to replace the homes sold through right to buy. It would be helpful if the Government completed this change and made it permanent rather than just for two years. On this theme, I hope that the Government will finally agree to councils having the ability to set right-to-buy discounts locally as part of the Bill’s emphasis on devolution.

The time has surely come to be rid of this 2016 misguided measure to strip local authorities of their best housing assets. The LGA and others have been waiting for a legislative opportunity for the Government to enact their clear intention to have nothing to do with this defunct legislative device. The Bill provides that opportunity, and I think everyone in local government and in the world of social housing will breathe a sigh of relief to see this expunged from the statute book. I commend this amendment.

[Lord Young of Cookham (Con)]

My Lords, I wish to intervene briefly to put this debate in an important context. Before I do so, I commend the noble Lord, Lord Best, on eventually achieving the victory which he sought when the 2016 Act was going through; it was not the best piece of legislation on housing that Parliament has seen. I agree with what the right reverend Prelate said—that we should unfreeze the local housing allowance or, if we cannot, increase the discretionary housing grant, to enable those who find that they cannot meet the rent to have more support.

I also agree with the noble Lord, Lord Stunell, that “affordable” is a misnomer, but there is a fundamental choice that we have to make, which is: the higher the rents, the more social houses you can build; and the lower the rents, the fewer social houses you can build. That is simply because of the way that social landlords are funded. A Government decide to have a capital fund available for new builds. A Government of a different persuasion may have a higher figure than the current one but, whatever that figure, the number of houses that can be built is dependent on the rent levels which the social landlords can charge.

A Housing Minister has a choice: you can have lower rents, social rents or genuinely affordable rents, but you will get less output. When I had responsibility and was faced with this spectrum, I went for slightly more output but slightly higher rents, to meet the demand for new houses and to build more houses that would last 60 years. I recognise that others may choose to go the other way on the spectrum, but you cannot get away from the fact that this is the choice. If you want to have affordable rents reduced to social rents, the consequence is that you will have fewer houses. I make this intervention at the end of this debate just to put it in a slightly broader context.