Housebuilders

Lord Bourne of Aberystwyth Excerpts

Thursday 11th January 2018 Lords Chamber

[The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)]

My Lords, first, I thank the noble Lord, Lord Best, for moving this debate with characteristic breadth and depth of knowledge. It is a real privilege to hear his thoughts on the issue. Clearly, he is a man who knows what he is talking about.

Many noble Lords have talked about this being a debate not just about housing but about people. For example, the right reverend Prelate the Bishop of Newcastle made that very pertinent point. People referred to the new name of the department. In fact, it is now a ministry—the Ministry of Housing, Communities and Local Government, or MoHoCoLoGo, as I am told it is being called in the corridors of power. It makes us sound like a Mexican nightclub. But there is a serious point to this; it is not just cosmetic—it is about the importance that we attach to housing as a Government. Indeed, the Prime Minister has made it clear that it is the number one domestic priority. Points have been made across the Chamber, and I think we all share the recognition that this is crucial; we need to build more and to higher standards and a higher quality design. I shall try to do justice to some of those points.

Noble Lords have referred to the phrase, “fixing our broken housing market”. The noble Lord, Lord McKenzie, referred to it and indicated that it shows that it is not just dependent on the market. I agree with that; I think that the fact that we need to fix the market means that we are looking at regulated markets. Anyone who has been following what the Government and the ministry has been doing knows that we have been taking action to do just that. That is not to say that the market is not important here; it has certainly helped to deliver housing across generations, as my noble friends Lord Borwick and Lord Hunt made clear, along with others—my noble friend Lord Naseby spoke with great personal recollection of his time in Islington and indeed in Northampton South.

We have announced further reforms recently, including planning reforms both to ensure that more land is available for housing and to maximise the potential of our cities and towns to build new homes, while protecting the green belt. Noble Lords, including the noble Lord, Lord Shipley, and the noble Baroness, Lady Thornhill, made points about the viability assessment. We have consulted on this and will be responding to that consultation, but the aim is certainly to make the viability assessments simpler and clearer.

More than £15 billion of new financial support has recently been made available for housebuilding over the next five years, taking the total financial support up to 2022-23 to £44 billion, which will help to boost the delivery of housing. Using funds flexibly will unblock barriers to more housebuilding.

Many noble Lords have referred to the need to assist smaller housebuilders; I share this aspiration, as do the Government, and we have of course been doing this. The noble Lord, Lord Shipley, and my noble friends Lady Neville-Rolfe and Lord Borwick referred to this, as did other noble Lords. We have, for example, recently ensured that there is an extra £1.5 billion for the home building fund for small and medium-sized builders; we will be watching this to make sure that it is having an effect.

The right reverend Prelate the Bishop of Newcastle, among others, referred to the housing revenue account and the borrowing cap. We have recently raised that cap by a total of £1 billion in areas of high affordability pressure for local authorities that are starting to build new council homes. We will be assessing bids in relation to that before long.

Noble Lords may have seen that, this very morning, we launched Homes England. The Secretary of State, Sajid Javid, was at Alconbury to do that this morning. This will drive forward change by bringing together money, expertise, planning and compulsory purchase powers.

Many noble Lords also referred to the importance of new towns—including the noble Lord, Lord Best, and my noble friend Lord Naseby, who spoke with personal experience of Northampton—and have urged expansion of this programme. We are taking that forward; it is central to our thinking and it featured very much in the White Paper.

Taken together with these measures in the housing White Paper, the Budget puts us on track to raise housing supply to 300,000 a year on average by the mid-2020s and to drive up housing supply by the end of the current Parliament to its highest annual level since 1970. This represents clear ambition.

Many noble Lords referred to the need for more social housing—I share that aspiration. We have committed £2 billion, much of which will go towards social housing development, and we will be assessing bids in relation to that. The noble Lords, Lord Best, Lord McKenzie, Lord Kennedy and Lord Whitty, my noble friend Lord Horam and the noble Baroness, Lady Janke, referred to that. The noble Lord, Lord Shipley, expressed it in a slightly different way as “civic building”, which I think is a very good phrase to keep hold of and which describes what we are seeking to do.

We recognise and welcome the contribution made by Britain’s larger housebuilders towards getting the homes that we need built—it is worth putting that on record. Many have done and are doing that to a high standard, though not all, by any means. I will say something about housing design in a minute. We need to recognise that there are market controls and provisions for shareholders to control bonuses and indeed salaries, which are subject to being published.

That said, I understand the particular frustrations that have been expressed in relation to Persimmon. They will note what has been said—not least because we will make sure a copy of the debate goes to all major housebuilders, our partners and all agencies in this area. I listened with great interest to what my noble friend Lady Gardner of Parkes said in relation to the paternalism that was demonstrated by some people who had been here previously. My noble friend has had great experience in this area, so I was interested in what she had to say, which was very pertinent regarding that paternalism of old.

The noble Lord, Lord Taverne, also made some points about smaller organisations, including Pocket, and some good organisations that are really helping to deliver.

Some noble Lords touched upon planning conditions. My noble friend Lord Hunt spoke on this from a different angle, and so did the noble Lord, Lord Kennedy. They will both recall that the provisions in the Neighbourhood Planning Act forbid the use of pre-commencement conditions without the applicant’s agreement. We are now working on the regulations in relation to that, not least on the speed with which these matters are dealt with, which I hope will help in terms of delivery.

Noble Lords also touched on the Help to Buy programme. The noble Lord, Lord Kerslake, talked about possibly having it in a revised form. It is important that we make this provision. It is of course a loan scheme, not a grant scheme, but it is central to the Government’s thinking and noble Lords will understand the aspiration for home ownership. The noble Lord, Lord Kennedy, touched on it himself in terms of his personal journey in the types of tenure that he has enjoyed.

Mention was made of developer contributions and infrastructure in relation to Section 106 and the community infrastructure levy. I will take up some of those points in a write-around, if I may, because time is pressing. There was a contribution made in relation to small and medium-sized builders, which I have touched upon. The home building fund, which we launched in October 2016, provides £1 billion of short-term loan funding for small builders, custom builders and innovators to help diversify the housing market. Some £2 billion of long-term funding for infrastructure is also available to small and medium-sized enterprises, and indeed others. These funds have both proved popular. As announced in the Autumn Budget, we have added an additional £1.5 billion for loans to small and medium-sized enterprises, custom builders and innovators. It is our belief that this will help with delivery and of course also help small and medium-sized builders. I share the aspiration that many have expressed that we need to move the emphasis back to small and medium-sized businesses, which are more flexible and should be able to take up some of the slack here.

In addition to ensuring that small and medium-sized enterprises have the financial support that they need, we have also responded to concerns about access to viable land and the unnecessary planning burdens that the sector faces. Proposals in the White Paper include increasing the availability of small sites through changes to the National Planning Policy Framework. The right reverend Prelate the Bishop of Newcastle referred to this. We have set out that at least 20% of the sites allocated for residential development in local plans should be sites of half a hectare or less. We also want to make information available so that small companies know what land there is to build on through the brownfield registers. Increasing planning fees to enable local authorities to provide a faster and better planning service should also help in that regard.

Further planning reforms were announced in the Autumn Budget, which will help to ensure that local authorities produce up-to-date local plans and take steps to increase density in urban areas by delivering more small and brownfield sites. I think this was something that my noble friend Lady Neville-Rolfe touched upon. We will continue to simplify the planning system in order to reduce the burden on business and to stimulate housing supply.

On leasehold reform, which was raised by my noble friend Lord Hunt and the noble Lord, Lord Turnbull, with few exceptions the Government cannot see any good reason for new-build houses to be built and sold on a leasehold basis. It is for this reason that we have asked all builders who use the Help to Buy equity loan scheme to stop selling leasehold houses with Help to Buy support. We have written to all developers to strongly discourage the use of Help to Buy equity loans for the purchase of leasehold houses in advance of new legislation. Although it is not possible to impose a requirement on developers to stop building leasehold houses under existing contracts, this is an opportunity for housebuilders to get on to the front foot and show that they are putting their customers first by recognising that the unnecessary use of leasehold on new houses has to end as quickly as possible. We will be monitoring the sale of leasehold houses through the scheme and will take further action, as appropriate, if we are not satisfied that builders are working on this important issue—we will be watching like hawks.

A question was about existing leaseholders. We are working with the Law Commission to see what can be done in relation to these matters. I will expand on that in the letter that I will send to contributors to the debate. The Secretary of State has written to developers to make this position absolutely clear.

Housing guarantees were touched on by noble Lords in relation to helping SMEs and providers of purpose-built rented housing. The announcement of £8 billion-worth of housing guarantees at Autumn Budget should help with delivery here. Therefore, we will work to engage the market over the coming months on the most effective way to deploy this guarantee capacity to pursue our housing goals. That, of course, will emphasise the work that we wish to do through the small and medium-sized housing providers.

Mention was made of supporting ambitious housing associations and local authorities to build. In 2016-17, 41,530 affordable homes were delivered. This represented a 27% increase from the previous year. However, I stress that we want to see more. To deliver more affordable homes, including at a social rent, we are investing £2 billion, as I mentioned. That will be subject to an announcement on how we are carrying it forward. As I indicated, we are also raising the housing revenue account borrowing cap. I think that was raised by the noble Lord, Lord Stunell, among others. Local authorities have shown that they share our ambition and we look forward to seeing how that plays out.

Mention of land banking and delivery was made by many noble Lords. Mention was also made of Sir Oliver Letwin’s review. It is important to recognise that a variety of factors can prevent development starting, but certainly sometimes this will be as a result of what is termed land-banking. The housing White Paper acknowledged that there was an issue here and at Autumn Budget we more than doubled the housing infrastructure fund, because this is sometimes an issue, investing an additional £2.7 billion, to take the total fund to £5 billion. This infrastructure issue was raised by my noble friend Lord True, the noble Baroness, Lady Thornhill, and others, including my noble friend Lord Hunt. Therefore, we will ensure that we invest in the right infrastructure, in the right places, so that new housing does not create additional strain on local communities and services.

As I say, we acknowledge that there are concerns that land may be being banked by major developers. We announced in the Budget a review panel, chaired by the right honourable Sir Oliver Letwin MP, to look into build-out rates. This review will provide an interim report in time for Spring Statement 2018 and a full report in time for Budget 2018. The review will have two parts. The first part, which Sir Oliver is working on at pace—he often works within the department—will seek to explain the significant gap between housing completions and the amount of land allocated or permissioned. This will be the focus of that interim review. As I say, initial engagement has already commenced. The second part will make recommendations for closing the gap, and will work to identify practical steps that could increase the speed of build-out. These recommendations will be published in the full report later this year.

Quality design is very close to my heart. I believe very strongly that we need a robust framework to ensure proper design. The Government have embedded design principles into the National Planning Policy Framework and guidance, and this will be further strengthened when we publish the new NPPF early this year. Emphasis is placed on achieving well-designed and distinctive new developments that add to local character and create distinctive neighbourhoods as well as contribute to creating healthy and attractive local places where people genuinely want to live. The essence of this is that it is about not just the number of houses delivered but the quality of the design and of the property. We can all point to poor design, where new characterless, featureless, pattern-book housing estates are the same across the country. This is in contrast to much new housing throughout the country, for example, in Cambridgeshire, where the Secretary of State is today, but in many other places as well.

It is important to say that the department has made great strides. We are creating a team of newly appointed design experts to be led by an architect with a research background. She will be in post by the end of January and will be supported by other design and planning advisers with experience in the sector. There is also a great opportunity to initiate in relation to new town developments. This fresh emphasis will help us to rise to the opportunities and challenges that exist.

To encourage people to put the message out there, the department will hold a major design conference in the spring in central London. The conference is an opportunity to signal to the industry what we seek to do. It will be attended by up to 400 representatives from developers, including large housebuilders, SMEs, local and central government, institutes, community representatives and others. All in all, our approach to raising design quality has attracted widespread support, not least from RIBA’s President, Ben Derbyshire, who said that,

“we see much in the way of promising activity from Westminster; the Design Quality Fund, a major conference on quality, the appointment of architects to advise on policy, a joint working group on modern methods of construction, and of course the creation of the new Ministry”.

The support that has attracted is welcome.

On modern methods of construction, I thank the noble Lord, Lord Taverne, for what he said, not least on the importance of skills. I know that the importance he attaches to this goes back a long way. He has always as a politician—from when he was an MP for Lincoln onwards—signalled the importance of our European partners. That will remain true after Brexit. We will need the relevant skills.

I welcome what was said in relation to climate change by the noble Baronesses, Lady Brown and Lady Maddock. I absolutely accept that it is important. We have international obligations in relation to climate change and so it is important to ensure that these things are built into housebuilding. I noted the work of an impressive housebuilder in Wales—not England—who charges the normal price for a four-bedroom house but builds them as if they were power stations, as it were. They are carbon neutral and British. They have everything that we should approve. The Government are looking at that important initiative.

I will draw to a close. I regret that time is short on this occasion. I will ensure that I pick up any points that I have missed. I will write round and, as I say, I will ensure that a copy of this debate is sent to all relevant people, as it has been first class. I thank all noble Lords who have participated.