Housing: Affordability and the Underoccupancy Charge

Lord Greaves Excerpts

Thursday 31st October 2013 Lords Chamber

[Lord Greaves (LD)]

My Lords, I declare my interest as a member of Pendle Borough Council and as a vice-president of the Local Government Association. I, too, thank the noble Baroness, Lady Quin, for sponsoring this important debate, which has resulted in a number of extremely important speeches. I particularly associate myself with the remarks of my noble friends Lord Shipley and Lady Bakewell of Hardington Mandeville. I very much welcome her here as another local councillor, who I hope will continue to give us the benefit of her local experience in this great Chamber, which in my view too often behaves as if it were the Westminster parish council.

The noble Lord, Lord Whitty, put his finger on an important issue: that 30 or so years ago, there was a very significant change of policy, in which support for social housing and council housing, as it mainly was then, moved away from supporting what people then called bricks and mortar to supporting people. It all sounded right and there was a general political consensus in favour of it. When I did not agree I always thought that I was little Johnny out of step, but it has been disastrous. As the noble Lord said, housing benefit is a matter not really of benefit policy but of housing policy, and the sooner that we start to debate it on those grounds, the better.

The noble Lord, Lord True, who has just left for a moment, said that some of us would support the Government in various ways, with “modified degrees of rapture”. I have to say that my degree of rapture on this subject with regard to the Government is modified. Having said that, and in saying how much I support what was said by the noble Baronesses, Lady Quin and Lady Hollis, the noble Lord, Lord Whitty, and others on the Labour Benches, I say very gently that they should remember that we had the opportunity in this House to stop the bedroom tax when it was going through. The noble Lord, Lord Best, who is not here today, moved amendments to do away with it, and we could have stopped it. Between us, we failed, so we should all remember that. However, we are where we are.

I stand here fully in support of the policy of my party, the Liberal Democrats. I remind the House that we are still, and I hope will always be, a democratic party that meets twice a year and decides our policy in open debate in a democratic way. When we met this year in Glasgow, we passed almost unanimously a resolution that had the full support from all parts of the party, from top to bottom. It said that we were, effectively, against the bedroom tax. It supported the Scottish Liberal Democrats, who had passed a motion against it, and said it believed that:

“The majority of rural and urban areas outside large cities such as London have insufficiently large, diverse and dynamic social housing markets to make moving into a smaller property locally a viable option”,

and of course we know that is true in other areas, too. It continued:

“There is lack of appreciation of the housing requirements of children and adults with disabilities and care needs … Insufficient funds are allocated to Discretionary Housing Payment Funds of Local Authorities”,

and so on. I do not have time to read it all out, but noble Lords will get the gist that it was pretty critical. It welcomed:

“Scottish Liberal Democrats passing a motion against the policy”,

and,

“reports that some councils will not evict those in arrears”,

for that reason. It encouraged the Government to have a review of the whole policy, which I believe is now taking place as a result of pressure from the Deputy Prime Minister, and called for no withdrawal of housing benefit from those who are on the waiting list for social housing that fits the current guidelines within their local area, and no reduction in housing benefit from their projected housing need for those who, for a period of less than six months, temporarily have a small housing need due to a change in their circumstances but whose need will predictably return to a higher level—for example, children who pass the age limits for separate rooms within that period. There are quite a few ameliorating measures that the Government can and should take now in order to prevent some of the cruelty that is occurring as a result of this policy. Of course many of us would like them simply to abolish the policy, but I do not think they will do that in the short run.

The other part of the motion refers to affordable rents. The problem with affordable rents is that the words have an ordinary meaning that people will assume them to have, but the way in which they are now used by the Government and the Homes and Communities Agency is as a very specific technical phrase. As some noble Lords have already said, in many places they are not really affordable, so what they are called is not an accurate description of what they are.

I have some evidence for that from my own authority in Pendle. The HCA affordable homes framework covers the period 2011-15. It introduced a new affordable rent product that replaced the previous social rent model. Registered providers therefore cannot obtain funding to develop housing for social rent now; they have to go to affordable rents, and rents for these properties can be charged at up to 80% of market rates. What is called an “affordable” rent is related very closely to market rates. This approach is designed to give providers more income to build affordable housing, as the assumption is that market rents will be significantly higher than social rents, hence borrowing capacity will be increased.

The problem in areas like the one where I live and am a councillor is that housing is relatively cheap to buy, and levels of rent in the private sector are also therefore relatively cheap. For example, for a two-bedroomed flat where the social rent might be £65.06, in the example that I have been given by my officers, the affordable rent per week—that is, 80% of the average market rent in the private sector—is £83.07. For a three-bedroomed house, the affordable rent would be £87.69 per week. These are cheap rents relative to many parts of the country. Low differentials between market rent and social rent put registered providers developing in low-value areas at a disadvantage, because the figures basically do not add up.

Coupled with the change from social rent to affordable rent is a reduction in the grant level in the current HCA programme. The average grant for an affordable rent property is now around £22,000, but for a social rent property in the previous programme it was around £50,000.

When you take into account the cost of building the property, the revenue that comes in from rents over 30 years and the management costs and assumed refurbishment costs during that time, that simply does not add up for a lot of these properties. The council puts money in, in the sense of free land for sites for these properties, but it still does not add up. Up to now the council has been able to use right-to-buy receipts that it still has in the bank to subsidise this operation, but that will not be possible in future. For pieces of land that the council owns, which are perfectly remediated and ready to build on, the figures simply do not add up to build new properties, or they are very marginal.

I was asked today to give a quote for eight new properties that have just been built for affordable renting in my own ward, built by the council’s own company for the main housing association in the area, which runs a form of council housing. We think that eight properties is a great step forward, but we are not going to help the Government very much with their targets unless the basic rules behind what we are trying to do are changed and made more favourable to us.