Housing: Availability and Affordability

Lord Horam Excerpts

Thursday 12th October 2017 Lords Chamber

[Lord Horam (Con)]

My Lords, many noble Lords may recall the name Lord Harmar-Nicholls, now sadly no longer with us. I remember him when we were both Members of Parliament along the corridor, when he was the MP for Peterborough. He famously retained the seat with a majority of 12, on one occasion, and subsequently with a majority of three. He always said that his ambition was to double his majority. I mention him because, as the humble Mr Harmar-Nicholls at the Conservative Party conference in Blackpool in 1950, he raised the cry, “Three hundred thousand houses a year must be built”. The noble Lord, Lord Smith, in his excellent introductory speech referred to this occasion. That cry was taken up from the hall enthusiastically and, as the story goes, Lord Woolton, a famous chairman of the Conservative Party, was listening intently and whispered to the head of the Conservative research department sitting next to him, “Can it be done?”. The word came back, “In theory, yes, it can be done”. Lord Woolton terminated the debate by saying, “This is magnificent; it should be done. It should be Conservative Party policy”. Imagine it: a conference where Conservative Party policy was actually decided at the conference—those were the days. And so it was. It became Conservative Party policy.

In 1951, the Conservative Government were elected and the Prime Minister, Winston Churchill, called on Harold Macmillan to be his Housing Minister. As the noble Lord, Lord Smith, again rightly pointed out, Harold Macmillan had really wanted to be Minister of Defence, but Winston Churchill said to him, “Harold, you’ll be loved in every humble home in this land if you can deliver 300,000 houses a year”. A glint came into Harold’s eye—he was not without ambition, as noble Lords will be aware—he realised the possibilities and got to work. He renamed the department the Department of Housing and Local Government, sacked the Permanent Secretary and brought in Evelyn Sharp, a famous civil servant. He brought in Sir Percy Mills, who had been a prominent industrialist in the Midlands during the Second World War, and appointed Ernie Marples, who had experience in construction, as his dynamic Parliamentary Secretary. He divided the country into 10 regions and got to work. In 1954, 317,000 houses were built. Not all of them were great houses, I have to confess. There a bit of rubbish there as well, but that target was achieved.

I mention all this because, obviously, it has been done. The target has been achieved, and I do not believe that it cannot be achieved again. It also shows the sort of drive that is needed to get something like this achieved. Crucial in all this was the fact that Harold Macmillan got the full-hearted support of not only Winston Churchill, who was then Prime Minister and for whom it became a personal commitment—as it is of our Prime Minister today—but Rab Butler, the Chancellor of the Exchequer. Ironically, in view of future political events, Rab gave him full authority to raise the money to get on with building these houses. I fear that the problem today is the Treasury. Why was there a limit of £2 billion and 5,000 houses a year in the recent statement at conference? It is the Treasury—the dead hand of the Treasury. The fact is the Treasury is limiting this, and the reason it will give is that we have a deficit of 80% of our GDP at the moment and how can we possibly add to that. Well, in Harold Macmillan’s time, the deficit was 250% of GDP and they still did it. They did not worry about that too much then. The reason is the Treasury today is making no distinction between current and capital expenditure. I am all in favour of balancing current expenditure over the economic cycle, making some allowances, and indeed paying off some of our deficit. That is absolutely right and, as a Conservative, I totally support that. But it is madness to include capital expenditure in that.

As the noble Lord, Lord Cashman, pointed out in his speech, we should be borrowing against our assets. We are creating assets, against which the local authorities should be able to borrow. The noble Lord, Lord Cashman, may be interested to know that, in today’s Financial Times, there is an article making this very point: it makes a distinction between current and capital expenditure in the Treasury in New Zealand and, therefore, New Zealand has a long-standing patient infrastructure programme, which we have never had in this country under any Government. So this is a problem for the Treasury, I think. We are also facing the possibility of a recession in 18 months or two years’ time. This would be a counter-cyclical policy, so it is good not only on housing grounds but economic grounds.

The House may remember that there was an excellent book produced by Anthony King and Ivor Crewe, The Blunders of Our Governments. I think I will produce a sequel: “The Mistakes of our Treasury”—unless it gets some sense in all this and behaves like an ordinary private company would. A private company would never get away with one number as the deficit; it would obviously have an account that would take into account the fact that it was spending money on development, research and building up assets. My plea to my noble friend, when he replies, is that he takes the views expressed in this debate today, with the urgency in which they have been made, to the Treasury. The job can be done, but it will not be done unless we get the Treasury right behind it.

[Baroness Donaghy (Lab)]

My Lords, it is a pleasure to follow the noble Lord, Lord Horam, and I invite him to join these Benches—on this side.

[Lord Horam]

I have tried that. It was a big mistake.

[Baroness Donaghy]

I am grateful to my noble friend Lord Smith of Leigh for initiating this important debate, and I want to say something about the areas of greatest need, the Government’s potentially conflicting policies and the need for some cross-party work on this giant project, which will take longer than one or two Governments to achieve.

I turn, first, to homelessness, temporary housing and the impact on black families and older people. DCLG’s own figures reveal a 134% increase in rough sleeping between 2010 and 2016. The number of households in temporary accommodation increased by 60% in the same period. Whether this is because of a housing shortage, drastic reductions in local authority budgets, changes in housing benefit or a combination of all three, it is still the responsibility of the Government. What is happening to the weak and vulnerable is shameful. The drop in home ownership has seen black families affected the most. Less than one-third of black households are headed by owner-occupiers, compared with two-thirds of white families and 58% of Asian households. If we had more age-appropriate housing for older people, it would contribute to solving the wider housing crisis and might alleviate some social care and loneliness issues. The chair of the Communities and Local Government Committee, Clive Betts, when he launched the committee’s inquiry into housing and older people, said:

“Many pensioners may be interested in downsizing, but … are restricted from doing so by a lack of suitable options”.


The Government’s target to build 1 million homes by 2020 is commendable and I do not want to sound churlish, but even that target will not solve the affordability problem. By the way, if we do nothing else, can we ban the use of the word “affordable” where it does not belong? I checked the Concise Oxford English Dictionary this morning; it says, “have the means”, or “be rich enough”. It does not say “receive minor subsidy on overinflated full-price option”. As Shelter has pointed out,

“Developers are allowed to use secret ‘financial viability assessments’ to show that they’re not going to make a ‘competitive’ profit”—


my noble friend Lady Young has already covered this very ably—

“A whole industry now exists to provide such assessments, showing that affordable housing isn’t viable any more”.

Savills has forecasted that a further 100,000 homes are needed each year to have any effect on affordability—real affordability. The worrying contraction in the construction industry has not been felt so keenly in the housebuilding sector, although it has slowed down. Another concern is that we import a significant proportion of building materials and the costs have increased this year because of the weak pound.

The Prime Minister has promised to “make it my mission” to solve the housing problem. This is powerful and welcome. However, the extra funding that she announced for councils and housing associations—as the noble Lord, Lord Horam, has already said—will build 5,000 houses a year, bringing the projected total to 32,000 new council and housing association properties per year. This is good news, but a modest start. Mood music can be important, however, and perhaps council housebuilding will become so respectable that they will not have to be sold off afterwards.

I turn to Help to Buy, which presses all the political buttons for the Government. It accounts for a third of private sales of new homes. Like a flock of migratory birds, Help to Buy moves south to warmer climes, favouring areas that are not traditionally Labour heartlands. It is great that 135,000 families have benefited since the launch in 2013, but most of the beneficiaries of taxpayers’ money could have afforded to buy a home without such a scheme and 40% of the lucky households earn more than £50,000 a year. Experts as varied as Shelter and the Adam Smith Institute have said that Help to Buy will do nothing to meet real housing need and pushes up property prices.

I am all in favour of building companies reaping rewards for their work, but the five largest stock market listed builders made £3 billion worth of profit last year. The chief executive of Persimmon is likely to receive a £130 million payout, and half of Persimmon’s house sales are through the Help to Buy scheme. If we are to subsidise building companies—I am not fundamentally opposed to this—it should be done to build properties for people in greatest need. The Adam Smith Institute said of Help to Buy:

“This scheme is being used by investment bankers and doctors. They are certainly not the sort of people who the taxpayer should be subsidising”.


I pay tribute to John Healey, the shadow Housing Minister, for his hard work and clear message. He has built up a formidable knowledge of the housing crisis and what is needed to fix it over a period when six government housing Ministers came and went—if they had been tenants, no landlord would have wanted them. Labour has promised to create a government department for housing and will launch the biggest council housing programme for 30 years. It will make 4,000 new homes available to people with a history of rough sleeping. This would not mean borrowing from current spending but a return to the level of capital investment we had in the last year of the Labour Government. John Healey feels that the public loss of faith in the power of the state is due largely to the Government’s “small state” thinking, and that Governments have an important role in leading the way on housing. He calls for a cross-party consensus on public and private housebuilding, and I wholeheartedly agree with his views.