Building More Homes (Economic Affairs Committee Report)

Lord Kerslake Excerpts

Thursday 2nd March 2017 Lords Chamber

[Lord Kerslake (CB)]

My Lords, I am pleased to be able to contribute to this debate on the excellent report of the Economic Affairs Committee. First, I declare my interests as chair of Peabody and president of the Local Government Association. I was also chair of the IPPR commission into housing in London and recently did a peer review of the north Essex garden communities project.

I say that the report Building More Homes is excellent because of the clarity of its analysis and the good sense of its conclusions and recommendations. It forensically examines the reasons that this country has failed to build enough homes for a long time and puts forward some bold proposals to address this. I can honestly say—and it is rare that I can say this—that there is nothing in it that I disagree with.

At the heart of this debate is the scale of the challenge we face in delivering new housing supply and our willingness to take the steps necessary to address it. I share the report’s view that the goal here is not the number of houses that we manage to build in one Parliament, but achieving a step change in the rate of build and, as the noble Lord, Lord Hollick, said, sustaining it over a long period of time. Housing should be seen as a vital part of the country’s infrastructure that is planned for the long term, going well beyond one Parliament. In this respect, I would go further than the report and make it a core part of the responsibilities of the National Infrastructure Commission. It is only by moving away from short-term fixes and taking a holistic, long-term view that we will we have any chance of delivering the homes this country needs.

Since the report was published in July we have, of course, had the Government’s White Paper Fixing Our Broken Housing Market. I have to say that there is much in this White Paper that I welcome, too. I share the positive view held by the new Housing Minister, Gavin Barwell. The Government have recognised the scale of the problem. They have set out the need—if not a target, as we have just heard—for somewhere between 225,000 and 275,000 properties a year to be built. Crucially, they have recognised that this can be achieved only by building homes of all types and tenures, including affordable rented homes, and have moved away from the previous obsession with home ownership.

If the White Paper had done nothing other than break with the utterly unfair and unworkable policies of before, it would have been worth doing for that reason alone, but it also contains a good number of practical and sensible improvements to the current arrangements. I shall give three of these: the objective assessment of need for local plans; the diversification of the market by growing the SME sector; and the increase in planning fees for local authorities. I also note in passing that paragraph 4.16 of the White Paper effectively adopts the flexible approach to the delivery of starter homes that I and others advocated during the passage of the Bill last year and on which we had such a heated debate. Taken with the dropping of pay to stay, this represents a real change of heart, on which I congratulate the Government.

Notwithstanding the positive features of the White Paper, the key question is whether it will be enough. Here, I fear that the answer is less positive. Much more will be needed if we are to deliver the 300,000 homes proposed in the Select Committee report. We have already heard about many of the areas where changes are needed, including in a very powerful contribution from my noble friend Lord Turnbull about the taxation issues involved, so I would like to finish my contribution by highlighting just five areas where I think gaps still lie.

The first is the role of local authorities and the need for greater devolution. The Select Committee report rightly recommended lifting the borrowing caps on local authority capital spend to enable them to do more direct development. This does not need to be in competition with housing associations: there is plenty of work to go around. In many ways, local authorities working in partnership with housing associations and the private sector is the way forward, as I have seen in the Sheffield Housing Company.

The desire to do more direct development goes across the political spectrum of local authorities. I recently met the cabinet member for housing in Guildford, who is passionate about that council building more social housing. I strongly encourage the Minister to meet him and hear about the barriers they experience in doing this. Local authorities in high-growth areas such as Essex, for which I recently did a peer review, as I mentioned, need more capacity to enable them to develop their plans and secure much-needed infrastructure before major housebuilding starts.

The importance of the leadership role of local authorities in place making cannot be overestimated. Without the creation of great places, new housing will not get local support. To do this, local authorities need new skills and more capacity. They also need greater powers, which is why I support the proposal that devolution deals should always contain a housing supply element.

My second issue is that the Government need to do more to harness the power of housing associations. I have said in other places that the sector now has the policy alignment that it has been asking for, and it must step up to the plate and deliver. Peabody will play its part, including our very ambitious plans for Thamesmead. We are also proposing to merge with another housing association, Family Mosaic. One important reason for that is that it will enable us to build more homes. The National Housing Federation has set out an ambition for the sector to deliver 120,000 new homes a year by 2033, half of the Government’s target. This could be helped enormously if the Government were to consider either rent flexibility or at least very quickly moving to rent stability to address the issues that were raised with the changes in 2015. There are also other proposals, such as that by ResPublica for the creation a £10 billion renewable building fund, that I believe are seriously worth exploring.

My third issue is that the Government should allow a more localist and flexible approach to building on the green belt. The IPPR report on housing in London found that this could play an essential part in securing the 50,000 new homes a year that London needs. In reality, councils up and down the country are already looking at the issue of the green belt. The Government can do more to support them in this. I understand that this issue was the subject of some intense debate between the department and No. 10 Downing Street. I sincerely hope that the department will stick to its guns and keep going on this.

My fourth issue is the need to address the concerns of the private housebuilders on labour shortages and the future of Help to Buy. Ensuring a good supply of skilled labour has moved from being an issue for the private housebuilder to being, in many cases, the issue. Noble Lords will be pleased to hear that I will not rehearse again the issues that we talked about yesterday on Brexit. However, we have to do much more than we are at the moment on growing an indigenous skilled workforce. We have only scratched the surface of this issue. Help to Buy has played a key role in underpinning demand for new housing, but we need quickly to resolve what happens to the scheme after 2020. If we do not, housebuilders, faced with a softening market, will scale back their delivery.

Fifthly and finally, we still have some unfinished business from the Housing and Planning Act, particularly the deeply divisive forced high-value sales policy. I sincerely hope that the Government can find a way of pushing this even further into the long grass. I would welcome the Minister’s view on each of those five points when he comes to sum up.

Delivering the new homes that this country so desperately needs should not be regarded as mission impossible. The Select Committee report has pointed the way forward as to what is needed. The Government have responded but need to go further. The sector itself, public and private, must also step up to the plate and deliver its share of the task.