Housebuilders

Lord Kerslake Excerpts

Thursday 11th January 2018 Lords Chamber

[Lord Kerslake (CB)]

My Lords, I first declare my interests as chair of Peabody and Be First, as well as president of the Local Government Association. I should also say that I have worked closely with the major housebuilders and their trade body, the Home Builders Federation, for nearly a decade, in particular when I was the chief executive of the Homes and Communities Agency. I too congratulate my noble friend Lord Best on this debate and his speech. Four minutes is a cruelly short time to speak on this very big subject, so I will say very little about the wider housing issues, other than to observe that the Government have correctly identified the importance of tackling our broken housing market but have so far been nowhere near big enough or bold enough in their solutions.

I came into housing at just the point the housing market fell off a cliff. Supply halved, the workforce was also halved, and profits and share values crashed. Through a combination of their own enormous efforts and substantial intervention by the Government, the major housebuilders pulled through. Sadly, many of the smaller housebuilders were not so fortunate. A decade on, supply has been restored and profitability and share value have returned. This is something we should generally celebrate: it suits nobody to have the housebuilders on their knees. Yet we still have enormous issues of affordability and supply, unacceptable bonuses and, as others including my noble friend Lord Best have commented, customer satisfaction falling to a worrying level.

Something more needs to be done, and here are my top four actions. First, we should recognise once and for all that the task of delivering the new housing that this country desperately needs cannot and will not be delivered by the major housebuilders alone. This was the fundamental mistake of the late, unlamented measures in the Housing and Planning Act. The Government have thankfully moved on from that Act but have not done enough yet to create a genuinely long-term mixed model of delivery. Lifting the borrowing cap on local authorities and substantially increasing the social housing grant would be a good start.

Secondly, a fundamental review is needed of the now £30 billion Help to Buy scheme. It should not be deleted, but should become much more targeted and require much more from the industry in order for it to benefit from it. The scheme should be focused solely on first-time buyers and available only where it is critical to the delivery of a scheme. In return for this, housebuilders should commit to curbing excessive bonuses, delivering more affordable housing and investing in developing a skilled workforce.

Thirdly, a fundamental change is needed in the way the viability assessment works. Currently, land prices are determined by whichever developer is prepared to take the biggest gamble on beating down costs and reducing Section 106 commitments. As Shelter commented, this makes for scheme delays, high legal costs and poorer quality schemes. This is creating real anger and disempowerment at community level, exacerbated by the poor quality of many of the schemes agreed through the permitted development rights scheme.

Fourthly—my noble friend Lady Wolf has been very good on this—we need a new joint plan between government and the sector to address the enormous skills gap. It is not just about bricklayers and Brexit, important though that is. There are significant shortages in professional skills as well, including, crucially, many local authorities planning departments, which are on their knees, frankly. The London mayor’s Public Practice initiative and Bexley Council’s proposed place and making institute, both of which are supported by Peabody, are good examples of what needs to be done.

I put forward these proposals to support, not attack, the housebuilders. We need a thriving and growing housebuilding sector to have any chance of delivering the homes that this country requires, but it is in the interests of everyone, most of all the sector itself, that change is made.