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.

Trade Union Bill

Lord Kerslake Excerpts

Tuesday 3rd May 2016 Lords Chamber

[Lord Collins of Highbury (Lab)]

My Lords, I thank the Minister; I appreciate that the Government have moved substantially on this issue since we last debated it. I will try to encourage her to be a little more positive, because the fact is that the Government have publicly declared in favour of a review, which is important. It is important that she reassure the House that all interested parties will be publicly consulted in that review and will have the opportunity to put their case and the evidence in an open and transparent way. I hope this will include not only balloting agencies but the trade unions themselves and the TUC, which obviously have a wealth of experience. It may even be an opportunity for the Conservative Party to explain how well it gets on with electronic balloting, which it has used in the past. I therefore hope that the Minister will be able to give that commitment that evidence will be taken across the board.

I also noted the comments by Nick Boles in the other place about the pilots running as part of the review. I hope the Minister will be able to give the independent review a freer hand that will enable it to say, “Well, yes, we have evidence, but we want to test it”. That is important, because whatever the review’s conclusions, it matters that people have confidence in it. That is why all noble Lords were committed to the idea of a trial or pilots—to ensure that the review could assess its effectiveness.

Of course, no balloting process is completely secure, as we know from our own parliamentary system. However, I am fairly confident that the balloting agencies will be able to ensure that there is a strong case. We must not forget the reasons for this. It is about ensuring democracy, and if the Government are genuinely concerned about the rate of participation in elections—or, primarily, in industrial action ballots, where the thresholds have been put in place—it is their duty to ensure that all measures are taken to maximise this. Views were expressed across the House that this independent review should take place as speedily as possible and that the Government should consider fully its conclusions. I note what the Minister says but I hope that once that review is published, the Government will give proper consideration to its conclusions.

[Lord Kerslake (CB)]

My Lords—

[The Earl of Courtown (Con)]

My Lords, the noble Lord, Lord Kerslake, was not in the Chamber until well after the Minister had started speaking. I do not know whether the House feels that he should be allowed to speak.

[Baroness Neville-Rolfe]

In the circumstances, it would be right to hear the noble Lord, Lord Kerslake.

[Lord Kerslake]

I am very grateful to the House for giving me the opportunity to speak. I was going to convey my apologies for lateness for the exact reason given by the noble Lord, Lord King—I had a different understanding of the timetable. All I can say is that I am learning fast.

I wholeheartedly welcome the movement on electronic balloting, and the Minister will know how passionately I feel about this. The fact is that it is both a secure and effective system for testing the opinion of different groups. It has been used on many occasions by many organisations for very important votes, and I believe passionately that it should be made available to the unions, particularly where we have set thresholds that must be met before they can take industrial action.

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[The Parliamentary Secretary, Cabinet Office (Lord Bridges of Headley) (Con)]

My Lords, there has been much debate over the Government’s wish to have a reserve power to place a cap on facility time. The Government have listened to that debate and, as I said last week, the amendments before your Lordships today reflect a number of points made in this House.

First, the amendments set out that the cap will not be exercised until three years have elapsed after transparency regulations come into force. Secondly, they ensure that, where there is cause for concern about levels of facility time, public sector employers will be put on notice and given at least a year from the date of such notice to make progress before a cap can be applied. Thirdly, they guarantee that the employer will have the opportunity to set out the reasons for their levels of facility time. Fourthly, they set out clear criteria that the Minister must have regard to when considering the exercise of the power. Fifthly, they provide employers with an opportunity to take action to meet the Minister’s concerns and to evidence it via their data. If there is insufficient progress, the Minister will then be at liberty to exercise the reserve power and make regulations to cap facility time for that employer or those employers.

These safeguards provide a high degree of comfort about the circumstances that must arise before the reserve power could be contemplated. They underline that this is very much a reserve power to be used in exceptional circumstances—only where valid concerns have been raised and inadequately addressed over a long period. I remind your Lordships that this measure would be exercised under the affirmative procedure.

I urge your Lordships to see these amendments as a reasonable, practical and balanced means of addressing concerns while enabling the Government to meet their objective. I beg to move.

[Lord Kerslake]

My Lords, I first declare my interest as president of the Local Government Association. Your Lordships will be aware that I moved an amendment to delete Clause 13 from the Bill. I did so because I was concerned about the extensive powers it gave to the Secretary of State for what, as far as I could see, was little justification. That is why I argued that this provision is necessary: so that the transparency provisions of Clause 12 will control expenditure and make visible the amount that public bodies spend.

My sense is still that there is no convincing case for why the clause is needed, but I acknowledge the considerable distance the Government have gone by introducing safeguards that will protect public bodies from arbitrary power in this situation. I absolutely welcome that movement, which reflects well on the Government and Ministers.

I hope that this is a reserve power that we never see used. I hope that the rational decisions of public bodies and the process that will now be put in place will ensure that we never need to impose this reserve power. I recognise that there are now proper safeguards, and I welcome that change.

[Lord Stoneham of Droxford]

I want to make just one brief point. We, too, welcome the amendment and the compromise which the Government are showing. However, having got rid of quite a lot of the powers, we are still left with a hell of a lot of bureaucracy—for no good purpose, as the noble Lord, Lord Kerslake, was suggesting. It is now a very complicated procedure and one wonders whether this will disappear into the long grass and be quietly forgotten. It would have been much better to have a one-off review to see what the problem is and deal with it through the management of the public sector, rather than setting up this ridiculous bureaucracy for no good purpose.

Trade Union Bill

Lord Kerslake Excerpts

Tuesday 19th April 2016 Lords Chamber

I will mention the case of UNISON. It is a union of low-paid workers. The monthly average subscription is £1.43 a week, and the average worker earns £15,000 a year. That is the average; in other words, most people earn less than that. This union deduction is crucial to their well-being. As such, I am delighted to hear what the Minister has said. I think that possibly, as the debate has developed, these facts have come more to the fore. As I said, the union movement is a very wide one and it is very easy to see some parts of it and think, “Oh well, they can do a direct debit—it is not hard for a doctor to have a direct debit”. But when you look across the whole waterfront, you see that this is a very important part of it. As such, at the appropriate moment, I will be delighted to withdraw my amendment. But for now, I beg to move.

[Lord Kerslake (CB)]

My Lords, I rise to speak to this amendment and in doing so declare my interests as chairman of King’s College Hospital and president of the Local Government Association. I am very grateful to the noble Lord, Lord Balfe, for moving this amendment. He has been a constant companion during the Committee stage of the Bill and I have learned a great deal of trade union history from him that I did not previously know about.

Like the noble Lord, Lord Balfe, I am in the equally happy position of finding that the speech I wrote over the weekend is now entirely redundant. I think we are all agreed about the importance of the role of trade unions in this country. They are a part of British life. It was clear to anyone who looked at the detail that the Government’s proposals on check-off stood to do considerable damage both to the unions themselves and to their members and potential members. Like the noble Lord, Lord Balfe, I was particularly concerned about the impact on low-paid, mostly female workers who stood to lose out on the protection and benefits of trade union membership.

It is worth bearing in mind that the impact of this proposal was likely to be felt by more than 21,000 public sector organisations. Given its impact, I think many noble Lords felt that the arguments in favour of it were—to put it mildly—not convincing. Take just one example: modernisation. Again, as the noble Lord, Lord Balfe, has said, there are many examples of payroll deductions continuing. It appears that only the trade unions and their members were going to be route marched to modernity on this issue. It was absolutely right that the members should have the choice between payroll deduction and direct debit. In a situation where the unions had signalled clearly that they were willing to pay the costs, it felt to me that the last credible argument on this issue had fallen away.

I am delighted that Ministers have listened on this issue and changed their view. I hope that we can see equal progress on some of the other contentious issues in the Bill, and I look forward to seeing the wording at Third Reading.

[Lord Cormack (Con)]

My Lords, mine is the third name on this amendment and I am delighted to intervene. I am also delighted that I did not write a speech at the weekend. I am extremely grateful to my noble friend the Minister for what he said and for the way in which the Government have engaged in constructive dialogue and listened to the voice of the House.

The words that I have used constantly in my contributions to this debate in Committee and earlier on Report have been “choice” and “fairness”. Had we kept the Bill as it was, those principles, which are fundamental to one-nation Toryism, would have been violated. I am extremely glad that I can pay tribute to an institution of state—the trade unions—that I have always admired, which have a vital, constructive and continuing role to play in our society and in our economy. It would have been a great mistake for this House and this Parliament, in the wake of a general election and promises and pledges genuinely made, if we had we violated the principles of choice and fairness.

Personally, I have some doubt about the need for this Bill at all, but at least now we are on the way to having a Bill that is unexceptionable and can be accepted in all parts of the House. As my noble friend Lord Balfe said, it is an example of your Lordships’ House at its best. My noble friend talked about cannon to the right of him, cannon to the left and cannon in front. A noble Lord interjected that there were also cannon behind him. Well, as one of the cannon behind him I am very glad to pay him and my noble friend Lady Neville-Rolfe an unstinted expression of admiration for the way in which they have listened and reacted. I hope that before the Bill has gone on to the statute book we will have seen the amendments that we passed at an earlier stage accepted in another place and going through on the nod in this House. I hope that we will then have diffused all the potentially damaging aspects of the Bill. Let us hope that is how it ends.

Trade Union Bill

Lord Kerslake Excerpts

Wednesday 16th March 2016 Lords Chamber

Moved by

[Lord Kerslake]

3: After Clause 3, insert the following new Clause—
“Electronic ballotingProvision for electronic balloting: review and piloting scheme
(1) The Secretary of State shall commission an independent review, the report of which shall be laid before each House of Parliament, on the delivery of secure methods of electronic balloting for the purpose of ballots held under section 226 of the 1992 Act (requirement of ballot before action by trade union).
(2) The use of pilot schemes shall be permitted to inform the design and implementation of electronic balloting before it is rolled out across union strike ballots.
(3) The Secretary of State must consider the report and publish and lay before each House of Parliament a strategy for the rollout of secure electronic balloting.
(4) For the purpose of preparing the strategy under subsection (3), the Secretary of State must consult relevant organisations including professionals from expert associations to seek their advice and recommendations.
(5) The review under subsection (1) shall be commissioned within 6 months of the passing of this Act.”

[Lord Kerslake (CB)]

My Lords, the purpose of the amendment is simple: to promote the greatest possible engagement, and widest choice, for trade union members in ballots for industrial action. As we have heard, elsewhere in this Bill there are provisions that require a turnout of at least 50% and, in the case of important public services, the support of at least 40% of those able to vote before industrial action can be taken. These thresholds set a high bar, and have been hotly debated. If a 50% turnout test had been applied to elections before local councillors and police and crime commissioners could take up their seats, we would sadly now have many vacant posts. We do not, of course, set referendum thresholds, including for one of the most important decisions that this country will ever take: whether we remain in the European Union. Equally, Governments are able to govern and bring forward legislation having secured the active support of far less than 40% of the electorate. The amendment, however, does not seek to contest these thresholds; it simply says that if we are to apply these higher tests before industrial action can be taken, it is incumbent on us to provide trade unions with the best practical means available to achieve the full participation of their members.

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[Baroness Neville-Rolfe]

My Lords, I have explained that we already have the power, and we also have the will to move in this direction. However, for the reasons I have stated, we should not agree to the review set out in the amendment. As I was saying, other countries have struggled to implement online voting successfully and sustainably. The Speaker’s commission identified 14 countries that have tried internet voting for binding elections, which included five countries—the UK, Finland, the USA, the Netherlands and Spain—which either piloted or fully adopted electronic voting and then decided to discontinue its use.

There is a problem here. The only country that has succeeded with a sustainable system is Estonia, and that is because its ID card system makes it unique. I met with the President recently and we had an interesting discussion about this. Of course, it is possible there because their system is different.

On the amendment in the name of the noble Lord, Lord Kerslake, of course, the concept of a review is not new and, as I said, a lot has already been done to review the case for electronic balloting. I have spoken of the Speaker’s Commission on Digital Democracy, which published a report on 26 January last year. Obviously, the Electoral Reform Services looked at the case for e-voting for trade unions in the UK and published its findings—indeed, they were published online—and WebRoots Democracy published a report on 26 January on secure voting with contributions from global experts and academics in the electronic voting field. Therefore, we are not short of reviews.

Against that background and despite the excellent points made by noble Lords, I cannot agree with the amendment because it irrevocably commits the Secretary of State to press ahead with a strategy for the rollout of electronic balloting, irrespective of any problems the review finds. I have tried to explain that another review could find problems—it is not absolutely dead easy. As I have said, we have the power to permit e-balloting, and we will use it when we are convinced that all the concerns have been addressed. This is why the current legislation is framed as it is, and for good reason.

I am conscious that this all sounds rather negative but, rightly, noble Lords want to know what problems prevent us agreeing to electronic balloting and I hope I have given a flavour of them. There has been a good deal of positive progress in the way technology can help to address these issues, and that is reflected in the reports I have cited.

I hope that I have been clear. I have listened to the case for the amendment and the case made at other stages of the Bill but, for the reasons I have given, the Government do not support the amendment and I encourage the noble Lord to withdraw it.

[Lord Kerslake]

My Lords, I am grateful for all the contributions to this debate. In the interests of time, I will not go through every single one but I am deeply grateful for what noble Lords have said. A number of noble Lords expressed puzzlement about the Government’s position, but I fear that the Minister’s response has not ended my puzzlement.

Perhaps I may briefly take up a couple of points before I conclude. The first is that security is relative. We are not talking about absolute security here; we are talking about whether electronic balloting can be as secure as postal balloting. I hope I made it clear beyond doubt that, specifically in respect of balloting for industrial action, there is no argument: it is as secure. One might have a debate about it in relation to elections but, for this purpose, it is as secure.

Secondly, we are clear that this is an independent review. My amendment says that the Secretary of State should consider that review and come back with a strategy. Of course, if the review concluded that the whole thing was impossible, we would have to think again, but from everything I know, I am absolutely convinced that it is not; indeed, electronic balloting is now used for very important elections.

I am very sorry that we have not seen more movement from the Government on this issue. I am deeply disappointed and I am afraid that I wish to test the opinion of the House.

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Moved by

[Lord Kerslake]

20: Clause 13, leave out Clause 13

[Lord Kerslake]

My Lords, this amendment would remove from the Bill the reserve powers proposed to be given to the Secretary of State to intervene in individual public bodies in respect of their facility time arrangements. In moving this amendment, which is also supported by the noble Baronesses, Lady Watkins and Lady Hayter, and the noble Lord, Lord Stoneham, I declare my interests as president of the Local Government Association and chair of King’s College Hospital.

I will not spend a long time making the case for the value of trade union facility time, because the Government are not contesting this. Suffice it to say that it is part and parcel of ensuring effective industrial relations and enabling trade unions to play their proper role in collective agreements with employers. The benefit comes as much to the employer as it does to the trade unions. I am clear that I could not have delivered the scale of change that I did in Sheffield without having trade union representatives funded through the facility time arrangements. Having them available to engage in the negotiations on behalf of their members was crucial. The Government are saying that the costs should be transparently known and proportionate to the benefits—I agree. However, this is fully secured—this is a critical point—through Clause 12. There is no need for the reserve powers contained in Clause 13.

It is worth spending a minute looking at the reserve powers given to the Secretary of State in this clause. They will enable the Secretary of State to specify not only the percentage of an employer’s pay bill that such arrangements will cost—to specify a cap— but also the percentage of an individual employee’s working time that can be taken as paid facility time. This will apply to all public bodies including those in the devolved nations. As we have heard, that ends up with a wide definition. Let us be clear about this: the Secretary of State will be able to specify the percentage of time that a trade union official in the City of Edinburgh Council and Essex County Council can spend on their paid duties. This will entirely cut across whatever collective agreements happen to be in place already in those authorities at the time. This does not make sense at any level. If the public body is controlled by central government then it is already within the Government’s gift to take action. They already have the ability to influence this. If, however, the public body is a local authority, it has its own democratic mandate and is answerable to its own electorate for the cost. Given the immense financial pressures now on local authorities, do we really think that they are incapable of making this judgment?

We rightly invest enormous responsibilities in local government. There is widespread recognition that local authorities have managed the substantial reductions in their budgets over the past six years as well as, if not better than, any other part of the public sector. Indeed, through the devolution deals, the Government plan to give them more powers and responsibilities. Yet we do not think that they can be trusted to manage a cost that comes to less than 0.2% of their pay bill.

The Government have pointed to the power of transparency to deliver savings on their own facility time costs. It must surely be right to let the same process take its course in other parts of the public sector. Their only defence of this clause in Committee was that it might come in handy at some time in the future. That is not an adequate defence for such a centralising provision. I beg to move.

[Baroness Watkins of Tavistock (CB)]

My Lords, as a co-signatory to the amendment moved by the noble Lord, Lord Kerslake, I declare my interests as an emeritus professor of Plymouth University and a non-executive director of the South Western Ambulance Service NHS Foundation Trust.

As the noble Lord, Lord Kerslake, said, we agree with the Government about the value of appropriate amounts of facility time, which we all acknowledge are essential to effective industrial relations and health and safety at work. The benefits of facility time come not only to the trade unions and employers but to the public, including patients and students, when good, sometimes even novel solutions are found to changes in working practice through collective discussion between managers and employee representatives.

For example, a management team that I led could not have delivered the effective changes in nursing and healthcare education in the West Country without having had trade union representatives funded through facility time. In that instance, we moved from 17 small sites to a four-centre hub-and-spoke model. This saved in excess of £3 million per annum, recurring, for the NHS budget—without a single working day lost. During the year in question union representatives’ facility time and managers’ time were a worthwhile investment in securing a cost-effective solution for the future.

The reserved powers for the Secretary of State outlined in Clause 13 should not necessarily be needed. Good managers should be facilitated to make decisions about the amount of trade union facility time that is appropriate for the business in hand at that time, whether in the NHS or other publicly funded services. Just as trust is necessary between managers and unions, it is necessary between government and leaders and managers in the public sector.

The Government are saying that costs should be transparent and relevant to the benefits. I have given a personal example of this approach and fully support the concept that this should be achieved. However, I do not believe that the reserved powers contained in Clause 13 are proportionate or necessary. Good managers will oversee and provide transparent data on facility time and should be held accountable for doing so without the need for Clause 13. The noble Lord, Lord Kerslake, has made a sound argument for the deletion of Clause 13, with which I concur.

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[Lord Bridges of Headley]

My Lords, we need to make sure that taxpayers’ money is properly accounted for, wherever it is spent. My understanding is that that is the rationale behind this.

[Lord Kerslake]

My Lords, I am grateful to the Minister for giving his response and for the contributions to this debate, which have been most valuable. This provision can be described only as overweening central power, with no justification whatever. The Minister said that public bodies—in the main, local authorities—should be accountable for what they spend. Yes, they should be, but to their local electorate. That electorate will be able to see exactly how much the authority spends and what they get for it, and to form their own opinion. Do we seriously think that the process of democratic control cannot deal with less than 0.2% of the pay bill? It is, I am afraid, absurd and it has not been defended.

I will make one last point before we go forward on this. The Minister said that there would be flexibility within the cap to decide what arrangements there would be. Within this clause, there is provision for the Secretary of State to say: “I don’t like the fact that you are doing 100% time, trade union representative: I would like to change it to 50%, or maybe 25%”. There is not even the ability to make the decision on the deployment of whatever cap is created. This is overweening centralism, so I beg to test the opinion of the House.

Charities (Protection and Social Investment) Bill [HL]

Lord Kerslake Excerpts

Monday 20th July 2015 Lords Chamber

Our amendment is about charities, many of whose tenants live in homes built with private charitable money. They are different from local authority tenants or tenants whose homes were built with some public money after 1974. Amendment 7 confirms the existing position that assets belonging to a charity must be used for that charity’s purpose. Sometimes, indeed, that will be by sale to raise money or replace stock. The amendment simply says that it is for the trustees of these independent organisations to decide that—not some outside body. I beg to move.

[Lord Kerslake (CB)]

My Lords, I declare my interests as chair of Peabody and president of the Local Government Association. I speak in favour of this amendment in light of the Government’s stated intention to extend the right-to-buy policy to housing associations. I entirely support the Government’s aim to extend home ownership but have serious concerns about this proposed way of doing so.

Currently, tenants in housing association properties—unless their property was transferred from a local authority and therefore covered by a preserved right to buy—are able to purchase their properties only through right to acquire. That is limited to properties built or bought after 31 March 1997 and—this is crucial—funded through social housing grant. Under the Government’s current proposals to extend right to buy, all properties would be open to purchase and the available discount of up to £104,000 on a flat after three years’ occupation would be much greater. That would include significant numbers of properties built with absolutely no contribution from government.

Peabody was established 153 years ago by an enlightened, London-based but American-born banker, George Peabody. The aim of the Peabody Donation Fund that he launched in 1862 was to,

“ameliorate the condition of the poor and needy of this great metropolis, and to promote their comfort and happiness”.

His contribution was £500,000, equivalent to nearly £1 billion at today’s prices. By 1882, 3,500 properties had been constructed, including the Whitechapel estate in east London and the Wild Street estate in Covent Garden. By 1939, there were 8,000 properties. Today, Peabody is established by statute and has 28,000 properties, but its mission has remained essentially the same. In all of its 153 years, it has received public funding for only 40.

Given that the average value of a Peabody property is over £350,000, it is likely that, even with the discount, sales will be to the better-off residents. Experience from local authority sales though right to buy is that, over time, substantial numbers of the properties are sold off, so that one-third of the homes become buy-to-let properties at market rents. These can be as much as double social rents, and so not accessible to low-income families, as was originally intended. The Government’s intention is, rightly, to see one-for-one replacement but, again, local authority experience is that this is unlikely to be achieved, and certainly not at the pace of the sales or in the locations where the sales have occurred.

I have spoken extensively of Peabody, but since I first raised this issue I have been inundated by many people and organisations of all shapes and sizes with very similar concerns. For example, the Holt and Neighbourhood Housing Society was brought to my attention by Norfolk county councillor, Dr Marie Strong. This is what the chairman of that society has to say:

“The Society was funded in 1960 with land and finance by a local family because of concern for affordable local housing. Now, with the generosity of local people, the Society has 35 properties in Holt, Glandford and Letheringsett, managed by a committee of local volunteers. The aim is to provide affordable housing for local people in housing need. Not bound by local authority rules the properties are always allocated to local people which helps ensure a continuity of the community. The rents are around one-half to two-thirds market rent. The government proposal would be a gross violation of what was intended—that the properties would be let in perpetuity to local people”.

If the policy is pursued in its current form, it will be contrary to the charitable intent of Peabody and housing associations like it. It would also—this is the critical point—be a major disincentive to charitable benefactors such as George Peabody and the local family in Norfolk that I referred to, to donate their money or their land for good causes, if the Government can intervene and direct the sale of those assets for very different purposes.

One wonders what George Peabody would have made of this. In 1866, he said that his donation would,

“act more powerfully in future generations than in the present; it is intended to endure forever”.

Far from enduring for ever, the sequestration of property built with private philanthropic money would seriously undermine the charitable foundations and ongoing objectives of Peabody and other charitable housing associations like it. The amendment would protect charities from this, both now and in future.

[Lord Palmer of Childs Hill (LD)]

My Lords, being on Report and bearing in mind all the comments made by the noble Baroness, Lady Hayter, and the noble Lord, Lord Kerslake, I can keep my remarks to the minimum, although I agree with all that they have said—and I certainly support the amendment. My brief point is that we should put ourselves in the place of the charity itself, which in this case may be a housing association that is told by the Government that it has to sell off its properties at a discount, as the noble Lord, Lord Kerslake, said, of up to £104,000 per property. That housing association has an ongoing business and ongoing logic of providing housing—not just the houses that it has already, such as in Peabody, but the houses that it might build for the future.

Let us put ourselves in the place of chief executives of housing associations asking their banks for finance to build more properties as registered social landlords. Any bank manager would look at them and say, “I would lend you the money, but how can you deal with the fact that the Government are going to take a proportion of those properties away by forcing you to sell them at a massive discount?”. No bank manager would lend. Therefore, if the Bill is not amended, it will take away not only housing associations’ assets but their ability to borrow and build more housing for people in need. Therefore, I heartily support this amendment and hope that when we get the housing Bill we will be able to go into this in great detail.

When I asked the noble Baroness, Lady Williams, how housing associations are going to build like for like when there are discounts of up to £104,000 she replied in this Chamber and in a letter that it is government policy. It is a government policy without any arithmetic. If that is the way the Government are going, they are headed for disaster.