Affordable Housing

Lord McKenzie of Luton Excerpts

Thursday 25th June 2015 Lords Chamber

[Lord McKenzie of Luton (Lab)]

My Lords, I thank my noble friend Lord Whitty for initiating and leading this debate. His focus on increasing supply and affordable housing is entirely right. The term “affordable housing” has been the subject of comment by a number of noble Lords, but in this debate I understand that it covers a variety of provision, encompassing social rented homes and homes for sale or rent provided at a cost above social rented homes but below market levels, sometimes just below. It encompasses shared ownership, shared equity and homes for intermediate rent. The noble Baroness, Lady Valentine, suggested that that definition is too narrow in planning terms, but I agree with my noble friend Lord Whitty that attaching the term “affordable” to any particular provision does not of itself bring it within the reach of many who are in desperate need of a home.

Today we will doubtless have our ritual exchange of statistics with the Minister using starts or completions and differing times zones, whichever suits, but it is undeniably the case that the Government are simply not causing enough homes to be built to meet the needs of our country. People on low and middle incomes are struggling to get a home to call their own. Home ownership is at its lowest level for 30 years and the number of homes built for social rent has been the lowest for many years.

Despite the rapid growth of private renting, the sector has not changed to meet the needs of those living in it, with short-term tenancies causing insecurity and instability. Rents in many parts of the country increasingly push many to seek the support of housing benefit. Over the five years to 2013-14, the proportion of renters who are in work and claiming housing benefit doubled to 14%. Over that period, average private rents increased by 15%.

The UK has long faced a large and growing shortfall between the number of homes that we need and the number that we are building. Estimates may vary, as they have today, but an additional 250,000 homes per year over the next 10 years seems to be about the consensus. Perhaps the Minister could say what figure the Government are working to. As my noble friend Lord Whitty made clear, we need to build not only more homes, but more affordable homes. The noble Baroness, Lady Wilkins, reminded us that we need to build homes of quality to meet people’s real needs. Homes to buy or rent for those who cannot afford the market rate should be part of that.

Shelter has provided us with an estimate of the range of provision that is needed, suggesting that 50% should be market homes to rent or buy, 30% should be for social rent and 20% for intermediate tenancies, renting or shared ownership. Perhaps the Minister can say whether that breakdown of the total is something that the Government would recognise and support.

Of course we know that one of the first acts of the coalition Government was to change the funding model for affordable housing. They cut capital grant subsidies and enabled intermediate rent tenure of rents up to 80% of market rent levels, switching the funding burden in part on to the housing benefit bill but also taking more from tenants. This is part of the reason why we have a burgeoning housing benefit bill. The Government are now encouraging more conversions of social rented homes to affordable rents.

There have been a plethora of other initiatives by the coalition Government, which are documented in the helpful briefing provided by the Library. We have had the affordable homes guarantee programme, affordable rent to buy, the new homes bonus, the growing places fund, the Get Britain Building fund, the builders finance fund, the estate regeneration fund and the single local growth fund, while home ownership initiatives have variously included FirstBuy, Help to Buy and the NewBuy guarantee. We accept that these were all with good intent and with some advances, perhaps of marginal benefit, but what has it all amounted to? The number of affordable homes provided in the last year of the coalition Government fell by 26% from 2009-10 levels, while the number of homes built for social rent fell by a staggering 75% from 2009-10 levels.

Statistics reported today in the Guardian quoting DCLG data reveal that there are nearly 50,000 families living in temporary accommodation, a rise of 25% in five years, and a quarter of those are couples with dependent children. There has been a rise of 300% since 2010 in the number of families living in bed and breakfast accommodation and, last year, 111,000 people in England made an application to their council as homeless. Over 1.3 million households are on social housing waiting lists. Rough sleeping in England has increased by 55% over four years—you can see evidence of that outside the very doors of this place.

This is, sadly, not a success story. We should not deny that there have been heroic efforts by many to try to make advances, particularly those associated with the housing association movement. We will doubtless hear today that local authorities are building more council homes than at any time under the last Labour Government, and that is fine; certainly the reforms to the housing revenue account that we devised have helped local authorities to get back into business, but of course it is Labour councils that are leading the way.

The Government’s current commitment to build 55,000 affordable homes for each year of this Parliament should be welcome—my noble friend Lady Warwick welcomed it in particular. It is suggested that that would account for at least a third of new housing supply in England over the next five years, so it is a very important component. However, because, as I understand it, that is for intermediate let, can the Minister say where the investment into homes for social rent will come from?

Faced with those huge challenges, what have the Government alighted on as a key policy? The extension of the right to buy to housing association tenants, which most noble Lords have commented on today, is a policy that was highlighted in the general election campaign, no doubt in an attempt to recapture the political benefits of the 1979 announcements. Frankly, it is a cynical way to develop policy in such a crucial area. It drew questions from a number of noble Lords today: my noble friend Lord Campbell-Savours, who described the crucial issues in Keswick; the noble Lords, Lord Horam and Lord Palmer of Childs Hill; the noble Lord, Lord Best, who took us back to the debate in 1983; and my noble friend Lord Hanworth.

Many unanswered questions surrounding the issue have been raised, both today and before. Foremost among those are the concerns that it could lead to fewer affordable homes, not more, and could impair the ability of housing associations to build. The funding that is supposed to come from the sale of the most expensive council houses is supposed to stretch to compensate housing associations for the discount, to enable replacement of the housing association and council houses sold and to contribute to the brownfield fund. How on earth is that all going to fit together?

Have the Government come to a conclusion on the matter of how the most expensive one-third of council houses are to be identified? Will there be separate calculations for properties of different sizes? Will the most expensive properties be identified on a national, regional or some other basis? What assurances will be given that smaller properties needed for those wishing to downsize to escape the bedroom tax will not be forcibly sold, or properties in rural areas? Just what is the legal position of the Government in imposing these sales on independent charities?

Are we not possessed of enough information and advice to deal with this housing crisis? The point made by my noble friend Lord Haskel and other noble Lords about a long-term consensus must be right. As Sir Michael Lyons put it, this needs long-term leadership, which can be achieved by making housing a national priority. We should give powers to local authorities to assemble land and commission development, as well as powers of “use it or lose it” over developers that hoard land. We are certainly for garden cities and engaging the energy and vision of housing associations, but we need to address capacity constraints in the building sector and sort out funding—how we can redirect the enormous funds spent on housing benefit.

Why does all this matter? Because substandard, inadequate and insufficient housing inevitably sits at the centre of deprivation, disadvantage and disillusion. We know that the major influences on a child’s life—family income, effective parenting and a secure environment—are all directly or indirectly influenced by a family’s housing conditions. I agree with the noble Baroness, Lady Bakewell, that everyone should have a decent home.

--- Later in debate ---

[Baroness Williams of Trafford]

I will certainly write to the noble Lord, but I am not in a position to make policy announcements at the Dispatch Box.

The noble Lord alluded to Keswick, so I will outline how we are supporting housing in Allerdale council. There have been 460 affordable homes delivered in the Allerdale local authority area between 2010 and 2015. In terms of help to buy, there have been 80 equity loan sales to March 2015, 58 mortgage guarantee loans, 158 homes supported by 20 new-buy mortgage loans and, up to 2014, the new homes bonus for Allerdale has been £791,455.

The noble Lord, Lord Best, said that the current right to buy has become more generous with increased discounts and shorter qualifying periods. The qualifying period was reduced from five years to three years under the Deregulation Act 2015, returning to the original qualifying period set in the 1980s, and the right to buy discount has increased to realistic levels after years of stagnation when the discounts became irrelevant.

A question was raised about making land available. We want to make brownfield land available because people want new homes to be built near existing residences while the green belt and the local countryside are protected. They might even want to build their own home. We will ensure that brownfield land is used as much as possible for new development. We will require local authorities to keep a register of what is available and ensure that 90% of suitable brownfield sites have planning permission for housing. I mentioned in this House the other day that we will create a brownfield fund to unlock land. There will also be a new London land commission to identify and release all surplus brownfield land owned by the public sector and fund housing zones to transform brownfield sites into new housing, creating 95,000 new homes.

The noble Lord, Lord Haskel, made the point that no one believes that one-for-one replacement will work, especially in London. There is inevitably a lag between sale and replacement in order to assemble land, get planning permission and so on. That is why in 2012 councils asked for three years to deliver the one-for-one figures that we have published today. They show that 3,053 additional homes were sold in 2012-13, and 3,337 have been started or acquired. The numbers have doubled in the last year, so councils are delivering the one-for-one replacement to date. However, we cannot expect to see the figures on that replacement immediately.

Two noble Lords talked about the definition of affordable housing. It is set out in the National Planning Policy Framework and in the Housing and Regeneration Act 2008. The definitions are as follows. The National Planning Policy Framework defines it as:

“Social rented, affordable rented and intermediate housing, provided to eligible households whose needs are not met by the market. Eligibility is determined with regard to local incomes and local house prices”.

[Lord McKenzie of Luton]

I hope that the noble Baroness will forgive me for interrupting, but using those definitions, on the affordable programme that the noble Baroness has talked about today, of the 55,000 houses each year, how many of those are social rented homes and how many are intermediate homes?

[Baroness Williams of Trafford]

Perhaps I may get back to the noble Lord on that particular figure. He always asks specific and detailed questions, so I shall get back to him on that.

I shall carry on with the definition:

“Affordable housing should include provisions to remain at an affordable price for future eligible households or for the subsidy to be recycled for alternative affordable housing provision”.

The Housing and Regeneration Act 2008 defines social housing as,

“low cost rental accommodation and low cost home ownership accommodation”.

“Low cost rent” is simply defined in the Act as “below the market rate”, while “low cost home ownership” is defined by its availability for occupation on a shared ownership or equity percentage basis.

I note that time has run out and there is a host of questions that I have not managed to get through. I will write to noble Lords whose questions I have not addressed, and I thank all noble Lords who have taken part in the debate.