Housing (Built Environment Committee Report)

Lord Moylan Excerpts

Tuesday 8th November 2022 Lords Chamber

Moved by

[Lord Moylan]

That this House takes note of the report from the Built Environment Committee Meeting Housing Demand (1st Report, Session 2021–22, HL Paper 132).

[Lord Moylan (Con)]

My Lords, I begin by drawing the House’s attention to my registered interest as a member of the board of the Ebbsfleet Development Corporation. In moving this Motion, I pay tribute to my noble friend Lady Neville-Rolfe, who chaired the committee from its inception and during the period when it was producing this report. It was published as long ago as January this year, although it seems much fresher than that. I think I speak on behalf of all members of the committee in thanking her for her work and the way in which she welded us together as an irresistible inquisitive force trying to understand the workings of the various aspects of society that come within our purlieu.

In producing this report, we started from some common ground, the first element of which is that there are too few homes for the population in this country. There are too few homes for those who want them, but also not all the homes are necessarily the right homes to meet demand in terms of size, necessary amenities and so forth; nor are they all in the right place. I think we all started with the common view that building more homes was at least a very important part of the solution to that problem.

The Government have set themselves a target of seeing 300,000 homes built per annum. It is sometimes said that the Government have promised to build 300,000 homes, but they do not build homes, or not in any significant number; the homes are to be built by the private sector. That figure is obviously an approximation and is what would I describe as a stretch target. There is nothing wrong with setting yourself a stretch target as a tool for motivating effort, provided, of course, it is understood as such. In the current year, the industry expects to be on track to build approximately 240,000 new homes. Although that figure is less than 300,000, it is none the less not to be regarded in any way as a failure.

With that common background, our report focused on the barriers to increasing the number of homes being delivered per annum and bringing it closer to that 300,000 figure. As it is such a long report, in the interests of time, I shall inevitably be selective about the items that I draw to the House’s attention, hoping that the other members of the committee I see in the Chamber will alight on other issues.

I intend to focus on three issues. One is the house- builders themselves, though in what I am about to say I do not intend any criticism of them at all. The large housebuilders—the ones that do the volumes we need—are relatively few in number. They do not have the capacity, either financial or in personnel, to ramp up the number of houses they are building every year on the scale that the Government would necessarily hope for.

There are difficulties in becoming a large housebuilder; it is an industry that has barriers to entry. One needs the land, the resources and—I will come to this in a moment—the skills necessary to negotiate the planning system in order to get the permissions that allow one to build large developments. One of our recommendations was that everything should be done to encourage more small housebuilders, to help take up the slack. We noted that the number of small housebuilders over the last two decades had declined and the share of the new-build market they were responsible for was probably at its lowest level for a very long time. One thing we want to see is more encouragement for smaller housebuilders, partly to add to the diversity of the housing stock available to members of the public looking for a new home, but also in the hope that some of the small housebuilders might, over time or even quite rapidly, become large housebuilders so that they are able to offer some competition and spur to the existing large housebuilders.

That brings us to planning. I have already mentioned the expense and complexity of obtaining planning permission. Certainly, when it comes to the smaller housebuilders, one has to take into account the fact that a substantial amount of money must be put up in advance, at risk, as one seeks planning permission. Leaving aside the cost of the land itself, which one could take an option on, the fact is that the design, the architectural work, the necessary studies, the environmental impact assessments and so forth, together with the planning fees, represent a significant upfront investment, which may never be recovered if it turns out that the application is simply doomed to fail. That is a significant deterrent and part of the barriers to entry that I mentioned, which prevent smaller house- builders offering more competition to the large ones. Overall, however, even in relation to large housebuilders, the committee found that delays in the planning system and uncertainty over planning reform had a chilling effect on housebuilding.

We also found that in a plan-led system for development, such as we have had in this country since the end of the Second World War through the Town and Country Planning Act, the system does not work—or does not work well—unless local plans are in place that are up to date and relevant to the needs of the local area and the forecast demand for homes. We also found that local plans need to be simpler, clearer and more transparent. In that regard, we look forward—as we have done for some time—to scrutinising the Levelling-up and Regeneration Bill, and hope to see reform of local plan-making in that Bill.

In relation to planning, we were also particularly concerned about the Government’s wish to move further away from Section 106 payments in the direction of an infrastructure levy. We appreciate that if an infrastructure levy can be a simpler method of calculating the contribution expected from a developer than Section 106, that is an attraction. Our concern is not that but that Section 106 contributions must, by law, be relevant to the development taking place. Therefore, if money is paid to contribute to or provide a primary school for a large new development, the contribution is tied to that primary school and one can be reasonably confident that it will be delivered. Our understanding of the infrastructure levy, however, is that the local authority can simply take the money and it becomes part of its general funds, so the connection with the development, and therefore with providing the amenities necessary to support it, is lost. We would therefore like to see some sort of assurance in that respect.

We also noted that planning departments in local authorities up and down the country lack sufficient skills to process the applications coming to them and to assess the increasingly complicated factors loaded on to planning applications. If we are to have a plan-led system and the Government are to insist on a certain level of complexity, it is incumbent on them to ensure that there are sufficient planning officers with the right skills to process them so that development can take place.

In relation to housebuilding, it is worth moving on to skills in the construction sector as well, the point on which I shall conclude. It is fair to say that the skilled trades necessary for the traditional method of house- building have been in decline for quite a long time—well over a decade, possibly longer. That is why, long before Brexit, the phrase “the Polish plumber” had become almost standard in our language. By encouraging immigration in those skilled trades, we had been responding to a long-standing decline in local availability of those skills. That was long before Brexit. The lack of plumbers, carpenters and so forth has not been produced by Brexit; it was already there. Brexit has changed the arrangements in the use of immigration to make up the shortfall.

In this respect, it has to be asked whether constantly importing skilled trades from the European Union was a sustainable and feasible response over the long term to the problem, anyway, especially given that many of the countries from which they were coming were themselves becoming richer and had demand for that labour at home.

We therefore think it behoves the industry to consider new methods of building alongside traditional methods—and perhaps taking their place—including automation, innovation and modular housing. It struck us that modular housing has been promised for many years but has never quite taken off. The Government should be looking closely at that and trying to understand why the many words that have been spoken about it have not turned into the revolution in housebuilding we might have expected.

Many hands have gone into the making of this report. I am grateful to all the members of the committee who attended so many evidence sessions, undertook visits and made such a great contribution. I have already mentioned my noble friend Lady Neville-Rolfe. I should express thanks to our special adviser, who looked after us throughout, Professor Paul Cheshire, Emeritus Professor of Economic Geography at the LSE. I thank all the clerks and the other House staff who supported us in producing the report. I will probably break some terrible taboo in your Lordships’ House by mentioning our lead clerk by name, Dee Goddard, and giving her a special vote of thanks, because she has looked after the committee since its inception and is leaving the service of the House in a couple of weeks’ time to relocate with her family to another part of the country. I give a special word of thanks to her as I sit down and commend this report to your Lordships’ House

--- Later in debate ---

[Lord Moylan (Con)]

My Lords, I am grateful to my noble friend for that comprehensive response. I apologise to the House, as I should have said when I first spoke that, in addition to the other registered interests that I declared, I am also an officer of the APPG for SME housebuilders; I should have said that, since it was clearly relevant, but it slipped my mind.

I am very grateful to all noble Lords who have spoken. If I may say so without giving offence, it has been a livelier and more challenging debate that I had expected when we started out. There have been many points made and much illumination cast. Many points have been made with which I could agree and some with which I do not agree. If the role of my noble friend the Minister is to respond to the points made in the debate, perhaps my role ought to be in some way to fuse together all the strands that arise from it, to create one single, coherent policy on which all of us could agree and with which we could move forward; but I fear that that would be well beyond my abilities.

I will use the couple of minutes at my disposal to focus on a single point, which struck me with great force. It was a point made by the noble Earl, Lord Lytton, when he referred to the fact that, with new housing developments of any size, the financial and managerial responsibility for external amenities is increasingly being placed on the householders through a service charge.

I mentioned that I was a member of the board of the Ebbsfleet Development Corporation. We have seen many historical planning permissions granted before the corporation was formed now being implemented, and this is the pattern of what is happening. These are services that the rest of us expect to be maintained and provided largely by the local authority through the council tax that we pay. They are to do with parks, street trees, grass on the verges and such things; yet these households are paying directly for the amenities as well as paying a full council tax to their local authority. I draw attention to this simply because I believe, and the noble Earl may agree, that this will not be sustainable, politically or financially, for very much longer. It may be the next scandal, like excessive ground rents, which are now largely dealt with. In this case, it will be service charges, not ground rents; I think that will be the next scandal that the Front Bench—the Government—are going to have to reckon with.

This is the only point that I pick out from the debate because I thought it needed amplifying, and I agreed so much with it. With that, I thank everybody who has participated and beg to move the Motion standing in my name.

Motion agreed.