Housebuilders

Lord Shipley Excerpts

Thursday 11th January 2018 Lords Chamber

[Lord Shipley (LD)]

My Lords, I remind the House that I am a vice-president of the Local Government Association and of National Energy Action.

This debate has been about the performance of the UK’s major housebuilders, and the number of speakers reflects its importance. I thank the noble Lord, Lord Best, for his robust diagnosis of that performance and place firmly on the record that I share it.

Many contributions have been made, and I should like to draw out just a few which I think are particularly important. The noble Lords, Lord Hunt of Wirral and Lord True, talked about the need for public-spirited partnership in housebuilding, and that is absolutely true. The question, of course, is how you get there and, for me, the answer is a civic housebuilding model rather than a speculative building model.

I particularly appreciated the contribution of the noble Baroness, Lady Brown of Cambridge. She raised a number of important issues, such as how to fund zero-carbon homes, and pointed out that the bonuses being paid by Persimmon Homes could have amply covered the delivery of zero-carbon homes built by that company. She also made a helpful point about Help to Buy: that it should apply only to low-carbon homes.

I agree with the noble Lord, Lord Whitty, on the subject of a separate Ministry of Housing, a point supported by my noble friend Lady Maddock. It is a very important suggestion that we have debated before in this Chamber; it is important to raise housing even higher than did the recent reshuffle.

The noble Lord, Lord Turnbull, asked what redress the Government might provide for leaseholders with existing expensive contractual commitments. I hope that the Minister can give a specific answer to that question. I absolutely agree with the noble Lord, Lord Horam, who talked about the importance of not selling public land at the highest prices if we are to solve the current crisis.

We have not been building enough homes for about 20 years, and housing policy has been geared too much to owner-occupation, to which many households cannot aspire. The result of past failures in our dysfunctional housing market has been a lack of supply overall and a lack of affordability caused by the shortage of homes. House prices today are almost eight times the average wage. The number of people under 35 owning their own home has dropped from 59% to just 38% in the past 13 years. According to Shelter, the average new home built today is not affordable for 80% of private renting tenants who are in work, even with the assistance of Help to Buy. We should note that private renting now accounts for one in five of all households in this country. That figure is too high.

From these Benches, we have heard from my noble friend Lord Stunell that government policies have led to increased prices. He made the point that big companies prefer big sites, on which production can be slower; on big sites they can time the rollout of building. He made a very important point that more, smaller builders on lots more sites would mean multistarts on sites, which would mean a greater number of completions. That diagnosis is right. I know that the Government have proposed increasing the number of SME building companies. We need to keep encouraging more builders to enter the market to build on smaller sites because we will end up with more homes being built.

My noble friend Lord Stunell also talked about the need for increased borrowing for housing for rent. The noble Baroness, Lady Thornhill, talked about the massive shortage of social and affordable homes, and raised the issue of viability assessments, which the National Planning Policy Framework has made a material factor in planning. She said that it was meant to be a sensible exceptions policy. Indeed, when the Bill in question passed through this Chamber, that is what noble Lords thought it was but, as she said, it has become the rule. Planners are frustrated locally by their lack of control because viability is being weighted in favour of the applicant and is undermining public confidence in the system.

My noble friend Lord Taverne talked about the importance of small developments, such as pocket developments, and using modular home construction systems. He talked about the demographic time bomb and the importance of having enough trained workers if Brexit happens. The issue of apprenticeships and skills in construction was also mentioned by the noble Lord, Lord Kerslake, and by the noble Baroness, Lady Wolf of Dulwich. That issue, which is not entirely related to Brexit but is made worse by the prospect of it, really matters. We need to have enough people trained to build if the Government are serious about getting to 300,000 completions a year.

My noble friend Lady Janke talked about Bristol, where the price of a home is not eight times but 10 times the average national income. She talked about the £6.1 million that Bristol council spent on homelessness and the lost 200 affordable homes in a year because of the viability assessment loophole. She reminded us that many of those assessments are not made public and that many planning departments operate with too few staff. My noble friend Lady Maddock talked about quality and said that energy efficiency is too often seen as a low priority when it should not be, and she encouraged new methods of modular construction that could be more environmentally friendly. We have had a wide-ranging debate and all the contributions are very helpful.

In my final two or three minutes, let me say what I think the Government should do next. I acknowledge that they have understood some of the dysfunctionality of the housing market—that has been reflected in various announcements in recent months. However, as the noble Lord, Lord Best, pointed out in his introduction, the Government are underpowered in this area. Not enough is being done. The noble Lord, Lord Kerslake, made the same point.

The Government cannot build 300,000 homes a year unless they make more productive use of land, so they should stop selling public land at the highest possible price. Government policy needs instead to be driven by affordability, with 50% of affordable homes on publicly owned sites and at least 30% on privately owned sites. I hope they will pay particular attention to the outcome of the Letwin review and take action in the public interest, as necessary, to reduce land banking.

A number of contributions on planning have dealt with bureaucracy and red tape, but I do not see it as being about bureaucracy and red tape. More planners could speed up the planning process. We need planners who can lead place-based planning. We need a planning system based on fewer large-scale sites and more, smaller sites which in turn, as I said earlier, will encourage smaller builders to enter the market. Planners, too, have a role in reversing the current trend of smaller new homes of poorer quality, which result in rising profits for builders.

The viability assessments process has to be reformed. We have heard a great deal about this, but I hope the Minister can say something further about how the Government plan to make that process better. The Government have to permit more borrowing by local authorities and housing associations in order to build more social and affordable homes. That is essential, unless they are prepared not to hit their 300,000 target. They will do that only if local authorities and housing associations can borrow.

Finally, the Government have to end the speculative housing model that has increased land values and created the dysfunctional housing market we have today. Instead, we have to move to a civic housing model that emphasises place-making, quality and affordability and has at its heart community benefit, not private profit, director bonuses and reducing standards.