Housing

Lord Stoneham of Droxford Excerpts

Thursday 19th January 2012 Lords Chamber

Moved by

[Lord Stoneham of Droxford]

That this House takes note of Laying the Foundations: A Housing Strategy for England.

[Lord Stoneham of Droxford]

My Lords, I am very grateful for the privilege of leading this debate and thank all noble Lords who have agreed to participate in it. I look forward to an interesting debate on a key issue for the coalition Government and the country’s economy. I declare my interest as chair of First Wessex Housing Group and Housing 21, two housing associations.

My motives for initiating this debate are threefold. First, I believe that housing needs to be higher on our national agenda as it defines our national life and so many issues—the economy, health and social well-being and energy conservation—impinge on it. In fact, it underpins everything in society. Secondly, housing is critical to the national economy. It is a driver of growth, jobs and social mobility. Its multiplier impact is not surpassed in any other sector. The deputy director-general of the CBI said this morning:

“The only way to resolve unemployment in the short term is to pull out all the stops to get the economy moving and business growing”.

Housing has to play a fundamental role in that.

Thirdly, there is a huge demand for more housing to be met, and we are not meeting it. More than 4 million people are on social waiting lists, and 100,000 homes were built last year while demand is growing at the rate of 232,000 new households each year. In fact, we face a critical situation in housing. As I have said, we built only just over 100,000 homes in 2010 and building since the credit crisis has been at the lowest level for many generations. The number of construction jobs has reduced by 150,000, and in the wider economy the number of housing-related job losses will be much more. As I have said, 4.5 million people are on social housing waiting lists. Over the past 30 years we have sold off more than 2 million of our social housing stock. There remains a huge need and demand for affordable housing.

The Government were right to review the housing strategy, and their document has encouraging themes, but it is arguable that it is a bit like a box of liquorice allsorts—there are some very tasty items but it is not yet a totally satisfying meal. The questions are: how far are we prepared to go and will we be able to respond quickly enough? I accept, however, that the Government see themselves at this stage as laying the foundations.

I should like to emphasise a number of encouraging themes from the document. The first requirement is that we have got to rebuild confidence in the housing market. That is not easy when house prices are still uncertain and unemployment is growing. There is huge variability across the country. Here in London and the south-east, we are relatively unscathed compared with the rest of the country. As to the measures that the Government are introducing, I welcome the new-build indemnity scheme to deal with buyers frozen out of the housing market by the need for large deposits. That is an important measure. Other funds are important—the £500 million Growing Places Fund for infrastructure, to unlock housing and economic growth; and the £400 million Get Britain Building investment fund to support building firms that need development funding but have been deprived by the banks. I also welcome the £150 million for the Empty Homes fund to bring vacant properties back into affordable housing.

Probably most important in terms of driving an increase in housing is the freeing up of public sector land to deliver up to 100,000 new homes, with its “build now, pay later” proposition. I welcome the advisory group set up under Tony Pidgley, for whom I have huge respect, but I wish that the group was a task force committed to driving the building of housing on that land.

I also recognise and welcome the commitment to the private rented sector and the recognition that it has a major role to play in future housing. The growth in this sector is remarkable: 16 per cent of households are now privately rented—an extraordinary growth of 30 per cent since 2005, representing 3.4 million households. The problem with the private rented sector is that it is a polarised marketplace. Sadly, it is still associated with Rachmanism, but there have been huge improvements. The document shows that, in surveys, satisfaction in the private sector in many categories outperforms social housing—85 per cent are satisfied with their accommodation, compared with 81 per cent of social tenants. Seventy per cent are satisfied with their repairs, compared with 69 per cent of social tenants. The private rented sector also has a better ongoing record on energy efficiency than owner-occupied properties. I also welcome the important tax changes to encourage private rented investment and the examination of barriers to investment in this sector that are laid out in the paper.

The third theme that I welcome is on social housing. I am pleased that there is now a firm commitment to providing 170,000 new affordable homes over the next four years. Together with a commitment to replace rent-to-buy properties, this Government could well achieve the first net increase in social housing stock of any Government for 30 years. Some of us have been nervous about the new basis of this funding, but I have to accept that this tranche of investment has worked and has eased pressure on government debt. The problem is that this does not actually meet the demand. The key question is how we can expand the building of more affordable housing.

I also welcome in the document the ongoing commitment to improve community designs through a variety of initiatives—the commitment to review building regulations for the improvement of energy efficiency and carbon emission standards for new buildings, the commitment to zero-carbon homes by 2016, and the launch of the Green Deal this autumn to revolutionise the energy efficiency of existing housing stock.

I emphasise one final theme which is very important. I am pleased that the Government recognise the paramount need in a recession to protect the homeless and vulnerable. Recession always impacts on the most vulnerable, and I welcome the special funding for national night schemes and the ministerial group to look at the wider implications of homelessness. Vulnerable people need particular attention in a recession when unemployment is growing, and we have to ensure that the broadest backs take the greatest pain.

We can note the foundations of the housing strategy, but how do we achieve a radical change going forward to ensure that the foundations lead to construction of more housing on a significant scale? First, the Government must have real ambition and drive. It is 60 years since Harold Macmillan was appointed as Housing Minister in October 1951. No one has repeated the mark he made in that position. We had nine Housing Ministers in the previous Labour Administrations. Sadly, neither party in the coalition had a conference resolution to build 300,000 homes a year. Nor do we have the public funding that Macmillan had available. Nor do we believe that housing can be achieved simply by top-down directives. However, there remain many loose ends that require constant drive: bullying the banks and lenders, getting the public sector to provide vacant land and encouraging, incentivising and cajoling local communities and providers to extend the capacity to build. Above all, we need new funding vehicles to meet the need for more affordable homes. We want our ministerial team to have the ambition and drive of Macmillan's team of Marples, Sir Percy Mills and Dame Evelyn Sharp.

Private funding will remain the key to success. We will have to regulate the mortgage market better, so that it does not end up in an unsustainable speculative boom once the economy recovers, but low interest rates now mean that funding housing could be cheap. Housing associations have significant surpluses this year because of lower than expected interest rates. One percentage point off mortgage rates puts £10 billion back into consumers’ pockets. There is a potential revolution in housing association sector funding under way. Banks and building societies are seeking to obtain greater liquidity and are moving away from the sector. Pension funds and other funds want to lend to us direct. Last week, pension funds were investing in 30-year, index-linked government gilts with a negative real yield. Surely it should not be beyond us to develop vehicles which could provide 1 to 2 per cent real yields to fund social housing. That could benefit both housing associations and local councils. Housing seeks pension funds, which do not have the liquidity pressures of the banks but want long-term secure income. The Government also need to look at the significant level of government social grant which sits on housing association balance sheets as a liability. If part of it could be converted to equity, it could leverage rich significant funds for affordable housing.

Housing strategy must be based on a mixed housing approach involving owner-occupied, private rented and social housing. Some of our old, deprived estates remain a national disgrace. They are often hidden away by the apartheid design style of past generations. Those estates will be transformed only if partnerships are formed to transform them. I have been personally involved in the Rowner estate in Gosport for 17 years. It took the vision of a social entrepreneur to see that it could be transformed by breaking it up, selling part of it and using the proceeds to rebuild social housing, to effect a real social transformation in people's lives by providing a mix of social, owner-occupied and private rented accommodation through a partnership of Taylor Woodrow, a housing association and Gosport Council. It is no good councils telling housing associations that they can build houses more cheaply. In my view, they can do it more effectively if all sectors work together in these problem communities. The last thing the housing sector needs is to rebuild the old silos of the traditional sectors.

There are two other areas that I should like to mention briefly. The first is that planning for retirement is as important in relation to housing as it is to people. We need a closer interest in this future demand. The objective should be to cope with the underoccupation of property and reduce future care costs while enabling people to live independently for longer, and I am sure that the noble Lord, Lord Best, will have more to say on this. It is recognised but it needs much greater recognition and attention.

The second area is the Green Challenge. I do not believe that we will tackle fuel poverty unless housing is transformed. The economics of better insulation and energy-efficiency need tackling in order to reduce costs. There are huge benefits to be had in tackling older stock, and the Green Deal is a classic means by which to involve the private sector in funding it. A gradual upgrading of new build and decent home standards, covering insulation, should follow.

Many of us are concerned about the state of the economy, and therefore housing has become the focus of our attention as a regeneration force. It will not be revived by a traditional rivalry between owner-occupation and public housing. The objective should be a balanced approach involving the public sector and the private and voluntary sectors, with a choice of different housing in mixed communities. Private funding will have to leverage what limited public funds there are.

There is an action plan in the Laying the Foundations document and I suggest that it is ruthlessly followed. We should hector, probe and argue so that it is delivered and expanded. It took Macmillan three years exactly to transform housing in this country in the 1950s. The coalition has the same timeframe in which to double housing construction and make a real impression on housing provision, which will revive the British economy as well. It should be its central mission to do this.

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[Lord Stoneham of Droxford]

My Lords, I thank noble Lords for this debate. It has been very valuable in raising this issue and giving it a higher profile. I would like to say a few words in response to the individual speakers. I thank the noble Baroness, Lady Gardner, for emphasising the importance of rent to buy and I shall certainly look at her comments on commonhold leases.

The noble Lord, Lord Whitty, was very brave to admit the inheritance which the Government have received as being far from perfect. I thought that his argument that we need a holistic approach to resolving the crisis was important. He raised the dangers of hierarchy in housing and the need for new ideas to overcome the current divisions that exist between private ownership, rented and social housing.

I am grateful to my noble friend Lady Maddock. I think her emphasis on the importance of the policy on empty homes and on energy efficiency are two key issues going forward in the housing sector and her emphasis on the need to address energy efficiency in the existing housing stock. I accept that her proposals on VAT will need longer examination.

My colleague, the noble Lord, Lord Best, and I have a strong interest in retirement housing. He reminded us that the key issue in our sector is that of borrowing. I thought that his five-point plan to get the housing sector moving was very constructive and useful. I thank him for his remarks.

My noble friend Lady Miller emphasised the self-build sector and the vigour that can be applied by local people particularly in rural areas to such projects. I was particularly amused and convinced by her commitment to turning arms into ploughshares.

My noble friend Lord Shipley gave a northern dimension to the debate, emphasising the need to contribute to the economy and reaffirming our commitment to challenge the situation of the homeless.

The noble Lord, Lord Beecham, raised the significant issue of equity between north and south and the importance of fairness. I thought he was just a little negative in terms of coming forward with how we might fund what he would like to achieve and what we would all like to achieve. I appreciated his commitment to multiplicity of tenure.

I thank the noble Baroness, Lady Hanham, for her very detailed reply and commitment to pursuing the development of the foundation strategy. Housing should be a focus for the coalition. It is important to job recovery and meets a very important social need. As the noble Lord, Lord Best, reminded us, the key is the issue of borrowing and I hope that the ministerial team will take up the challenge of finding and fighting for new vehicles for funding which will enable us to build more affordable housing in this country.

Finally, I hope that the Jack Russell of a housing Minister and the coalition will continue to aspire to the ambition and example of that old bulldog, Harold Macmillan.

Motion agreed.