Future Homes Commission Report

Lord Stoneham of Droxford Excerpts

Tuesday 4th December 2012 Lords Chamber

[Lord Stoneham of Droxford]

My Lords, I welcome the debate and thank the noble Baroness, Lady Whitaker, for initiating it. I found it difficult to disagree with anything that has been said so far in the six speeches tonight—but I suppose that noble Lords would expect me to say that, particularly of my own colleagues.

I declare my interest as chair of Housing 21, a national housing and care provider for the elderly. The Future Homes Commission report shows the continuing severe gap between the current housing supply and what is actually needed. It also shows the potential of housing investment stimulating the national growth rate, since £1 spent in housing creates £2.84 elsewhere in the economy. Good housing design and energy- saving initiatives underline the social benefits of new housing, and pension fund investment in UK rental and shared ownership housing is overdue and needed. It can be used to keep the pressure off the government deficit.

Housing must be one of the key drivers of the coalition Government’s growth strategy. It played this role in the 1930s recession while government spending was constrained and interest rates were low. No one can doubt its potential now. Although I hope that there has been an improvement this autumn, the problem is that we have been going backwards in the past year. In the 12 months to September 2012, new housing starts, at 98,020 homes, were 9% down on the previous year, ending in September 2011. More worryingly, in the same 12 months to September 2012, housing association new starts were down 23% at 16,810. I hope that this is simply a case of worse before better, but we have to ask why this performance has been so disappointing.

We know that the mortgage market is still difficult and restrictive and lenders have been cutting back. In March 2012, the Government aimed their new-buy indemnity scheme to help, but there remains a problem with the higher interest rates now charged on these new-buy mortgages. Housing associations have also suffered from uncertainty due to changes in grant funding and the change in their overall funding arrangements, as they have had to move to private bond placements as banks have reduced their previous dominance in this sector. Sadly, confidence among potential house buyers has remained low out of fear of unemployment, and because the fall in house prices may not yet be complete. Changes in the planning system have also caused uncertainty in the market, but as the noble Baroness, Lady Whitaker, said, there remain some 400,000 potential homes with planning permission still to be built.

So what is to be done? First, the Government, through the HCA, must ensure the current programme of funded social housing must is be delivered. There is a lot to do in the last two years of this Government, and the recent further government initiative on retirement housing is also welcome. We just need to get on with it, but we also need to do much more. In September, the Government announced their £10 billion guaranteed housing loans for private sector renting and social housing. This is a real opportunity, but I fear we remain a little cautious about the extra housing we will get from it. The indication that I have received is the Government’s target by 2015 is for 15,000 extra homes. I hope that the Minister could clarify this. I believe that, given average house prices, it should be three times this, and if we spent a higher proportion of this funding on actual development projects its impact on the economy, as the Future Homes Commission demonstrates, would be three times the housing investment.

Pension funds could provide further funds for private rented, council and other forms of social housing, where funding streams could be secure. We should ask whether the Government are going to allow councils to borrow now that they control their housing revenue accounts so a further impetus on new housing could be sourced.

I finally return to a previous theme of mine. To be successful in government, you need people who can demonstrate that they can pull the right levers to get things done. We need to get the most from the guaranteed housing loans. We have to keep the pressure on public sector departments to release land which could be used for housing development. We have to keep the dialogue going with lenders and developers to improve confidence in the sector and wider funding opportunities. We have to work with housing associations and councils to maximise their plans for more housing. So we need the drive and determination of a Minister, such as a Heseltine or a young Macmillan, to direct and galvanise all this work. We also need to give the Minister an objective of doubling our current annual housing development by 2015. The Future Homes Commission has shown us the potential of what is required. The coalition must now grasp the levers and deliver.