Lord Stoneham of Droxford
Main Page: Lord Stoneham of Droxford (Liberal Democrat - Life peer)
Lord Stoneham of Droxford (LD)
My Lords, I declare my interest as chair of Housing & Care 21. I also join others in thanking the noble Lord, Lord Whitty, for initiating this debate. It takes at least five years to have any chance of getting real change in the housing market, so it is good to have this debate right at the beginning of what is, I hope, a five-year parliamentary term.
Affordability of housing is a growing issue. I think we are all aware of that. Politically it is a very potent issue, not only in owner occupation, with young people finding it increasingly difficult to get on to the housing ladder; there is also a problem in building all sorts of housing when the price of land is accelerating.
I thank my noble friend Lady Bakewell of Hardington Mandeville for talking about rural housing, my noble friend Lord Palmer of Childs Hill for his remarks on the right to buy, and my noble friend Lady Humphreys for talking about Welsh housing. I shall talk mainly about the role of housing associations in providing more affordable housing, so I am very much in the same area that the noble Baroness, Lady Warwick, and the noble Lords, Lord Best and Lord Kerslake, were talking about.
There is a huge undersupply in all markets, as we know. In the last month of the coalition Government, nearly 65,000 households were in temporary accommodation. As the noble Baroness, Lady Valentine, said, there is a concern about the danger of key skills not being available in our urban centres as housing prices force people to buy outside and move outside our cities. There is the huge growth of housing benefit costs, as private rents rise and living standards stagnate; it is a huge, unsustainable problem in public spending. In all sectors, we simply have to build more. That has been a theme of this debate. The figures are quite clear: we have been building an average of 137,000 homes, and we need at least 100,000 more, per annum.
The coalition had a difficult start on housing. With the public sector restraints, it was difficult to get it to sustain some of the plans which the Labour Government already had for affordable housing growth, but we did, as the noble Lord, Lord Kerslake, told us, put in two important reforms: the stability of income growth, and trying to set a plan for five years. We increased the stock of social housing over the period of government for the first time for many generations.
However, I add another problem. It is not simply a problem of shortage of land; there are also significant capacity problems in the construction sector. It has been a very cyclical business, which means that lots of capacity gets lost every time we have a cyclical downturn, not least during the last recession. Small contractors, self-builders, and private developers through consolidation all disappeared in the last recession. There has also been a loss of skills, which is why we had to bring in immigrant skills to help out in the construction sector. Developers are very cautious; they build only when they can sell, and they have an interest in keeping prices moving upwards.
I turn to what housing associations can do. They are an important source of delivery, and we have to look very carefully at what we need to do to encourage them to do more and to meet the affordable market demand. I welcome the increase that the Government have committed themselves to in moving from 175,000 affordable homes built under the coalition Government to 275,000 in the next five years. However, as the noble Lord, Lord Kerslake, said, we have to sustain this. How can we increase the 55,000 homes per annum increase that is projected and get it nearer to the 80,000 that we need to reach the extra 100,000 houses overall?
There is capacity and potential in housing associations. At the end of the Labour Government there was a significant expansion. Under the last Government, the housing associations, with the guidance of the HCA, delivered on the targets set at the beginning of the Government. They have the ambition and the development teams to expand what they are doing. They also have unused security in their assets to help to fund this, and there is further potential if the Government would look particularly at the values of council-house transfers in their stock.
Housing associations have a track record of partnerships with developers and councils to help to rebuild communities and regenerate housing estates. I particularly value the work that has been done by the noble Lord, Lord Adonis, on the concept of city villages to regenerate some of the many old council estates, a concept that has been supported now by the Minister, as I am very glad to see. I have been involved in one of these projects in Rowner, in Gosport, Hampshire. It takes 20 years to do it, but it is immensely valuable. That community alone has been transformed by the work of a housing association, a council and English Partnerships, now the HCA, in that development, along with the private sector.
Housing associations can use their assets better. They have to be cautious. I am always worried when people say that housing associations can be more profitable. They can certainly be more efficient, but we have seen the dangers of HBOS going into the Halifax and turning the treasury department into a profit centre, and where that leads us. We have to be cautious. Property is a very cyclical market, and cash is important in order to survive. Housing associations can be so flexible that if there is a recession they can transfer houses that they were intending to sell into the rented sector, because there will be an overwhelming demand for them. That can provide stability. It also means that they can borrow money at cheaper rates because of the guarantees and security that their income streams can provide.
As the noble Lord, Lord Kerslake, said, we know that housing associations access private finance, which is vital at a time when public spending is under pressure. One of the initiatives not mentioned in this debate is the Government’s guaranteed loan schemes. If housing associations can borrow money at 1% less than they would otherwise be able to, that provides money that is almost as good as a grant. We need to look at this. The Government put forward a £10-billion facility. How much has been used, how much is committed, and are the Government going to pursue this over the next five years? That is important for future expansion.
Housing associations must manage their property portfolios well to develop other sources of funding. I am not one of those who oppose selling off expensive council house properties or, indeed, housing association properties, but only if they are being used to build more, new, affordable homes and regenerate old communities. They should not be used simply to subsidise the right to buy. We have huge concern that under the right to buy, properties will not be replaced, but more importantly that if housing associations’ assets are subject to this policy we will undermine their whole business plans and their financial viability. We know that when the right to buy council housing was imposed, councils simply stopped building, and we do not want that to happen at a time when we need housing associations to build more.
Housing associations build homes for social, affordable and private rents, for right-to-buy sale, and more importantly for shared ownership. It is the Government’s role to galvanise their hidden potential and to increase affordable housing. They have five years to do it with an economy that we hope is improving. They must not miss this opportunity. They will have no excuse if they do.