Levelling-up and Regeneration Bill

Lord Stunell Excerpts

Report stage
Wednesday 6th September 2023 Lords Chamber

[Baroness Hayman of Ullock (Lab)]

As I was saying, I thank the noble Lord, Lord Stunell, and the noble Baroness, Lady Bennett of Manor Castle, for their support for my Amendment 201. My amendment inserts a new clause for the definition of affordable housing. It asks that, within 90 days of when the

“Act is passed, a Minister … must publish the report of a consultation on the definition of affordable housing”.

Following the publication of that report, within 30 days, the definition must be updated in the National Planning Policy Framework. The reason we have put this forward is because we feel that the current definition in the National Planning Policy Framework is simply not fit for purpose.

Earlier today, we passed the amendment from the noble Lord, Lord Best, on social housing. He is not in his place, but I point out that getting that sorted out is part of managing our problem with affordable housing. So, in many ways, although they are not in the same group, these amendments in fact work together. The noble Lord is also the chair of the Affordable Housing Commission, and although he is not here, I pay tribute to the important work that he has done with that. The Affordable Housing Commission has produced an important report on this issue, Making Housing Affordable Again, which I urge all noble Lords with an interest to study.

When we consider affordable housing, we need to look at a number of issues, the first of which is to ask who has a problem with it. What the commission did was to divide the overall picture into four different groups: struggling renters; low-income older households; struggling home owners; and frustrated first-time buyers. So this issue affects a very large proportion of our population, including people who are trying to find themselves a decent, secure home. The way that housing affordability is currently defined and measured is as rents or purchase costs that are lower than in the open marketplace; we believe that that definition is both misleading and confusing. It is a crude definition, which is not helping to solve the problem. It brings “affordable housing” to a level that is way beyond the means of many who need a home.

The commission offers a new definition of affordability, which views the issue from the perspective of the household and not from the marketplace—as the current definition does. What can people pay for their housing without risking financial and personal problems? Who is facing these problems of unaffordability, and exactly what is the scale of the problem?

The NPPF definition of affordable housing is made with reference to various housing products, from social rent to low-cost home ownership. Even if eligibility is bounded by local incomes, except for social rent, of course, affordable housing remains market-led, rather than being defined by personal income. This has led to a number of local authorities being extremely sceptical about their ability to deliver the affordable housing their areas need.

A cursory glance at the affordable rent level shows that in many areas a three-bedroom, affordable-rent property cost £400 per week. This is clearly way out of the pocket of many people in this country. I suggest that the Government look at what the Affordable Housing Commission is calling on them to do. We believe it provides a good starting point for solving the housing crisis we are in.

First, it suggests a rebalancing of the housing system so that there will be affordable housing opportunities for all by 2045. Affordable housing should be made a national priority and placed at the centre of a national housing strategy. The safety net for struggling renters and home owners should be improved. A new definition and alternative measures of housing affordability should be adopted which relate to people’s actual income and circumstances, rather than just to the market.

We agree with the Affordable Housing Commission. Will the Minister accept that the current definition is not fit for purpose? In order to help the very many people who are struggling either to buy or rent a home, will the Government put into the Bill a commitment to act to change the definition so that affordable housing actually means what it says?

I have spoken on this issue a number of times. Others are saying what we are saying. The Affordable Housing Commission is saying it. People who understand the system and have identified how it can be changed for the better are offering concrete, constructive ways in which things can be improved. I hope that the Minister can accept my amendment as a starting point on this journey to improve the current situation. If I do not have her assurance that this will be the case, I will test the opinion of the House on this matter.

[Lord Stunell (LD)]

My Lords, I have added my name to Amendment 201 in the name of the noble Baroness, Lady Hayman of Ullock. As she clearly set out, there is a complete absence of focus on what is and is not affordable when it comes to government policy-making. That policy is in desperate need of overhaul and a recalibration. This amendment puts that overhaul firmly on the agenda. It is a fitting addition to the Bill. I hope that the Minister will accept it. If not, I and my colleagues will strongly support the noble Baroness in pressing it to a vote.

In Committee, I made the case as strongly as I could that the highly desirable objective of the provision of affordable housing, which is shared on all sides of this Chamber, is not being achieved in real life. It has failed by a wide margin, as the noble Baroness has just set out. At present, about half of affordable homes—the ones which are given capital letters by policy-makers—are supposedly delivered through planning obligations placed on developers. The reality is that in many parts of England this is being completely undermined by basing the calculation of affordability on a figure of 80% of the open-market price of that property on that site or, for renters, of 80% of the market rent. The noble Baroness, Lady Hayman of Ullock, gave one practical example of the consequence of this for renters.

Amendment 201 calls for a review. The Minister may reply that all government policies are under constant review, but when she replied in Committee, I got the impression that any such review of this policy has not been particularly diligent. It certainly has not been timely or purposeful. This amendment would put that right and task the Government with producing a review and publishing it, with recommendations for a change, on a short, fixed timescale.

In Committee, I drew noble Lords’ attention to the experience of my noble friend Lord Foster, who unfortunately cannot be with us today, in his local area of Southwold in east Suffolk. A so-called affordable estate, built with £1 million of government subsidy, is so out of the price range of people on median incomes there that its homes have proved unsaleable and the developer has been released from the planning obligation. The homes are now going on the open market. This is not in inner London; it is 100 miles away. In Southwold, the price/median earnings ratio of the affordable homes, at 80% of full price, is still 13:1, reduced from 17:1 for full-price homes. Obviously, that is completely out of the reach of those seeking an affordable home.

I am sure that the Minister will know of similar circumstances in many other places. It is certainly true in Cheshire and Derbyshire, for instance—they are known to me—and is quite possibly so in Wiltshire as well. Far too often, affordable homes as delivered by planning obligations are nothing of the sort. I sometimes think that saying this out loud is seen as swearing in church. Nobody seems to confront this obvious truth. This Levelling-Up and Regeneration Bill is exactly the place to begin putting that right. It must be the case that when median incomes in a locality are not sufficient to buy such homes, it is misleading to describe them as affordable, wrong to put them on the credit sides of the affordable homes balance sheet and deceitful to boast that their provision makes a worthwhile contribution to fulfilling an election promise.

Amendment 201 would kick off that process of reform, but my Amendment 201A and its consequential amendment, Amendment 285A—they are also in this group—would go further by setting out the principles that should underlie that review. Those principles have been set out by the noble Baroness, Lady Hayman. They include the principle that affordability must be defined by reference to the income of the purchaser or renter, not solely by the inflated price on the open market. My amendment does not specify the mechanics or precise formula for that. The Affordable Housing Commission certainly provides a professionally generated one, while two others were quoted in Committee. We all know how it can be achieved, but the vital point of any government review must be to take into account the obvious truth that the current measuring stick is not solving the problem of affordability but is instead costing the Treasury a hatful of cash, which is being wasted and at the same time leaves many families stuck in wretched housing conditions.

There is a second part to my Amendment 201A, which I believe would help to close the yawning gap between open market prices and affordable home prices. It would disapply the current exemption in the Freedom of Information Act for the disclosure of viability calculations used by developers when haggling with local planning authorities over their planning obligations. At present, commercial confidentiality can be exploited to leverage cuts in affordable home provision, and it often is. Transparency would ensure that there was no temptation to inflate falsely the figures of costs that are deployed in those negotiations. It would also be likely to lead, over time, to less profligate bidding and purchasing of land by developers. Simply by removing that commercial exemption in this specific situation, at nil cost to the public purse, more affordable homes will be provided by developers. It is a no-brainer and one that I hope the Minister will find irresistible.

If levelling-up is to proceed from an election slogan to real delivery, it has a long road to travel. On that road, an essential milestone will be a proper affordable homes policy. Amendments 201 and 201A would provide the Government with that milestone. I hope that they pass today.

--- Later in debate ---

[Lord Stunell (LD)]

I hesitate to interrupt the Minister, but can she confirm that the infrastructure levy will not be operational in most of England for another eight or 10 years?

[Baroness Scott of Bybrook (Con)]

As the noble Lord knows, we have already discussed this. We will have a test and learn throughout the country and then a rollout, but with any large change in any planning system, as with the community infrastructure levy, it will take time—up to 10 years, we believe.

Levy rates and charging schedules will be matters of public record, as I said. For these reasons, I hope that the noble Lord will agree not to move his amendments.