Deregulation Bill

Lord Wallace of Saltaire Excerpts

Thursday 30th October 2014 Grand Committee

[Lord Wallace of Saltaire (LD)]

My Lords, I think we all agree we need to build more houses and it is part of the puzzle over the last 20 years and more that successive Governments have been committed to doing this and have not been succeeding. Certainly, my own observation in Bradford is that one of the problems is a shortage of skilled labour for building. I am quite happy that the housing association that has its headquarters a good 10 minutes’ walk from my house in Saltaire now has a very good apprentice scheme to train plumbers, builders, electricians and others in sourcing its own maintenance and building. That is a model I hope others are planning to take forward. We are all conscious that we need to build more houses and aware—and this answers one or two of the questions raised by the noble Lords, Lord McKenzie and Lord Best—that we do not necessarily need to build the houses in the same areas where houses are being sold off as the population is shifting. We have different sorts of housing needs and requirements in different areas. Population has shifted towards the south-east and areas of heavy immigration require more housing than areas without much immigration, which now often have surplus housing stock. I have just been in Hull, for example, which does not suffer from a shortage of housing at present.

The noble Lord, Lord McKenzie, asked a number of questions. I do not have all the figures to answer him but I will make sure he gets the answers to all his questions as soon as possible, and of course well before Report. I am told by officials that many of the figures which he asks for are publicly available, so there should be no problem in that respect, but I do not have them immediately to hand. I noted his comments about houses that have been sold under right to buy and which are now privately rented. In some parts of England, there are some problems of that sort.

I think that the noble Lord, Lord Best, suggested that the discounts were enormous and immediate but the discount scheme, as he knows, is progressive and one gets the higher rates of discount only after renting a house for considerably longer than three, five or 10 years. The longer that someone has been a tenant the more discount they get, starting at 35% discount on a house and increasing by 1% each year to a maximum of 70% of the market value. It is not a short-term renters’ paradise, as I thought he was almost beginning to suggest.

The baseline for right to buy was set in April 2012, when the policy was reinvigorated, and it does not change year by year. I assure noble Lords that the Government are committed to keeping this reinvigorated right-to-buy scheme under review, including the impact of the change in the qualifying period from five to three years. The Committee may be interested to read the impact assessments for this clause that were published in January 2014, which is available on the parliamentary website, and in March 2012, at the time of reinvigorating the policy, which provide important context. When this Government reinvigorated the right to buy, they included an important measure guaranteeing for the first time ever that receipts from additional local authority sales—that is, sales above the level forecast prior to the change—would be used to help fund new homes for affordable rent on a one-for-one basis, not a like-for-like basis.

[Lord McKenzie of Luton]

While it is on my mind, is the test—the baseline—the originally anticipated numbers of sales of units, or is it anticipated sales proceeds?

[Lord Wallace of Saltaire]

I think that it is the units rather than the baseline being the proceeds of sales, but I will check with the officials and come back on that.

We publish quarterly and annually on right-to-buy one-for-one starts on-site and acquisitions, so the figures are available. I will make sure that they are circulated and put in the Library. Since the reinvigoration, there have been more than 12,600 additional local authority right-to-buy sales and, as the noble Lord, Lord McKenzie, said, councils have already reported almost 3,700 starts on-site and acquisitions of replacement homes for affordable rent. Councils have three years from the date of receiving the additional receipts in which to use them. This gives councils adequate time to leverage in additional funds and build up enough receipts to produce robust economies of scale.

The Government also publish annual statistics on preserved right-to-buy sales in England, which strike a balance between the needs to monitor the effectiveness of the policy and not to place unnecessary burdens on housing associations. As housing associations are independent organisations and stock transfer agreements are private commercial contracts, we do not mandate what those associations do with receipts that they receive from preserved right-to-buy sales. In practice, any surplus receipts retained, after costs and compensation for lost rental income, are likely to be used to support new build and other public benefits. Where receipts are shared with councils, it is our expectation that associations will work with them to develop replacement homes.

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[Lord McKenzie of Luton]

My Lords, I thank the Minister for his reply and the noble Lords, Lord Best and Lord Stoneham, for their contributions to this debate. I look forward to receiving the figures in due course from the Minister. I was not quite sure whether in his response he was saying that the Government are currently meeting their one-for-one guarantee. It would be helpful to know if that is the Government’s position.

[Lord Wallace of Saltaire]

There is not yet a one-for-one guarantee.

[Lord McKenzie of Luton]

In which case, when is it expected that the Government will meet that guarantee?

[Lord Wallace of Saltaire]

I have not chosen between soon or shortly, but we very much want to move on that. It takes time. As I said, local authorities have three years to replace, and we are already two years into this new scheme. We are, of course, frustrated by the length of time it takes to build new homes. That is part of a long-standing story under successive Governments which we continue to push forward with.

[Lord McKenzie of Luton]

I thank the Minister for that. I was also not sure whether he had accepted the thrust of my amendment, which was that the Government would produce a report. Could he respond to that?

[Lord Wallace of Saltaire]

My answer was that the Government already produces a large number of statistics which, in effect, form the basis of the report for which the noble Lord is asking.

[Lord McKenzie of Luton]

I take that as a yes. I thank the noble Lord, Lord Stoneham. I think we are on the same page in recognising the scale of the housing crisis which faces this country and the need for more social housing in particular, and for a one-for-one replacement policy.

We have debated the issues in the three amendments from the noble Lord, Lord Best, extensively from time to time in recent years. We share with him a strong desire to do more to produce more and better social housing, particularly housing for rent, though we are not able to follow him specifically on every aspect of his three amendments.

Where Amendment 40 is concerned with setting discounts locally, it discusses setting them at a level which will encourage right-to-buy take-up. That raises an interesting question of where the policy should be focused between facilitating and encouraging. Presumably, it would depend on the need for investment into the social housing sector, and there has to be a balance in these matters. I do not resile from my party’s position on managing the country’s overall level of debt. Our priority is not a wholesale lift of the cap.

Notwithstanding that, we should recognise the important role that local councils can and should be enabled to play in tackling the housing crisis—as the Lyons report put it, to return to their historic responsibility to build affordable housing. We note that there is some scope for a rise in output even on the current basis, but that would be modest compared to historic output. In the 1960s, I think that about 200,000 units a year were produced.

We recognise that councils have a long record of sound economic management and borrowing prudently—a point that the noble Lord made—but early removal of the overall cap will be difficult for any Government. The Lyons report recognised that. The report suggested that there is an opportunity to provide additional capacity without exceeding total borrowing if there is more active management from the Treasury of the overall borrowing headroom. Lyons suggests, for example, that councils should be able to apply for more borrowing headroom by demonstrating: a viable business plan and asset management strategy in the context of new contracts for housing delivery and a single pot of funding for housing investment; costed plans for investment in new housing that relate to their housing strategy and make full use of partnership opportunities; that new homes will be additional to those which would be delivered by others; and compliance with prudential rules with expectations about rent levels and reinvestment in their existing stock. The Treasury would be able to make a decision on a case-by-case basis against an understanding of the overall level of borrowing planned, to ensure that total borrowing did not exceed the current provision.

The report also points to the alternative models by which councils can invest in homes—by using land, by entering into joint ventures, by some of the imaginative work which the LGA has done on the municipal bonds agencies. There are other opportunities there, but we cannot go the whole way with the noble Lord in reducing the cap as he wants to.

I hope that debates such as this will continue to help us focus on the absolute need to address the housing crisis across the private sector, the local authority sector and housing associations. I look forward to receiving the Minister’s data in due course; I take it that they will come in the form of the requested report. In the mean time, I beg leave to withdraw the amendment.

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For similar reasons, we concur with the amendments that the Minister will move shortly to correct something that, because of a court case, needs challenging. However, our amendment is equally urgent, so I beg to move.

[Lord Wallace of Saltaire]

My Lords, this clause and the government amendments are here because of the uncertainty and concern caused to landlords and tenants across the private rented sector by the Court of Appeal decision in the case of Superstrike Ltd v Marino Rodrigues. The noble Baroness’s amendment also touches on some of the implications of that case. The decision effectively interpreted the legislation differently from its original intention and contrary to the advice given by successive Governments. It left a large number of landlords at risk of court action and open to a financial penalty, because the tenancy deposit protection requirements must be complied with within a set period. That leaves landlords in an impossible position with no means of complying. The situation is made more complicated by the increase in the number of landlords resident outside the United Kingdom, which means that they are dependent on letting agents to deal with their tenants. Similarly, it has left tenants unclear about the status of their deposits.

The aim of Clause 31 is not to completely reverse the decision made by the Court of Appeal, as it is important that the protection offered to these tenants as a result of the ruling is retained. It gives landlords a grace period to protect those deposits and give the necessary information to the tenant. That applies to landlords who still hold deposits which were taken before the introduction of the tenancy deposit protection legislation for tenancies which rolled over into statutory periodic tenancies after the introduction of the legislation.

The clause will make it clear that where a deposit has been protected, the prescribed information is given to the tenant and the tenancy is subsequently renewed, there is no need for the landlord to keep providing the same information every time the tenancy is renewed. It will also be clear that this has always been the position and will continue to be from now on.

Where legal proceedings are under way at the time the provisions come into force, tenants will be protected from paying their landlords’ relevant legal costs where the court subsequently decides against the tenant in the light of these provisions. We see the provisions as striking the right balance between ensuring that tenants do not suffer financially as a result of the retrospective legislation and ensuring that landlords are not penalised where they have followed government advice. I hope that these changes are accepted as uncontroversial.

Finally, government Amendments 25 to 35 are technical drafting amendments.

The Government agree with the intention behind the noble Baroness’s amendment but are not sure that it is necessary. We understand that the law as it stands provides that, where the agent holds the deposit, it is sufficient for just the agent’s details to be included in the prescribed information. Article 2(1)(g)(iii) of the Housing (Tenancy Deposits) (Prescribed Information) Order 2007—I am sure that she knows it by heart—indeed states that,

“the name, address, telephone number, and any e-mail address or fax number of the landlord”,

should be provided. However, Section 212(9)(a) of the Housing Act 2004 explains that any reference in Chapter 4 of Part 6 of the Act—and hence in the 2007 order—to “landlord” in relation to any shorthold tenancy includes a reference to a person acting on his behalf in relation to the tenancy. Clearly, an agent managing the deposit on behalf of the landlord falls within that definition. Paragraph 40 of the regulatory impact assessment that supported the 2007 order covered this point, stating that:

“The person who receives the deposit will need to be the person who is registered with the authorised tenancy deposit scheme. Thus, in instances where the deposit is taken by a letting agent, the landlord’s details will not need to be included in this information”.

This is an issue with the deposit schemes that letting agent bodies have previously raised with the department, and I understand that they still consider the language of the Act and the supporting statutory instrument to be ambiguous. As I have set out above, we do not share that view. Of course, if they are able to provide evidence to the contrary we will consider whether a change to the order could be made to clarify the point, but we do not believe that any change to the primary legislation is required. I have asked officials from the Department for Communities and Local Government to contact the tenancy deposit schemes and letting agent bodies to discuss this further.

I hope with that assurance that the noble Baroness will be willing to withdraw her amendment. I thank her for the discussions we had before Committee and, if necessary, I am very happy to have further discussions. I commend Amendments 25 to 35 to the Committee.

[Baroness Hayter of Kentish Town]

My Lords, I thank the Minister for that. Clearly this would not have been brought up and supported by the groups I mentioned if there were not real concerns. They have counsel opinion that differs from that of the Government. Of course, if the Government would like to assure them that should it go to the High Court they will then cover all their costs and those of all landlords, maybe we could accept that. Would he like to make the offer now? Offer came there none.

The groups are doing this day to day—their lawyers have worries and counsel opinion continues to say there is a difficulty that the words “or their agent” do not apply to the instrument. That seems the problem. I also cannot see why this change cannot be made. It would be very easy and would make sure we did not have to go to the High Court to get a ruling. I urge that that meeting takes place before we come to Report, so that I can then consult these good organisations and, if necessary, table an amendment for Report if they are not reassured by the meeting. If it is possible to set that up before Report then I would be happy to withdraw this amendment at this stage. I think the nod means that the meeting will take place before Report. On that basis I beg leave to withdraw.

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Moved by

[Lord Wallace of Saltaire]

25: Clause 31, page 25, line 7, leave out “and”

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[Lord McKenzie of Luton]

My Lords, I put my name to this amendment but there is not much else left to say, so I shall be brief. Like the noble Lord, Lord Best, we welcome the work on standards and the inclusion of these matters in building regulations. We are grateful to Leonard Cheshire for its very helpful briefing. We welcome the fact that the lifetime homes standards and the wheelchair accessible standards have been recognised in building regulations, but like Leonard Cheshire and noble Lords who have spoken, there is a concern that those standards are optional, and that, moreover, a hurdle has to be gone through for a local planning authority to be able to require those as a planning condition. My noble friend made a telling point about the capacity of local planning authorities to address those issues.

I conclude on one point: this is not only a quality-of-life issue, although it is very important at that level; it has economic ramifications. Unsuitable accommodation means the likelihood of more trips and falls, more visits to the A&E and hospital, and more cost. I hope that the Minister can assure us that there is a way through this process to address the real concerns that have been raised today.

[Lord Wallace of Saltaire]

My Lords, I thank noble Lords who have taken part in the debate. As I came in, I was thinking that I have mixed views on housing standards. I first became aware of housing standards because of Parker Morris, when a number of houses in the Yorkshire dales were being condemned as back-to-earths which were not suitable or up to Parker Morris standards. Nowadays, those houses that remain would be regarded as extremely environmentally friendly and valuable; they were indeed beautiful homes. I once sat in on a violent argument between someone who lived in one of them and a particularly modernist Liberal councillor who believed that the Parker Morris standards were the absolute minimum and that any house that did not meet them should be immediately demolished.

On the other hand, having with my wife delivered to a large number of houses on the other side of the Aire from Saltaire just before the local elections this spring, with road names such as Cliff Rise and Steep Avenue—one house had 41 steps up to the front door—I recognise that accessibility is an issue with new housing. As I was listening to the debate, I reflected that if I wish to get out of bed in the middle of the night, in our house in Saltaire there are 15 steps down to the bathroom, whereas in my house in London there are five steps down to the bathroom, which, for someone approaching middle age, as I am, is much easier. The question of suitable and unsuitable accommodation is one which we all need to be concerned about.

First, this is not a dumbing down. As there is in much of the Bill and much government legislation at present, there is an inherent tension between local autonomy and central direction. I must say to the noble Lord, Lord Tope, that no Government can ever say that they understand in full the consequences of what they propose. We do our best to conduct impact assessments, but we are never entirely sure where we will be—especially after the High Court has had a go at our provisions in a few years’ time.

The optional requirements are intended to allow local authorities to set higher requirements for development than the building regulations minimum. They are a new concept in building regulations, and we are enabling local authorities, as a condition of granting planning permission, to require a developer to meet a higher building regulation requirement than the national minimum.

[Lord Rooker (Lab)]

Is it not the case, however, that if the local authority wants to do that, it must change its plan and go through the planning process for its local plan? So it is not just a question of a committee of councillors meeting to say, “We will let this go. We want higher standards”. It has to go through the process of changing its public local plan. Does the Minister accept that?

[Lord Wallace of Saltaire]

That is my understanding, but I am a great deal less expert on this than the noble Lord, so I shall have to consult and write to him if I am mistaken.

The intention is of course to raise standards for new builds. We understand the reasons why there is this strong push for lifetime building standards; we also recognise that that imposes costs and that there are parts of the country—certainly the part of the country in which I live when I am in Yorkshire—where finding a sufficiently large level site on which to build, which is part of the requirements, is not easy. A great deal of housing is therefore not entirely suitable for the high standards which are suggested.

The Government intend to issue planning guidance on matters to be taken into account by local authorities in applying optional requirements, and we are consulting on the matters to be covered in that guidance.

This will mirror the approach taken with planning guidance, which supports the National Planning Policy Framework. I promise that I will write to the noble Lord, Lord Rooker, on the point he has raised just to make sure I am correct.

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[Lord McKenzie of Luton]

My noble friend is absolutely right. I think the consultation document makes it very clear that it has to be part of the planning process for planning authorities to be able to impose it as an optional requirement.

[Lord Wallace of Saltaire]

My Lords, I reform that. If the local authority already has a standard, it can passport this on, keeping the standard without a need for a new policy. If it wants a new policy, it will have to have a plan policy. Does that begin to answer the question the noble Lord has raised?

[Baroness Andrews]

It answers the question in part, but it raises and reinforces the problem of the complexity of getting these higher standards in place. Changing a local plan, as we know—and some local authorities still have not prepared and finalised their plans—takes four to five years. In the meantime, there are going to be hundreds, if not thousands, of people reaching their eighties and living in deeply inappropriate accommodation. If the Minister will bear with the Committee, I hope that we can return to this in more detail on Report.

[Lord Wallace of Saltaire]

I understand that our consultation suggests that where lifetime home standards exist these can be passported and will be carried on but I will consult and make sure we come back. I recognise the importance of this issue—particularly as we, Members of the House of Lords, might be approaching our 80s at some time in the next 25 years or so and therefore perhaps have a greater interest than our children do in this respect. Clause 32 is available in case there is a major problem in the delivery of the new system—for example, if the powers we have given to authorities are not applied properly, or without sufficient rigour, or the system is misused in some way. If the Government decide to put conditions in regulations under Clause 32(4)—and we have no plans to do so at present—then these will be subject to full consultation with interested parties, as with all changes to building regulations. I stress that this is intended not to lower standards but to raise them. Our proposals currently out to consultation are, for the first time, proposing that standards for accessible housing and for wheelchair-adaptable and accessible housing will be given the force of building regulations. This is a major new step and I hope it will be welcomed by all noble Lords. Indeed, I heard what was being asked for. The consultation under way at the moment sets out the Government’s thinking on the issues that local authorities should consider if they wish to apply optional building regulations’ requirements for access.

The key points are that local authorities should plan for the current and future housing needs of a wide range of households, including older and disabled people, and should clearly state in their local plan the proportion of new development that needs to comply with the requirements for accessible and adaptable dwellings, or wheelchair-adaptable or accessible dwellings. Local authorities should base their decision on the outcome of their housing needs assessments, taking into account: the likely future need for housing for older and disabled people, including wheelchair-user dwellings; whether particular sizes and types of housing are needed to meet specific needs—for example retirement homes, sheltered homes or care homes; the accessibility and adaptability of existing housing stock; and the overall impact on viability. I hope noble Lords will agree that these are reasonable matters to be addressed by local authorities and answer some of the questions raised, for example, by the noble Lord, Lord Best, and the noble and gallant Lord, Lord Stirrup. Currently the Government expect to set out the detailed consideration, which I have described, in guidance rather than put it into regulations.

Multiple compliance regimes have created a maze for designers and developers to navigate. There are 50 different local space standards and many different conflicting ways in which to apply local energy standards, some of which may conflict with the building regulations. Concerns about these issues prompted the Government to launch a fundamental review of technical housing standards during 2012-13, which aimed to rationalise the proliferation down to a sensible core of what worked and what is really needed. There was widespread support for this; 92% of last year’s consultation responses supported the review.

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[Lord McKenzie of Luton]

My Lords, we have heard two very powerful presentations from my noble friends. It is not my nature to be helpful to the Minister, but I want to put one matter to him. The bit of briefing I received suggested that the particular provision in the Planning and Energy Act 2008 would stay in being until the zero-carbon homes policy was in place and that that would effectively replace it. That itself raises a couple of questions. The first is whether the zero-carbon homes policy would cover all the protections that my noble friends have said would be lost once we delete this provision. Secondly, how can we be assured that there will be an alignment—if that is the right way to go—and that the zero-carbon homes policy will come in at the same time as the ability to require higher standards disappears? There is a fundamental issue about whether the zero-carbon homes policy equates to what could be achieved under this provision. If it does not, the sort of losses that my noble friends Lord Rooker and Lady Andrews have identified become very real and pertinent.

[Lord Wallace of Saltaire]

My Lords, the noble Lord, Lord Rooker, often raises difficult issues for Governments, and I give all credit to him for the attention he pays to this. It is an entirely proper role for a Member of the House of Lords to look with deep suspicion at government proposals and to make sure that the Government can provide the rationale for them. Perhaps I can assure him that Oliver Letwin spoke on this on the Floor of the House and it was discussed in Committee, so it has not been entirely ignored by the House of Commons.

[Lord Rooker]

Then I apologise. My advice was that it had not been looked at in the Commons. Obviously I was wrong there.

[Lord Wallace of Saltaire]

The noble Lord is entirely right to be suspicious and to make sure that this is properly scrutinised, particularly an umbrella Bill such as this. I in no sense criticise him for raising a number of important points.

This is in no sense intended to lower standards; it is intended to continue the process of raising energy efficiency standards and to achieve zero-carbon aims. I was already briefed to make the point that the noble Lord, Lord McKenzie, just helpfully made. This is not intended to commence until it replaces the other standards. The code on which representation has been made is a fairly complex piece of legislation. Those parts will not be abandoned; they will be incorporated into the building regulations. I stress that we are raising standards, not lowering them. I will make sure that I can say that with confidence again on Report, because I recognise the concerns of noble Lords.

By 2016, the Government plan to have tightened building regulations to deliver zero-carbon housing. I repeat that the Section 1(1)(c) amendment will not be commenced until then; meanwhile there will be no dip in standards. We intend to consolidate necessary standards to ensure that sustainable housing can be built. The current situation means that insufficient housing is being built because authorities are applying too many different standards, making sites unviable. This is a rationalisation, not a deregulation of the sort that lowers standards and enables people to move further away from the zero-carbon housing that we all very much want.

Clause 33 amends the Planning and Energy Act 2008 to ensure that local authorities in England will no longer be able to set energy efficiency standards via local planning policies for new homes in excess of the building regulations. It does so by disapplying Section 1(1)(c) for dwellings in England where government policy is that such a requirement should be found only in national building regulations. However, local authorities will still play an important strategic role in delivering carbon reductions and the Act will continue to enable them to do so.

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[Lord McKenzie of Luton]

Given that we are not expecting the zero-carbon home policy to be included until late 2016, there is a lot of water to flow under the bridge between now and then. Would he accept an amendment which put in the commitment not to repeal the provision in the 2008 Act until the zero-carbon home policy was in place?

[Lord Wallace of Saltaire]

I thank the noble Lord for that interesting suggestion. May I consider it and consult? Perhaps we can also discuss that off the Floor, between Committee and Report.

[Lord Rooker]

I thank the Minister for his reply. I am not sure what I am supposed to do now on the clause stand part because there is no amendment.