Housebuilders

Lord Whitty Excerpts

Thursday 11th January 2018 Lords Chamber

[Lord Whitty (Lab)]

My Lords, although I agree with the noble Lord, Lord Naseby, that the crisis did not start with this Government, it is nevertheless one that all parties and all elements within the housing and construction industry now recognise is enormous. On present policies, it will not be resolved within the next 10 years let alone in the next few years of the period of this Government.

We could have made a start on it. This week’s reshuffle was an opportunity to put in place the cohesion of government policies that were referred to by the noble Lord, Lord Best, along with the need for a longer-term strategy, referred to by my noble friend Lord McKenzie. Instead, we have had a marginal change in the name of the department and the removal—or promotion; good for him—of a Minister who was beginning to get an intelligent grip on the matter, but like every Housing Minister over the past 20 years, he has been rapidly moved on.

We need a positive and continuous focus by the totality of government on this central social crisis. There are at least five different areas of policy which overlap here. We have a clear problem as regards the role of local authorities. Whether it is due to an ideological opposition to council housing or Treasury insistence on absurd and illogical caps on borrowing for housing, the fact is that we have to change the role of local authorities. We will not reach the targets without a major contribution from local authority housing to build council houses. Yes, it should be done within the context of mixed tenure in wider developments, but without a big step change in council housebuilding, we will not reach the targets.

There is also a concomitant failure in regional policy. One of the reasons there is so much pressure on housing in some parts of the country, particularly in the south-east, is a failure of regional policy as a whole. There is a failure of labour market policy as well. We do not have enough skilled workers and therefore have to rely to an excessive degree on migrant labour in many areas. I have to say that many of the larger companies in the housebuilding sector have a particular responsibility for this because they have a particular duty given the structure of the industry. As a result of all this, there is also a failure in social policy. The right reverend Prelate referred to the social division which the differences in housing provision leads to. It has directly distorted social security reform in that the escalation of rents and housing costs generally has led to a huge rise in housing benefit payments which is distorting the successful achievements of universal credit reform of the social security system. There has also been a failure of competition policy because in this as in other areas, we are failing to deal with the oligopoly that is made up of a few very large, powerful and exploitative companies.

When we look at Whitehall, the policies are all over the place. Planning and housing is admittedly in the Ministry for Housing, Communities and Local Government, but housing benefit, which is by far the largest expenditure by Government, is in DWP. Construction sponsorship is in BEIS, as is anti-trust policy, and finance for housing is dealt with in minute detail by mandarins in the Treasury. If we are genuinely to tackle the housing crisis, we need to bring these elements together in one powerful Cabinet-level ministry and Minister. For example, I have long argued that the inclusion of the housing benefit element in universal credit was a mistake. It may not be possible to unravel it, but it is making the delivery of universal credit more difficult and it is compounding problems in the housing sector. Actually, we need to provide more money on the supply side and less on the demand side. Whoever the Minister is, there needs to be a new start here. I believe that we need a single ministry of housing with a high-powered Minister who is close to the Prime Minister and changes to be made in Whitehall in order to tackle all of these issues together.

In passing, I would also say that in relation to the structure of this industry, the dominance of a few major companies and the almost total exclusion of small builders in big developments across many parts of the country, we need a CMA inquiry. So far, we have failed in this area. While our competition policy on cartels and monopolies is pretty good, it has failed utterly to deal with oligopoly in sectors like this.