Housing and Planning Bill

Lord Young of Cookham Excerpts

Thursday 10th March 2016 Lords Chamber

[Baroness Hollis of Heigham (Lab)]

My Lords, we have heard some very powerful speeches. I certainly do not wish to repeat, to the boredom of the House, the points made very effectively by the noble Lords, Lord Kerslake and Lord Best, but I entirely agree that the sums do not stack up.

A few months ago, the Minister took the Cities and Local Government Devolution Act through this House very skilfully, patiently and responsively. If this proposal had been part of that Bill and produced by this side, I suggest that she would have told us three things. First, she would have said, as a former local authority leader herself, that in the name of localism the sales of local authority property should be determined by those who know best—the local authority itself. She would have used that language last summer and indeed often did so, and she was right.

If local authorities decide prudently, as I think they should, to scrutinise their property stock and where appropriate to churn it—as I have certainly done in the past, selling more expensive stuff and replacing it with more effective, appropriate and numerous properties that best fit local need—the second thing that the Minister would have said, following the noble Lord, Lord Best, is that that was exactly what local authorities do and that local authorities are best placed to make that decision. What works for London does not work for Norwich; even what works for Cambridge does not work for Norwich. To have this blanket approach is anti-localism, the spirit of the very Bill that she was persuasive in encouraging the House to support last summer.

Thirdly, the Minister would have said that if local authorities decide to churn their resources, selling larger and more valuable properties—in Cambridge the average council house is worth about £350,000—then they should determine how those resources are recycled and spent. They may decide to help to build for sale—I have done that in the past—and why not if that is what their local area needs? In the name of the localism Bill that the Minister took through the House, local authorities are best placed to make that decision and should do so, not have it imposed by central government—as, to some extent, the noble Lord, Lord Horam, was arguing.

The result is that the Government have two pressures in the Bill. First, they want to increase the supply of housing, and they are absolutely right: we need to increase the supply of housing, and I do not think there is any dispute between us on that. It would help the construction industry and would help to address the demographic problems that are coming up as our populations grow and age, and as we need perhaps different sorts of housing from the sort that we have. The second motivation for the Bill, beyond increasing the supply of housing, is to increase a particular tenure, which is home ownership, as fuelled in this case by right to buy. What the Minister has to accept, as was spelled out by the noble Lords, Lord Best, Lord Kerslake and Lord Horam, is that the two flatly contradict each other. If you use the money coming from right to buy to fuel home ownership, at local authority level you will not be able to replace the stock lost.

Take your pick. The Government have two objectives, which most of us share—I certainly do—but the mechanism that the Government have set up for the funding means that the attempts to increase the housing supply in this country, including affordable housing, are subverted, undermined and sabotaged by the method of funding right to buy from the sales of more valuable property. What they should be doing is saying to local authorities, “We will encourage you to do this if this is what you think your area needs. The first call on the profits and resources from that sale of more valuable property should be, in your judgment, how best to replace your local stock”. If there are surpluses, it may well be that local authorities can come to arrangements with housing associations to help them to increase their stock too. That is what we should be doing: finding a co-operative way forward, so that if we go down this path of churning stock—with which I have no problems at all—it should first be deployed to increase the housing stock and only secondly to increase home ownership. If you use this money to produce home ownership through right to buy, you will not replace the stock.

The Government have to consider what will determine their policy: what is best suited for the country or, I am afraid, an effort to appease Tory party policy. They do not have to do it in this way but they have that choice. If they want to increase housing supply, they have to find a different mechanism from the one they are proposing in the Bill of funding RTB discounts, because it will not work—the sums simply do not work. Many of us have crawled over these figures and we know that they cannot do what the Minister hopes: fund discounts, replacement stock and brownfield sites. That cannot be done unless the mechanisms are changed by the Government. The Minister will be well advised to listen to the comments not just of the Cross-Benchers but from Members on her own side such as the noble Lord, Lord Horam.

[Lord Young of Cookham (Con)]

My Lords, I will make a very brief contribution to this debate as we enter another controversial section of the Bill, which has at its root, as the noble Lord, Lord Kerslake, said, a section of the manifesto. He warned us to beware of manifesto fundamentalism. What he calls manifesto fundamentalism other people might call democracy—namely, delivering the commitments that one made during an election. If I was still in another place, going back less than a year, I would be slightly cautious about saying, “I’m very sorry but we’re not going to do what we said because that would make us guilty of manifesto fundamentalism”. Given the low esteem in which politicians are held, one has to be quite cautious before one abandons manifesto commitments. In this case, the manifesto was quite clear:

“We will fund the replacement of properties sold under the extended Right to Buy by requiring local authorities to manage their housing assets more efficiently, with the most expensive properties sold off and replaced as they fall vacant”.

That is a perfectly practical policy, although I understand from most of the contributions so far that it is fiendishly unpopular with local authorities. In fact, the policy has been softened a bit, as they do not have to sell the high-value assets; if they have other ways of meeting the levy, they can do that. As a former local councillor myself—

[Baroness Hollis of Heigham]

After 40% cuts more generally and 1% cuts on council rents in particular per year, coming up to 12%, to say that local authorities can find another way of doing this is utopian.

[Lord Young of Cookham]

I would not be surprised at all if some local authorities use the discretion under the Bill not to fund all the levy by selling off high-value assets. They may have other ways of meeting their obligations, so that is a welcome concession. Having said that, I understand the strong feelings of many who have served in local government—

[Lord Foster of Bath (LD)]

When the noble Lord signed up to the Conservative manifesto, what understanding did he have of the word “vacant” used in it?

[Lord Young of Cookham]

Not surplus but vacant—in other words, as a tenancy comes to an end, the property then becomes vacant. I accept all the arguments we have heard so far that there may be people who want to move into it, but “vacant” means that no one lives there. That is relatively clear.

Having said that, I recognise that this is a fiendishly unpopular policy in this House, but all the debate so far has focused on one side of the coin; namely, the removal of the assets from the local authority. To get the argument slightly more balanced, one needs to look at where the money goes. The proceeds will be reinvested in housing, either by helping housing association tenants to buy their homes with the discount—homes that are then going to be replaced. All the homes that are disposed of by local authorities will also be replaced; all the money will go to regenerate brownfield sites so that they can be available for housing. Therefore, all the existing housing stock remains in place, still part of the existing assets of the country, but the proceeds that are generated will generate new supply.

[Lord Beecham]

My Lords—

[Lord Young of Cookham]

Can I just finish this point? The noble Lord, Lord Best, made the point very effectively that in one case you can get four times the number of units by disposing of one. It seems to me that, if one stands back and looks at the policy in macro terms, one is increasing the supply of housing stock by generating new build without diminishing the assets that exist at the moment. I accept that there is a change in tenure and that may be the point that the noble Lord, Lord Beecham, is going to make. However, in terms of housing policy, one is recycling assets in order to increase supply. The Treasury—I speak from experience—has normally been against hypothecation, but in this case it seems to have insisted on it by insisting on a linkage between revenue and expenditure, and I understand why it has done that.

Picking up what my noble friend Lord Horam said about flexibility, I think that it is important so to define high value that not all the large properties in a local authority area are disposed of. One has to retain a balance of stock. I hope that “high value” will be defined in such a way in London that local authorities in the centre of London do not find that all their properties are defined as such and they have to dispose of them. I take the point made by the noble Lord, Lord Best, and others about the situation in rural areas. I think that one needs to be flexible, but I am prepared to stand up and defend the overall principle of the policy.

[Lord Beecham]

Is not the noble Lord’s argument predicated on the sale taking place when the property is vacant? However, that is not what the Bill says. The levy can be imposed before the property is vacant, and it may never become vacant.

[Lord Young of Cookham]

Consultation is going on at the moment to discover at what rate local authority properties become vacant and the levy will be based on the normal turnover of local authority stock, so I think that it is perfectly defensible to come to an arrangement that fixes a levy. I think that there is a provision in the Bill that enables the Secretary of State, in certain circumstances, to refund the levy to the local authority. Therefore, I do not think that what the noble Lord says undermines the principle of requiring local authorities to recycle assets via the Government in order to increase the total supply of the nation’s housing stock.

[Lord Kerslake]

Before the noble Lord sits down, I just want to make a few points. The first is that of course the party that wins in the election will seek to deliver its manifesto commitments. That is absolutely right and it is part of the democratic process, but my point is that there has already been a variation from what was in the manifesto. We are not extending right to buy to housing associations like for like; we are putting in a different, voluntary policy for the perfectly sensible reason that it allows flexibility and addresses some of the issues such as the one affecting Peabody where properties receive no public subsidy. So there has already been flexibility.

The second point is that the intent here is to give people the opportunity to buy their property, so the end is clear: so far as possible we want to give people who live in housing association properties access to purchase their property in the way described. The question I am raising concerns the commitment to the mechanism by which that is delivered. I do not think that the electorate would feel that the Government had reneged on their commitment if they said that the mechanism they thought could deliver this was based on a set of false assumptions: an assumption of turnover of properties that was twice the actual level and an assumption about the value of those vacant properties that was way over the actual figure. In those circumstances, is it not reasonable for any Government to say, “We have to look again at the means while still being committed to the ends”?

[Lord Young of Cookham]

I understand the point that the noble Lord is making but he may recall an intervention that I made on Tuesday: the trouble with the alternative means of funding the commitment is that it increases the PSBR. There, you hit another real constraint from the Treasury in delivering the Government’s overall macroeconomic policy.

[Lord Tope (LD)]

My Lords, we have very many reasons to be grateful to the noble Lord, Lord Kerslake, but I suspect that in years to come he may well be remembered most for giving us the term “manifesto fundamentalism”. I was going to attempt to define it, but the noble Lord has just done so in a very much better way than I could. Maybe it is something like “the irrational adherence to a manifesto detail when there is a demonstrably better way of achieving the greater policy objective in that manifesto”. I am sure that, over time, others will be able to refine that definition more, but I think that that is what we are talking about—an irrational adherence to a clearly poor way of achieving the objective.

My noble friend Lady Bakewell at the beginning of the debate—

[Lord Young of Cookham]

Does the noble Lord think that the commitment on tuition fees may possibly fall into that definition?