Affordable Homes Programme

Matthew Pennycook Excerpts

Tuesday 25th April 2023 Westminster Hall

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

It is a pleasure to serve under you in the Chair, Mr Hollobone. I congratulate my hon. Friend the Member for Slough (Mr Dhesi) on securing this important debate and on the compelling speech with which he opened it. I thank my hon. Friends the Members for Coventry North West (Taiwo Owatemi), for Weaver Vale (Mike Amesbury), for Hackney South and Shoreditch (Dame Meg Hillier) and for Mitcham and Morden (Siobhain McDonagh) and the hon. Member for Caithness, Sutherland and Easter Ross (Jamie Stone) for participating this afternoon and for a series of powerful speeches.

The debate has covered a range of concerns, many relating to the housing crisis more widely, but, on the specific matter of the affordable homes programme, most fell within two broad categories—namely, the performance of the programme over recent years and the more fundamental issues of its design and purpose. I want to address each of those in turn.

When it comes to the performance of the programme, there is clearly significant room for improvement. The comprehensive National Audit Office report on the operation of the AHP since 2015, which was published last year, details concerns on to a wide range of issues—including governance, transparency and oversight—many of which were echoed in a report published shortly afterwards by the Public Accounts Committee. I would be grateful if, as part of his response, the Minister could tell the House whether the Department has acted on the eight specific recommendations made by the NAO in its report, and could take the opportunity to update hon. Members on the steps that his Department committed to taking in its response to the PAC.

A particular criticism levelled at the programme by both the NAO and the PAC and referenced by my hon. Friend the Member for Slough in opening the debate was the fact that targets were unlikely to be met. We know that, taken together, the 2016 and 2021 programmes are likely to miss their combined target by approximately 32,000 homes, with a shortfall of 9,000 starts under the 2016 programme compounded by a projected 23,000 shortfall in the current one. There is also a clear risk that the programme will fail to meet its sub-targets on supported accommodation and rural housing.

Opposition Members recognise that some of the factors undermining delivery on the targets are entirely out of the Government’s control, but there are others—such as local planning authority capacity and the need for funding and financing mechanisms to support providers in upgrading their stock—that the Government could take more proactive steps to mitigate. Might the Minister provide us with some assurance this afternoon that the Government are at least actively looking at what more can be done in that regard? Can he also explain whether and, if so, how rules about grant funding under the current programme might be being made more flexible—not least in terms of increased grant funding per unit—with a view to sustaining the Department’s central forecast of 157,000 completions in the face of inflationary pressure?

Lastly, when it comes to assessing the overall performance of the programme, effective scrutiny is still very much hampered by the absence of transparency and open reporting. The Department has now committed to providing an annual report to Parliament on programme delivery, but might the Minister go further today and commit at least to having Homes England publish its annual AHP targets, as the Greater London Authority has already done?

Let me turn to the design and purpose of the programme. One of the more damning conclusions of the NAO report was that the AHP lacks strong incentives for housing providers to deliver affordable homes in areas of high housing need and high affordability pressure. I would be grateful if the Minister could therefore update the House on how the Department is improving the way it works with local authorities to address local need, and tell us whether any further measures are being explored to ensure that more grant-funded affordable housing flows to areas of high need.

Providing more homes in such areas is, of course, not the only wider Government objective in respect of which the current programme is falling short. To me at least, it simply beggars belief that both the Department and Homes England did not include any specific targets relating to emissions reductions in the 2021 programme, with the result that outside London the Government are financing the construction of new affordable homes that in all likelihood we will have to retrofit in years to come.

The Government have committed to exploring the cost and deliverability of additional net zero requirements, but only in a successor to the 2021 programme.

[Valerie Vaz]

My hon. Friend is making an interesting speech. Does he agree that every new home should have a solar panel fitted when it is built?

[Matthew Pennycook]

There is a strong case for that. It is an issue—one of many—that we are exploring in detail. The situation speaks to a wider failure, which is the abolition of the zero homes standard by, I think, the coalition Government. We built tens if not hundreds of thousands of homes over recent years that we will have to retrofit at great cost. The least we can do is change the criteria the programme operates on, so that at least we build net zero-ready homes for which we will not have to do that in years to come. I would be grateful if the Minister could explain what precisely is stopping changes being made to the programme to ensure, as the Greater London Authority has done, that all new grant-funded homes are net zero carbon and air quality neutral.

Those issues aside, there is the more fundamental and important question of whether the programme provides the right kind of homes to meet affordable housing need in England. The answer of Labour Members is a categorical no. We believe it is a problem that the programme has constrained the overall amount of grant funding available for sub-market rented homes while also failing to deliver an increase in the supply of low-cost home ownership properties. We believe it is a problem that the Government’s decision to prioritise the so-called affordable rent tenure of up to 80% of local market rents has squeezed the amount of programme funding available for new homes for social rent and ballooned the number of households in temporary accommodation and on local housing waiting lists, as well as the housing benefit bill, as a result. Those are not technical design flaws; they reflect political choices about what a national affordable housing programme should aim to achieve and whether its primary purpose should be meeting the needs of people on the lowest incomes.

There is a clear difference of opinion between the Opposition and the Government on this matter. We believe the overriding purpose of a national affordable housing programme should be to provide as many genuinely affordable homes as possible, as my hon. Friend the Member for Hackney South and Shoreditch rightly argued. The Government believe, at least post-2018, that the purpose of such a programme is to provide—reluctantly —a small number of genuinely affordable social rented homes and a much larger number of sub-market rented and home ownership units that are branded as affordable, but, in practice, are anything but for many low-income households in swathes of the country. That is why—with the debasement of language we have seen in recent years in the concept of affordable housing—the Housing and Planning Minister could argue with a straight face in a debate that took place last week on the future of social housing that Conservative-led Governments since 2010 have outperformed the last Labour Government on affordable housing, despite the fact that the last Labour Government built over twice as many social homes as Conservative-led Governments since 2010 have managed, and that at no point over the past decade has annual social housing supply ever matched the levels delivered by the last Labour Government.

We want the performance of the affordable homes programme to improve between now and the general election, and I look forward to the Minister detailing the various ways in which the Government are attempting to achieve that. But as laudable an aim as fine-tuning the existing programme is, Labour is clear that a very different programme will be required in the future to markedly increase the supply of new net zero-ready, genuinely affordable homes to rent and buy, as is our aim. It is an aim based on a reassessment of the amount of grant funding directed toward sub-market rent and the building of social rented homes in particular; on a review of the scope of eligible sub-market products, not least the so-called affordable rent tenure; and on a reappraisal of whether there are better low-cost home ownership products than shared ownership.

--- Later in debate ---

[Lee Rowley]

I am grateful to the hon. Lady for raising that point. She is an assiduous follower of this issue. I know of all the fantastic work that she and her colleagues on the Public Accounts Committee do on this area and elsewhere. I fear I might not be able to give her an absolute answer, but I will try to provide as much information as I can. There is obviously a challenge, broader than the specifics of this debate, about the amount of money that the Government have; that is not particularly newsworthy. If I may make a tiny partisan point: the Labour party, if it ever gets into Government, will have to make more choices than Opposition spokesmen indicate when they respond to such debates. There will always be a challenge around how we prioritise funding, and what the trade-offs are to do that. The commitment from the Government is here, with the £12 billion contribution that has already been indicated for allocation.

When we come forward with further information about the affordable homes programme 2021-26, I hope we will be able to give greater clarity for those authorities that seek a particular mix of housing and to expand the number of affordable homes of whichever tenure. I also hope that some of the changes coming through in the Levelling-up and Regeneration Bill will take effect, although that needs to complete its progress in the other place. We will have to see what the other place does to that Bill, which I hope will give local councils some ability to flex their approach in the area of housing.

[Matthew Pennycook]

Will the Minister give way?

[Lee Rowley]

I want to make progress.

[Matthew Pennycook]

On that specific point?

[Lee Rowley]

Go on then—the hon. Gentleman has convinced me.

[Matthew Pennycook]

The Minister is right that, when it comes to designing an affordable homes programme, choices have to be made and trade-offs confronted, but does it not trouble him that, despite the fact that 50% of AHP funding under the current programme is allocated to low-cost home ownership, his own Department’s figures make it clear that grant funding under the last year of the previous Labour Government still delivered twice the number of low-cost home ownership units than the Government managed last year?

[Lee Rowley]

Before I answer that question, I hope the Chair will allow me a minute or two more than 10 minutes, given that we have a little bit of time, in order to answer these interventions.