Freehold and Leasehold Reform

Matthew Pennycook Excerpts

Wednesday 5th July 2023 Westminster Hall

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

It is a pleasure to serve with you in the Chair, Mr Sharma. I declare an interest: my wife is the joint chief executive of the Law Commission, the work of which I will cite later in my remarks.

I congratulate the hon. Member for Dartford (Gareth Johnson) on securing this important debate, and I commend him for the remarks he made in opening it. I thought that he did an admirable job of bringing home to the House the poor service and, indeed, the abuses that many leasehold and resident freeholders on private or mixed-tenure estates routinely face at the hands of their managing agents. He also made a strong case for action to ensure that leaseholders and those residential freeholders are better protected.

I thank all Members who have participated in the debate. We have heard a series of excellent contributions that have highlighted—often in painstaking detail, because Members are engaging with this on a weekly and monthly basis at their surgeries—how, all too often, leaseholders in all parts of the country are treated by developers, freeholders and managing agents not as homeowners or even as valued customers but as a source of profit to be gouged almost as those parties see fit in many cases.

The hon. Member for Dartford focused his remarks on the problems associated with managing agents and estate management companies, and he was right to draw particular attention to them. The Opposition, of course, recognise that there are good managing agents who work hard to ensure that the residents they are responsible for are safe and secure and that the homes they manage are properly looked after. However, as we have repeatedly argued over recent years, the case for doing more to protect leaseholders from poor service and exploitation at the hands of unscrupulous managing agents is as watertight as they come. Relying on incremental improvement and the sharing of best practice within the industry to raise standards is bound to fail.

To bear down on bad practice and improve the lives of leaseholders, the Government need to act. They have a ready-made blueprint for doing so, because in 2018, Ministers tasked a working group chaired by the noble Lord Best with bringing forward detailed recommendations on how a new regulatory framework for property agents should operate. That working group’s final report, which made a series of proportionate and sensible recommendations, was published in July 2019, yet in the intervening 48 months, the Government have done nothing to progress the implementation of those recommendations.

It is not at all clear why that is the case, especially given the fact that there are clearly opportunities to bring forward and progress such legislation, with the paucity of business that the House is dealing with at present. Can the Minister give us a clear answer today to this question: do the Government intend to implement the recommendations set out in the regulation of property agents working group’s final report in what remains of this Parliament? We are looking for a simple yes or no.

Regulating the dysfunctional property agent market alone is not enough. It is the inherent flaws of the leasehold system that ultimately enable substandard managing agents to abuse and exploit leaseholders and residential freeholders. Even if the Government did introduce regulation to raise standards and drive change within the property agent industry, leaseholders would still struggle with punitive and escalating ground rents, unjustified permission and administration fees, unreasonable or extortionate charges and onerous conditions that are often imposed with little or no consultation. As my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders) argued in a powerful speech—I commend him for the dedication he has shown to securing change in this area—what is needed is fundamental and comprehensive reform of the leasehold system to address the historical iniquity on which it rests and to ensure it works in the interests of leaseholders.

However, having ostensibly agreed with us on that point, over recent months it has become clear that the Government are likely to row back on the commitments they previously made in respect of leasehold reform. Let me remind the House what those commitments were. In 2017, the Government asked the Law Commission to suggest improvements to both the leasehold and commonhold systems, and once the recommendations were published in July 2020, they made it clear that they were considering how to implement all of them. In 2022, the Government passed, with our support, the Leasehold Reform (Ground Rent) Act 2022, which set ground rents on newly created leases at zero. Ministers assured us that that legislation was merely the first part of a two-part seminal programme to implement wide-ranging reforms in this Parliament.

In January this year, in an interview with The Sunday Times, the Secretary of State went further and unambiguously announced his intention to abolish the leasehold system in its entirety, raising expectations correspondingly among leaseholders across the country. Not only are leaseholders still waiting for the publication of the leasehold reform part 2 Bill—the hon. Member for Congleton (Fiona Bruce) was right about the need for urgency; leaseholders have been waiting for far too long for change in this area—but credible recent reports have suggested that while we will see a further piece of leasehold legislation in the King’s Speech later this year, it is likely to be a more limited one.

In the Opposition day debate we secured on this subject on 23 May, the Minister claimed that there had been no Government U-turn on leasehold reform, yet she also repeatedly refused to commit to the fundamental and comprehensive reform package that leaseholders had been led to expect was forthcoming, and the statement that the approved motion called on the Government to bring forward by 23 June has not materialised. I will give the Minister another chance today to unambiguously clarify the Government’s position. If she was correct in asserting that there has been no U-turn on leasehold reform, will she give leaseholders across the country a cast-iron guarantee that the Government will legislate to implement all the Law Commission’s recommendations on enfranchisement, commonhold and the right to manage before the end of this Parliament—yes or no? If she will not do so, will she at least assure leaseholders who are watching that a slimmed-down leasehold reform part 2 Bill will still contain the most significant of the Law Commission’s recommendations in relation to the right to manage and commonhold?

I put that question specifically to the Minister because, in the Opposition day debate on 23 May, Ministers reaffirmed their commitment to taking forward a number of measures relating to leasehold enfranchisement, from the abolition of marriage value to a cap on ground rents in enfranchisement calculations, but we heard next to nothing in that debate in the way of a solid commitment regarding the right to manage or commonhold. That is a matter of real concern because reform of both is essential if we are to fundamentally and comprehensively overhaul the current system.

Right-to-manage reforms are necessary to provide a remedy to leaseholders who cannot afford to enfranchise, and commonhold reforms are imperative if we are to have a viable system for regulating blocks of flats apart from leasehold.

I hope the Minister will not refuse to engage with the questions, because leaseholders across the country deserve answers now on precisely what the Government mean when Ministers state that the Government remain committed to bringing forward further leasehold reforms, not least because, as the hon. Member for St Ives (Derek Thomas) pointed out, so many leaseholders have put transactions and their lives on hold while they have waited, and continue to wait, to find out what the Government ultimately intend to legislate for.

Unless and until leaseholders receive answers and a renewed commitment from the Government to enact all the recommendations of the Law Commission on enfranchisement, commonhold and the right to manage, leaseholders will reasonably conclude that the Government have scaled down their ambition, and that the only way to ensure that the leasehold system is completely overhauled to the lasting benefit of leaseholders, and commonhold reinvigorated to such an extent that it becomes the default and ultimately renders leasehold obsolete, is to vote Labour at the next general election.

Holocaust Memorial Bill

Matthew Pennycook Excerpts

2nd reading
Wednesday 28th June 2023 Commons Chamber

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

It is a pleasure to follow the hon. Member for Harrow East (Bob Blackman) and a privilege to wind-up this Second Reading debate for the Opposition.

I start by thanking all the hon. and right hon. Members who have taken part in this debate: the Father of the House; the right hon. Members for Witham (Priti Patel), for Gainsborough (Sir Edward Leigh) and for Preseli Pembrokeshire (Stephen Crabb); the hon. Members for East Renfrewshire (Kirsten Oswald), for Cities of London and Westminster (Nickie Aiken), for West Bromwich East (Nicola Richards) and for Harrow East; and my hon. Friends the Members for Hemsworth (Jon Trickett) and for Canterbury (Rosie Duffield). Each made their respective case with both force and clarity.

The Bill concerns a matter that arouses strong emotions, and the debate has understandably reflected that fact, but everyone who has contributed this afternoon has done so in a considered and respectful way that has done justice to the significance of the issue at hand. Whatever differences might exist about precisely how we do so, we are united as a House in our commitment to remembering and learning from the holocaust.

The Opposition’s position on the Bill is clear and unambiguous. As my hon. Friend the shadow Secretary of State made clear at the outset of the debate, we support the construction of a national holocaust memorial and learning centre in Victoria Tower gardens, and we therefore welcome the Bill as a means to facilitate its establishment. Many who have spoken in the debate have touched upon the rationale for creating a national holocaust memorial and learning centre. As we have heard, the idea was first proposed in 2015, and it has enjoyed cross-party support from its inception. In the eight years that have passed since the idea was first mooted, the case for such a monument and institution has only grown. That is not only because of the alarming rise of anti-Jewish hate in recent years, but because as the number of those who survived the shoah dwindles and those who still remain with us grow ever frailer, it is essential that we as a country do more to preserve the memory of this unique act of evil and those who perished in it.

It is also imperative that we continue to educate future generations about what happened, both as a mark of respect to those who were lost and those who survived, and as a warning about what happens when antisemitism, prejudice and hatred are allowed to flourish unchecked. Once constructed, the memorial will stand as a permanent reminder of the horrors of the past, and the need for a democratic citizenry to remain ever vigilant and willing to act when the values that underpin a free and tolerant society are undermined or threatened.

We on the Opposition Benches believe it is particularly important that the thematic exhibition that the proposed learning centre will house is not only engaging and reflective, but honest about Britain’s complicated relationship with the holocaust. The proximity of the proposed memorial and learning centre to this House cannot and should not be taken to imply that the United Kingdom and its Parliament have an unimpeachable record when it comes to the knowledge of, and response to, the systematic mass killing of Jews by the Nazi regime.

[Sir Edward Leigh]

Let us put it on the record that, as Winston Churchill said, only one nation in the entire world fought Nazism and fascism from day one of the war to the last day of the war—it was this country and this Parliament.

[Matthew Pennycook]

I thank the right hon. Gentleman for that intervention. I agree with him, although he will know of the many voices of dissent both at the time of and in the years leading up to the moment in which we took that stand. As I was going to say, the proximity of the proposed site renders it all the more important to confront openly the ambiguous and varied responses—and there were some—of our country’s Parliament, Government and society to the still unsurpassed crimes that were carried out by Nazi Germany and its collaborators. We have heard about those examples today.

As the debate winds up, I want to take the opportunity, once again, to put on record our thanks to all those who have been involved in advancing this project, and holocaust education more generally, in recent years. The full list is far too extensive to read into the record, but they include the past and present members of the UK Holocaust Memorial Foundation, including the right honourable Ed Balls, the right honourable Lord Eric Pickles and Chief Rabbi Ephraim Mirvis; all those involved in developing the exhibition’s narrative, particularly Yehudit Shendar, who is providing the curatorial lead; all the organisations that have striven to embed holocaust and genocide education and commemoration in our national life, particularly the Holocaust Memorial Day Trust and the Holocaust Educational Trust; and finally, all the holocaust survivors who have campaigned for holocaust education and personally championed the project, including a number who will sadly not now see it come to fruition. In that regard, those of us on the Opposition side of the House think in particular of Sir Ben Helfgott, and convey our thoughts and sincere condolences to his family and friends.

I have felt it necessary to dwell again at some length on the rationale for establishing a national holocaust memorial and learning centre, given the Bill’s ultimate purpose, but as has been mentioned, the principle of doing so is almost entirely uncontested and not an issue that arises directly from the Bill. Instead, the Bill is concerned with making provision for, and in connection with, significant expenditure related to the establishment of the proposed memorial and centre, and removing pre-existing legislative impediments that exist to the siting of it in Victoria Tower gardens, namely sections of the London County Council (Improvements) Act 1900, so that progress towards construction can be made.

I want to make it clear once again that the Opposition appreciate fully that the selection of Victoria Tower gardens as the chosen location for the memorial and centre has attracted robust and principled criticism and, in some cases, outright opposition, including from prominent members of the Jewish community and holocaust survivors. Several of those who contributed to the debate today have articulated some of the criticisms and objections that have been made in that regard. The reasoned amendment in the name of the Father of the House sets out a number of them.

As we have heard, concerns about the proposed location include the impact on the construction process; rising build costs; the potential generation of additional traffic in the area; security risks; environmental protections; the loss of public green space and amenity; and the impact on existing monuments and memorials.

[Sir Peter Bottomley]

When the National Audit Office carried out its report last year, it thought the cost had gone up to £102 million. Since then, we will probably need to add an extra 15%, because of inflation in construction. The expansion at Yad Vashem, which was referred to by hon. Members, was completed for $100 million, so we will be spending much more for much less. I am not saying this to change the hon. Gentleman’s argument—I am grateful for the way he is summarising the debate, and he is doing it very fairly.

[Matthew Pennycook]

I thank the Father of the House. Build cost inflation is a serious issue, not just in relation to this project but across the country. That would be the case wherever the chosen location was if we are to move ahead with the memorial, as we must, but I take his point, which is a good one.

We know the concerns that have been raised about the adequacy of historical consultation. While the planning inquiry that took place in October 2022 enabled all interested parties to express their views and to raise these and other concerns and suggestions, the Opposition believe it is important that those with outstanding criticisms and objections have a chance to express them fully and be heard. The hybrid nature of the Bill and the resulting petitioning window that will be provided as a result of its designation will ensure that they are.

We hope that the Government will reflect carefully on the specific points that have been raised in the debate today. However, it is the considered view of Labour Members that this Bill needs to progress and that, amended or otherwise, it must receive Royal Assent as soon as is practically possible. There really can be no further delay if we are to have any chance whatsoever of having this vitally important project finally completed while at least some of those who survived the holocaust and made Britain their home are still with us. I think that would be the sincere wish of the whole House.

Draft Building Safety Act 2022 (Consequential Amendments etc.) Regulations 2023

Matthew Pennycook Excerpts

Tuesday 13th June 2023 General Committees

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

It is a pleasure to serve with you in the Chair, Sir Robert. I shall be extremely brief because this statutory instrument is entirely uncontroversial. The Minister has provided us with a fairly detailed explanation of the purpose of the instrument, and we are satisfied that it is simply a series of consequential amendments and changes to terminology to ensure consistency across the statute book in respect of part 3 of the Building Safety Act, and specifically, as he mentioned, the provisions relating to the making of applications for building control approval.

That is not to say that the Opposition do not have a number of outstanding questions and concerns about the resourcing and functioning of the new regime for high-rise buildings that is due to come into force on 1 October, but this Committee is probably not the appropriate forum to air those. We will seek further opportunities to do so, including in relation to the further regulations that the Minister mentioned. On that basis, we take no issue with these regulations and will not oppose them.

New Housing Supply

Matthew Pennycook Excerpts

Monday 5th June 2023 Commons Chamber

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

It is a pleasure to respond to this important and timely debate for the Opposition. I congratulate the right hon. Member for Haltemprice and Howden (Mr Davis) on securing it, and I thank the Backbench Business Committee for granting it. I also thank all the hon. Members who have participated this evening. In addition to the right hon. Gentleman’s thoughtful and compelling opening remarks, there has been a large number of extremely well-argued, informed and insightful contributions.

While there is good reason to treat sceptically the argument that boosting housing supply, in and of itself, will quickly and significantly improve house price affordability or address what are now essentially static levels of home ownership, there is no question but that a significant uplift in house building rates is an integral part of the solution to England’s chronic housing crisis. It is undeniable that, as a nation, we have clearly not built enough houses in recent decades to meet housing need, particularly in London and what might be termed the greater south-east, so it is imperative that we address this historical undersupply of homes.

To the best of my knowledge, no Conservative Minister has ever explained precisely why the number was chosen, but the Government made a manifesto commitment to build 300,000 homes a year by the middle of this decade. Even accounting for the additional supply facilitated by the progressive expansion of permitted development rights since 2013, many of them incredibly poor-quality office-to-residential conversions, the Government have never come close to approaching, let alone hitting, that annual target. In 2021-22, net additional dwellings stood at just 232,820. That level of output, respectable but ultimately insufficient, was, of course, achieved prior to the range of concessions the Government made, in their weakness, to the so-called “Planning Concern Group” of Conservative Back Benchers late last year.

In the aftermath of that abdication of responsibility, we have, predictably, seen scores of local plans across the country stalled, delayed or withdrawn. In the face of this alarming trend, Ministers contend that we need not worry because the proposed changes to the national planning policy framework will ultimately boost local plan coverage and, in turn, housing supply. Even if that is what ultimately transpires—there is good reason to doubt it—it would be a form of increased local plan coverage that is entirely disconnected from the Government’s purported aim of building 300,000 new homes per annum, because the intended effect of the proposed changes is to allow local planning authorities to develop and adopt local plans that fail to meet the needs of wider housing market areas in full. As such, the Government’s manifesto commitment to 300,000 homes a year remains alive but in name only; abandoned in practice but not formally abolished, in order that the Secretary of State and his Ministers can still insincerely cite it in a risible effort to convince this House and the British public that they did not agree, consciously and deliberately, to plan for less housing in England over the coming years in order to placate a disgruntled group of Back Benchers.

[Bob Seely]

I thank the hon. Gentleman for giving way to a disgruntled Back Bencher. If he reads the NPPF letter, the “Dear colleague” letter, he will find that although there is leeway on housing targets, there is set to be higher density and more liberalisation in many areas. A lot of what we tried to achieve was to free up the market to make it work better.

[Matthew Pennycook]

I fundamentally disagree with the hon. Gentleman on that. Whether it is by means of the emphasis in the proposed NPPF on locally prepared plans providing for “sufficient” housing only, the softening of land supply and delivery test provisions, the ability to include historical over-delivery in five year housing land supply calculations or the listing of various local characteristics that would justify a deviation from the standard method, the intended outcome of those changes is to allow local authorities to plan to meet less than the targets that nominally remain in place.

As I said, the choice the Government made entails a deliberate shift from a plan-led system focused on making at least some attempt to meet England’s housing need to one geared toward providing only what the politics of any given area will allow, with all the implications that the resulting suppressed rates of house building will have on those affected by the housing crisis and economic growth more widely. The next Labour Government will fix this mess. When it comes to housing and planning, our overriding objective will be to get house building rates up significantly from the nadir we will surely inherit, including, as part of that effort, markedly increasing the supply of affordable homes and, in particular, genuinely affordable social homes to rent. We do not intend to pluck an annual national target out of the air and ineptly contort the system to try to make the numbers across the country add up, as the Government have done by imposing an entirely arbitrary 35% uplift that most of the 20 cities and urban centres in England to which it applies are clear cannot possibly be accommodated.

[Bob Seely]

rose—

[Matthew Pennycook]

I will not give way.

But we will insist that the planning system is once again geared toward meeting housing need in full. To that end, if they are enacted as expected, a Labour Government will reverse the damaging changes the Government propose to make to the NPPF in relation to planning for housing. However, although reversing those damaging changes to national planning policy will be an essential first step, more far-reaching reform will be required if we are to overcome the limitations of a speculative house building model, a broken land market, and a planning system that is at once both too permissive and too restrictive. That will mean, among many other things, overhauling England’s dysfunctional planning structures so that the system more effectively facilitates strategic housing growth across those sub-regional areas with significant unmet need. That might be by way of extensions to existing urban settlements or entirely new settlements—I would argue that we need both in good measure. It will mean more proactive public sector involvement in housing delivery on large sites across the country, so that quality place making and long-term value creation become more than just the rare exception.

Let me make it clear, Madam Deputy Speaker, that Labour’s approach will not be premised on a drive for units at any cost. We appreciate that many local communities resist development because it entails poor-quality housing in inappropriate and often entirely car-dependent locations, without the necessary physical and social infrastructure for communities to thrive, or sufficient levels of affordable housing to meet local need. We would argue that that outcome is a direct consequence of the Government’s over-reliance on private house builders building homes for market sale to meet overall housing need. Yet when it comes to house building, there need not be an inherent trade-off between quantity and quality. A Labour Government will be determined to see increased rates of house building, but equally determined that much more supply comes via a long-term stewardship approach so that, if not removed entirely, public opposition to significant development in contested areas should at least be much reduced.

Similarly, we reject the notion that building more homes must come at the expense of wider national policy objectives. In addition to increasing housing supply in a way that prioritises quality of build and quality of place, we will act to ensure that the housing and planning systems play their full part in addressing other pressing national challenges such as the drive towards net zero, the need for urgent nature restoration and the need to improve public health.

To conclude, it is not the only way of solving England’s housing problems and it certainly will not be a panacea for them, but building more homes remains the most effective way that we have of tackling almost all of the housing-related problems with which our country is contending. The Government needed to build more homes before the so-called planning concern group extracted its damaging concessions late last year. As a result of the Government’s appeasement of that group, we now face the very real prospect that house building rates will plummet over the next 12 to 18 months.

We desperately need a change of approach, but it is a change that the present Government and the Ministers on the Front Bench are incapable of delivering. It is high time that we had a general election, so that they can make way for a Government who are serious about ensuring that we build to meet housing need in full and boost economic growth.

[Madam Deputy Speaker (Dame Rosie Winterton)]

Before I call the Minister to speak, I have to say that I am extremely disappointed that some colleagues were not present to hear the winding-up speech from the Opposition. It is as important to be here for the Opposition’s wind-up as it is to be here for the Minister’s wind-up. It is extremely discourteous not to be here.

Oral Answers to Questions

Matthew Pennycook Excerpts

Monday 5th June 2023 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

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

In an Opposition Day Debate that took place before the recess, the Minister claimed that there has been no Government U-turn on leasehold reform. She also refused to commit to the fundamental and comprehensive reform package that leaseholders had been led to expect was forthcoming. Can she give the House and the country a straight answer today: will the Government legislate to implement all of the Law Commission’s recommendations on enfranchisement, commonhold and the right to manage before the end of this Parliament—yes or no?

[Rachel Maclean]

The hon. Gentleman will remember I am sure the detailed debate that we had on this very issue where we dug into many questions that he and many others asked. I have given my answers from this Dispatch Box. I have been very clear that we will bring forward comprehensive reforms to leasehold, which is something the Opposition failed to do for the whole time they were in Government. We have made a start, and we will make good on that promise.

Leasehold Reform

Matthew Pennycook Excerpts

Tuesday 23rd May 2023 Commons Chamber

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

Thank you, Madam Deputy Speaker. It is a pleasure to close for the Opposition. I start by declaring an interest: my wife is the joint chief executive of the Law Commission, whose work I intend to cite in my remarks.

This has been an excellent debate, featuring a great many thoughtful and informed contributions, and I thank all those hon. Members who have taken part in it. In particular, I commend the remarks made by my hon. Friend the Member for Sheffield South East (Mr Betts), my right hon. Friend the Member for North Durham (Mr Jones), and my hon. Friends the Members for City of Chester (Samantha Dixon), for Dulwich and West Norwood (Helen Hayes), for West Lancashire (Ashley Dalton), for Weaver Vale (Mike Amesbury), for Brentford and Isleworth (Ruth Cadbury), for Blackburn (Kate Hollern), for St Helens South and Whiston (Ms Rimmer), for Ellesmere Port and Neston (Justin Madders), for Warwick and Leamington (Matt Western) and for Ealing North (James Murray). Together, they brought to life the plight of leaseholders across the country and powerfully reinforced the case for bold and urgent reform.

The sense of satisfaction, pride and security that is felt when someone completes the purchase of their first home and the keys are finally handed over is something that millions of homeowners across the country will recognise and remember with fondness. Given a free choice, an overwhelming majority of families would prefer to own their own home, and home ownership remains indelibly associated in the minds of many with security, control, freedom and hope.

Yet, as we have heard, for far too many leaseholders, the reality of home ownership has fallen woefully short of the dream, their lives marked by an intermittent, if not constant, struggle with punitive and escalating ground rents, unjustified permissions and administration fees, with unreasonable or extortionate charges, and with onerous conditions imposed with little or no consultation. For all those leaseholders also affected by the building safety crisis, particularly all those non-qualifying leaseholders who the Government have chosen to exclude from protections in the Building Safety Act 2022, that dream has not just fallen short; it has become a living nightmare.

This is not what home ownership should entail. Under successive Conservative-led Governments, the dream of owning their own home has slipped away for far too many families. Labour is committed to addressing that failure and reviving the dream of home ownership for current and future generations, but we are equally determined to reform the leasehold system fundamentally and comprehensively, by addressing the historical inequity on which it rests and making sure it works in the interests of leaseholders.

The Government ostensibly agree with us on the need to overhaul the entire leasehold system. In 2017 they asked the Law Commission to suggest improvements to both the leasehold and commonhold systems and, once the recommendations were published in July 2020, they made it clear that they were considering how to implement all of them. In 2021 they established the Commonhold Council to prepare the ground for widespread take-up of a collective form of home ownership that is the norm in many other parts of the world.

In 2022 the Government passed, with our support, the Leasehold Reform (Ground Rent) Act, which set ground rents on newly created leases to zero. Ministers assured us, as my hon. Friend the Member for Weaver Vale pointed out, that that legislation was merely the first part of a two-part seminal programme to implement reform in this Parliament. In January this year, in an interview with The Sunday Times, the present Secretary of State went further and unambiguously announced his intention to abolish the leasehold system in its entirety—raising expectations, as my right hon. Friend the Member for North Durham pointed out, among leaseholders across the country.

Yet not only are leaseholders still waiting for the publication of the leasehold reform (part 2) Bill, but, according to recent reports, the Government’s commitment to legislate for fundamental and comprehensive leasehold reform through that Bill looks set to be abandoned after the Secretary of State was overruled by Downing Street. If the substance of those reports is true, it will represent the latest broken promise in 13 years of Conservative failure. The media reports in question indicated that we will see a second leasehold reform Bill in the King’s Speech later this year, but they suggested that No. 10 will only allow the Secretary of State a limited one.

We are told that the Bill in question might include a cap on ground rents, more powers for tenants to choose their own property management company and a ban on building owners’ forcing leaseholders to pay to the other side any legal costs incurred as part of a dispute. However, it is still not clear whether that is the sum total of the measures leaseholders can now expect, or whether Downing Street might give the Secretary of State permission for a little more.

When the Minister closes the debate, will she therefore tell the House, and all the leaseholders across the country who are listening very carefully to what is being said here today, not just what the Government are committed to implementing at some point in the future, but what the major provisions in that forthcoming leasehold reform Bill will now be? Will they be limited to the three measures I just mentioned, or can leaseholders expect more—perhaps a prescribed formula for valuation in standard cases, or, as I believe the Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities, the hon. Member for North East Derbyshire (Lee Rowley), implied but did not explicitly confirm, improvements to freehold service charge protection?

If the Minister is not prepared to tell leaseholders what all the major provisions in that forthcoming Bill are likely to be, or if the Government have still not made up their mind after all this time, she owes it to leaseholders at least to clarify whether the Government remain committed to that Bill’s containing all those specific measures relating to enfranchisement, valuation and lease extensions that the right hon. Member for Newark (Robert Jenrick) committed to implementing when he was Secretary of State.

As set out in a written ministerial statement of 11 January 2021, those specific commitments included the abolition of marriage value, capping the treatment of ground rents on all existing residential leases at 0.1% of freehold value and prescribing rates for the calculations at market value, a right for those with existing long leases to buy out the ground rent without the need to extend their term of lease, and the right for all leaseholders to extend their lease as often as they wish, at zero ground rent, for a term of 990 years. The Parliamentary Under-Secretary of State earlier mentioned several of those commitments, but again he was less than explicit that they would definitely be in the legislation. Will the Minister of State tell the House whether the forthcoming Bill will include them all?

But whether it ultimately includes merely a handful of worthy measures or all those explicitly committed to by the right hon. Member for Newark during the period he led the Department, what now looks certain is that the scaled-back leasehold reform Bill that the Government are finalising will be a far cry from what successive Ministers—and, in particular, the present Secretary of State—have led leaseholders across the country to believe would be enacted by this Government in this Parliament. When she closes the debate, the least the Minister can do is to be honest with leaseholders about what they should no longer expect from this Government in the way of leasehold reform, and make it clear, if that is indeed the case, that Ministers do not now intend in this Parliament to enact all the recommendations on enfranchisement, commonhold and the right to manage made in the Law Commission’s three reports of 2020.

As well as that honest admission, leaseholders deserve an explanation as to why the Government are seemingly not now prepared to implement those sensible and proportionate recommendations in full. Finding adequate parliamentary time cannot be the reason, given that the Law Commission parliamentary procedure would reduce the time any such legislation would spend on the Floor of the House and enable the Government to complete the process before a general election. The House, as well as all those organisations that have been campaigning for so long on behalf of exploited leaseholders, deserve a clear answer today about the real reason leaseholders look set to be fobbed off with just a limited Bill.

To conclude, nearly 5 million households in England are trapped in an archaic system of home ownership that has its roots in 11th-century English property law. This House has legislated to give leaseholders more rights in the past, but none of those previous efforts fundamentally disturbed the historic inequity on which the system rests, and as a result, leaseholders remain at the mercy of arcane and discriminatory practices, to their detriment and to the benefit of freeholders.

I end by saying this directly to any leaseholders watching our proceedings today. Labour recognises that you have waited long enough for this House of Commons to truly deliver for you. We are determined to fundamentally and comprehensively reform the current system, overhauling leasehold to your lasting benefit and reinvigorating commonhold to such an extent that it will become the default and render leasehold obsolete. If the Government abide by the spirit of the motion tabled today and honour their commitments to you in full, we will work with them constructively to improve your lives, but rest assured that if they do not, a Labour Government will finish the job.

[Madam Deputy Speaker (Dame Rosie Winterton)]

Now that we are all back, I want to reiterate once again how important it is for those who have contributed to the debate to get back to hear not only the Opposition’s but the Minister’s winding-up speeches. One way to ensure that that happens is to actually stay in the debate and hear what other people have to say—a novel idea, I know, but it can be well worth it.

--- Later in debate ---

[Rachel Maclean]

I do not have much time, and I have a lot to get through, so I hope the hon. Gentleman will allow me to answer the questions asked by him and his colleagues.

The first point to address is one of timing. In a sense, this debate hinges somewhat on a false premise. It hinges on media speculation—

[Matthew Pennycook]

A false promise!

[Rachel Maclean]

A false premise. It hinges on media speculation, as the hon. Member for Greenwich and Woolwich (Matthew Pennycook) set out. I want to be very clear that there has been no U-turn, as some have tried to characterise it. This is about timing. As hon. Members will know, it is a long-standing tradition of this House that Ministers cannot comment on precise timescales and details of forthcoming legislation, but I can reassure the House today that officials in my Department are working flat out to bring forward further leasehold reform.

--- Later in debate ---

[Rachel Maclean]

I thank the hon. Gentleman for his question. He will know that we work closely with all the devolved Administrations when we bring forward legislation, and that is the right thing to do.

As hon. Members will know, it is not only leaseholders who are too often subject to unfair or outrageous practices. We should not forget the plight of freehold homeowners who pay towards shared services, such as unadopted roads, but have few rights. The Government remain committed to making estate management companies more accountable to the homeowners for whom they provide services. When parliamentary time allows, we intend to legislate to deliver these commitments, including measures that will allow homeowners the right to challenge the reasonableness of costs they have to pay. We will give them the ability to apply to the first-tier tribunal to appoint a manager to manage the provision of services.

In all aspects of this ambitious programme of reform, the Government are committed to rebalancing what has historically been a largely one-sided relationship between homeowner and landowner. We are affording peace of mind to those who have realised the dream of home ownership—something we on the Government Benches strongly support—giving them much greater control of the place where they and their loved ones sleep at night. Crucially, we are pursuing this agenda in the right way, working hand in hand with the Law Commission, the CMA and our partners across the housing sector.

[Matthew Pennycook]

I think the House is still somewhat confused as to what the Government’s position is. The Minister says there has been no U-turn, so can she confirm that it is the Government’s intention to legislate for all the recommendations that the Law Commission made in its three reports in the forthcoming leasehold reform part 2 Bill?

[Rachel Maclean]

I refer the shadow Minister to the remarks I have literally just made on that point. I repeat that we are committed to moving to a fairer, simpler and more equitable system. We are committed to the promises in our manifesto, as the Under-Secretary of State for Levelling Up, Housing and Communities, my hon. Friend the Member for North East Derbyshire (Lee Rowley), set out in his opening remarks. These promises have been repeated by previous Secretaries of State with responsibility for housing. That is our ambition, and we will work tirelessly with Members from all parts of the House to make it a reality.

Short-term Holiday Lets: Planning

Matthew Pennycook Excerpts

Tuesday 23rd May 2023 Westminster Hall

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

It is a pleasure to serve with you in the Chair, Dame Caroline. I congratulate the hon. Member for Torbay (Kevin Foster) on securing this important debate and commend him for the focused and thoughtful remarks he made in opening it. I also thank all other hon. Members who have participated in the debate. In particular, I praise the contributions of my hon. Friend the Member for Plymouth, Sutton and Devonport (Luke Pollard) and the hon. Member for Westmorland and Lonsdale (Tim Farron). Both have long called for bold action in this area, and both brought home the need for urgency in taking the measures still required to tackle it.

It is not in dispute that holiday homes and self-catering apartments have an important role to play in catering to the needs of tourists, as well as those who require short-term accommodation for work or other purposes. All hon. Members who have spoken clearly recognise the contribution of short-term holiday lets, and the visitor economy more generally, to the prosperity of individual homeowners and local economies in their constituencies. When we respond to the issue, it is absolutely right, as the hon. Members for East Devon (Simon Jupp) and for Totnes (Anthony Mangnall) mentioned, that we should get the balance right.

As we have heard repeatedly throughout the debate, the issue is that the surge in the numbers of homes marketed for short-term holiday lets over recent years has generated a number of significant challenges for communities across the country. Those challenges range from the immediate impact on residents, neighbourhoods and local services of high visitor turnover, particularly when short-term lets are abused by the minority of antisocial or disruptive guests, to the longer-term negative impact on entire communities with respect to the affordability and availability of homes for local people—and, indeed, those who work in the visitor economy—to both buy and rent.

As noted several times in the debate, those challenges are obviously most acute in areas of the country, be they rural, coastal or urban, where the concentration of short-term holiday lets is extremely high. It is worth noting that they are also particularly evident in London, owing to the fact that the Cameron Government decided, by means of the Deregulation Act 2015, to loosen requirements on short-term letting in the capital, allowing properties to be let for a maximum of 90 days a year without requiring planning permission. The Government were warned at the time about the harmful consequences that would flow from the relevant provisions in that Act, not least given that few, if any, London boroughs have the means to monitor and enforce the 90-day limit, but those warnings went unheeded, and short-term let abuse is now rife in many parts of the capital as a result. I feel duty bound, as the only London MP in the debate, to mention that particular problem.

It has been abundantly clear for some time that the deregulated nature of the short-term letting sector is deeply problematic. There is a pressing need to overhaul the sector’s regulatory framework to account for the significant changes that have taken place over the past 10 to 15 years, but also, we would argue, a watertight case for giving local authorities that are struggling to cope with high concentrations of short-term holiday lets the powers they need to protect the sustainability and cohesion of their communities. It is true, as the hon. Member for Totnes mentioned, that measures have been enacted on the business rates loophole and neighbourhood plans to try to tackle the problem, but we argue that they are clearly insufficient, not least because we would not be debating the issue today if they went a long way to solving the problem.

Having opposed for years the very notion that robust regulatory intervention was required to address the negative impact of short-term holiday lets on communities and local housing markets, the Government were finally forced to act in June 2021.

[Anthony Mangnall]

The hon. Member has criticised the Government for introducing policies, but I wonder what Labour’s position is on what the correct level of short-term lets in communities is.

[Matthew Pennycook]

If the hon. Member gives me the opportunity, I will go on to make clear where we differ from the Government, in what they have and have not proposed.

As I was saying, when the Government finally acted in June 2021, they did so only in the most limited fashion, agreeing to have the Department for Culture, Media and Sport consult on a tourism accommodation registration scheme in England. After consistently resisting various attempts to amend the Levelling-up and Regeneration Bill in Committee, so that it might provide local communities with more effective means of redress, the Government were forced to go further late last year. The concession they made on Report, on 13 December, was to agree only in principle to introduce a discretionary registration scheme in England, and only by means of legislation that might come into force as late as autumn next year.

Subsequently urged to go further still by the Opposition—as well as, it must be said, many Government Members—Ministers have now committed, as we have heard, to consult on the introduction of a new planning use class for short-term lets. Let me be clear—here I address the point made by the hon. Member for Totnes—that the package currently on offer from the Government still falls short of the comprehensive suite of measures that we would like to see enacted at pace to tackle this problem. The Government remain opposed to, for example, the introduction of a discretionary licensing scheme of the kind we have proposed on numerous occasions, which we think would be the solution in many parts of the country dealing with particularly high concentrations.

None the less, we welcome the consultation on the new planning use class, just as we welcome the commitment to introduce a new discretionary registration scheme. However, as so often with this Government, where they propose to give with one hand, they plan to take away with the other. Because that new consultation, as the hon. Member mentioned at the outset, also invites views on introducing new permitted development rights that would make it easier to convert dwelling houses into short-term lets, with proposed article 4 direction protections applicable, according to the consultation, only in

“the smallest geographical area possible”.

I encourage hon. Members to go and see what investors are saying about that part of the consultation. They say they are happy with the consultation overall, because the inclusion of that provision makes it light touch, and will make it incredibly attractive and easy for investors to convert properties into short-term lets. I caution the Government about going down that route, not least because the consultation makes clear that what they propose in that expansion of permitted development rights would not be subject to any limitations or conditions, and would apply in national parks and areas of outstanding natural beauty. I want to put on record the Opposition’s serious concerns about the implications of expanding permitted development rights in that way and our intention to scrutinise extremely carefully any measures that the Government might ultimately decide to bring forward in this area.

The more fundamental issue is the frankly glacial pace of the Government’s overall response to the challenges posed to communities across the country by the surge in short-term holiday lets. For many English communities, particularly those with extremely high concentrations of such lets, it is not hyperbole to argue that those challenges are existential, entailing as they do the loss of a significant proportion of the permanent population, as a result of local people simply being unable to find affordable local homes in which to live, and diminished local services and amenities, whether that be local schools, transport links or local small businesses, for those who manage to hang on.

It is not good enough for Ministers to tell those communities that they may be able to establish a registration scheme to gather information about short-term lets at some point next year, if and when the Levelling-up and Regeneration Bill receives Royal Assent, or that they may be able to control the numbers of such properties by means of a new planning use class, at some point in the coming years, if appropriate regulations emerge from the current consultation. Those communities need a response commensurate with the scale of the challenge they face, and they need it urgently.

We urge the Government, not only to rethink the potential further expansion of permitted development rights, as set out in the consultation now under way, but to accelerate the introduction of the discretionary registration scheme, to which they are committed, to legislate for the introduction of a new planning use class for short-term lets without delay, and to give serious consideration to other measures, whether on taxation or licensing, that will almost certainly still be required, so that the communities we have been discussing today will finally have the prospect of securing the full suite of planning and non-planning tools that they need to appropriately regulate the numbers of short-term holiday lets in their areas and manage their day-to-day impact. That is what a Labour Government would do, and it is what we need this Government to do.

[The Minister of State, Department for Levelling Up, Housing and Communities (Rachel Maclean)]

It is a great pleasure to see you in the Chair, Dame Caroline, and I thank my hon. Friend the Member for Torbay (Kevin Foster) for introducing this vital debate. It is a credit to him that so many Members from across our wonderful United Kingdom are here to speak on the issues he has highlighted, and I will turn to all the contributions that colleagues have made before I conclude my remarks.

However, I want first to pay particular tribute to my hon. Friend, whose efforts on behalf of his constituents have recently been recognised in the local elections. It is no surprise to me to hear that there has been a win for the Conservatives in his local council area, no doubt thanks to his assiduous work on behalf of his constituents and his communities, and I commend him and his colleagues in Torbay for that incredible effort.

My hon. Friend’s speech has done an extremely good job of reflecting the concerns involved and the issues that matter to his community. He has highlighted the importance of homes for people to live in, which enable them to take jobs in the local economy, and his desire to prevent streets that should contain homes for families from turning into holiday parks. He has called for a balance to be struck, and I hope colleagues will see that my aim is to reflect that in my remarks—indeed, it is what all hon. Members have said—but we agree with him that we must tackle the issue of constrained housing supply.

My hon. Friend is right to challenge me on how quickly such measures could be enacted, and I will definitely turn to that in the body of my speech, but let me first say that I want to be clear that we recognise the value of tourism to our country.

I feel as though I went on a wonderful virtual holiday while colleagues were contributing to the debate, reflecting on many family holidays in different parts of the UK. I think I have been to almost every constituency represented in the Chamber. I have four children, and we had a limited holiday budget when the children were little, so we often had wonderful holidays in this country. I have been to the constituency of the hon. Member for Strangford (Jim Shannon) and had lovely walks there. The hon. Gentleman mentioned sharks. We have plenty of sharks here in Westminster, so I do not need to go far to see them. It was certainly very sunny when I went to the constituency of the hon. and learned Member for Edinburgh South West (Joanna Cherry), as it was in Norfolk, Cornwall, Devon and elsewhere.

Tourism is an economic, social and cultural asset that plays a vital role in supporting our institutions and attractions across the country. It is a major contributor to UK jobs and growth, employing 1.7 million people and contributing nearly £74 billion a year pre-pandemic. I am not going to repeat everything that colleagues have said, but we all understand why we need to introduce these reforms. That is why we are in the Chamber for the debate.

Every Member from every party has highlighted the issue of the hollowing out of communities, the impact of that on schools and other services, and the fact that the growth of short-term letting might in itself be having an impact on local businesses that serve the tourism industry, such as restaurants and cafés. That is why we are consulting on changes that will provide local areas, where there is a concentration of such usage, with the necessary tools to help them to strike the right balance between supporting tourism and providing housing for local communities.

Briefly, there are two separate strands to our proposals. The first is the introduction of a new use class for short-term lets and associated PDRs. The C5 short-term let use class will capture those properties that are not someone’s main or sole home, and which are used for the purpose of providing short-term lets. When the use class comes into force, subject to consultation, all dwelling houses will be reclassified. When they meet the definition, they will fall into the C5 use class. There is no planning process attached to that, which means there is no burden on existing short-term lets.

However, short-term lets are not an issue everywhere, which is why we are introducing national permitted development rights that will allow for the change of use from dwelling house to C5 short-term let and vice versa. That will return the position to the status quo ante. Therefore, many people who live in areas where there is no local issue will see no change. Where there is a local issue, the local authority may remove that right by making an article 4 direction. That addresses the point made from the Opposition Front Bench by the hon. Member for Greenwich and Woolwich (Matthew Pennycook). A planning application will then be required with respect to any future material change of use, allowing for local consideration of where additional short-term lets would or would not be acceptable. In that way, local areas would be able to retain more homes for local people to rent or buy. Many colleagues have been calling for this change, and we expect that they will want to make that article 4 direction and will have the supporting evidence to do so.

Our second proposal relates to where people let out their main or sole home. We know that many people do so and that that helps them to manage the rising costs of living and to benefit from the sharing economy. However, there is no defined limit on how many nights someone can let out their own home, which can lead to uncertainty. We are therefore proposing some changes that will provide homeowners with confidence on how many nights in a calendar year they can let out their home—whether that is 30, 60 or 90. If, in future, homeowners wanted to let out their own main or sole home for more than that specified number of nights, planning permission would be required where there is a material change of use.

As many colleagues have said, and I hope anyone listening will note, the consultation closes on 7 June. It is generating a fair amount of interest, and we welcome this timely engagement with hon. Members on this important issue. My hon. Friend the Member for Torbay has challenged the Government, as I fully expected he would do, on when changes can be enacted and brought forward. I reassure him that, subject to the consultation, measures can be brought forward through secondary legislation, but we need to consider fully all the issues raised, not only in this Chamber but elsewhere, in past debates and in the consultation. It is right that we consider all the issues carefully so as to avoid unintended consequences, as many colleagues have said.

Separately, the Government are also introducing a register of short-term lets through the Levelling-up and Regeneration Bill. That will provide a valuable tool for local authorities; it will be a stronger evidence base of short-term let activity in their area, which could help those local authorities better manage the supply of short-term lets. That could also improve consistency and help local authorities apply health and safety regulations across the guest sector. It also gives international visitors visible assurance that we have a high-quality and safe guest accommodation offer.

My colleagues in the Department for Culture, Media and Sport are consulting separately on how the register would work in practice. We are of course working very closely with that Department and others to ensure that officials are looking across the piece at different Government measures, to make sure they are proportionate and complementary.

Those are not the only changes we are making on short-term lets. We have legislated to require from April 2023 evidence of actual letting activity, in response to very sensible concerns from colleagues. The property must have been let for at least 70 days in the previous year before it can be assessed for business rates and therefore qualify for 100% relief. That ensures that more properties contribute to local services through business rates, council tax or income tax regime changes.

Through the new Renters (Reform) Bill, introduced by the Secretary of State to Parliament just last week, we are removing no-fault evictions and will ensure that landlords will not be able to evict tenants simply to turn the property into a holiday let.

Our ambition remains to deliver the housing that communities need. We delivered 232,000 additional homes—a 10% increase on the previous year. I will not take any lectures from the hon. Member for Greenwich and Woolwich on the Opposition Front Bench. I agreed with many of his comments, but on affordable housing, we delivered over 632 affordable houses. They oversaw the worst record of housebuilding since the second world war in their time in government. In Labour-run Wales, which they often point to, they built no council houses between 2014 and 2017, and only 12 in 2019. Let us look at what they actually do, rather than what they say.

[Matthew Pennycook]

Will the Minister give way?

[Rachel Maclean]

I cannot give way; I am sorry. I need to give colleagues a fair hearing.

I thank the hon. Member for Westmorland and Lonsdale (Tim Farron). I note his support for the points made by my hon. Friend the Member for Torbay and for the Renters (Reform) Bill. I thank my hon. Friend the Member for East Devon (Simon Jupp), who highlighted the importance of these measures being in the control of locally elected councils, which they will be. That is what the changes we will introduce will seek to deliver.

The hon. Member for Plymouth, Sutton and Devonport (Luke Pollard) challenged us, and said we were not doing enough. I completely disagree with that and reject it. As I have set out, we are acting. The changes to section 21 had their First Reading in Parliament just last week.

My hon. Friend the Member for St Ives (Derek Thomas) challenged me to work closely with other Departments, including the Treasury. We work very closely with the Treasury and also the Department for Energy Security and Net Zero, on some of the measures with energy performance certificates. He was right to raise that issue, and concerns have been raised with me.

As ever, I thank the hon. Member for Strangford. It is very important that we all work together across our United Kingdom, even though these issues are devolved, and that we learn lessons and make policy that affects everybody.

I thank my hon. Friend the Member for Totnes (Anthony Mangnall), who was right to highlight the considerable work going on across Government. I reassure him and any other colleagues with concerns about the Renters (Reform) Bill; we are working closely with him and others to ensure we shape the legislation, as we always do, by listening to different views. My hon. Friend the Member for North Norfolk (Duncan Baker) made a good point about district councils. He has spoken to me about that on many occasions, and we look forward to working with him to understand those issues, and how district councils as well as higher-tier authorities can reap the benefits of the rise in council tax for second homes. My hon. Friend the Member for Truro and Falmouth (Cherilyn Mackrory) gave a fantastic speech. She highlighted how acute the problem is in Cornwall, and how much it affects her constituents not only in St Agnes but elsewhere. I thank her in particular for championing what her local council, under Conservative control, is achieving.

The SNP spokesperson, the hon. and learned Member for Edinburgh South West, highlighted the fact that the planning system is an issue across the United Kingdom. She will know that there is close working at official level to understand the implications of policies and look at evidence. It is right that we do that. The Opposition spokesperson, the hon. Member for Greenwich and Woolwich, challenged me, but he said that he supports what we are doing on balance. I thank him for that, and, of course, we will continue to be scrutinised in these debates and elsewhere. I am grateful for the opportunity to set out what the Government are doing.

--- Later in debate ---

[Matthew Pennycook]

Will the Minister give way?

[Rachel Maclean]

I do not believe I have time to give way, because I must allow my hon. Friend the Member for Torbay time to wind up. Unless the Opposition spokesperson can do it in 20 seconds—that may work.

[Matthew Pennycook]

I take that as a challenge. The Minister mentioned affordable housing, which I did not mention. Is she concerned that the Government are failing on their derisory target for affordable homes in rural areas?

[Rachel Maclean]

We need much more time to debate that issue, but I reject the hon. Gentleman’s contention. I suggest that he looks to his own party’s record in office in Wales, as I have already said. I thank my hon. Friend the Member for Torbay for securing today’s debate.

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.

Future of Social Housing

Matthew Pennycook Excerpts

Wednesday 19th April 2023 Westminster Hall

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

It is a pleasure to serve under your chairmanship, Mr Paisley.

I start by warmly congratulating my hon. Friend the Member for Weaver Vale (Mike Amesbury) on securing this incredibly important debate and on the compelling remarks he made to open it. His personal commitment to tackling the housing crisis in all its manifestations is second to none. He made a passionate case today for doing what is necessary both to tackle the present chronic undersupply of genuinely affordable social homes and to drive up standards in those that already exist. I thank all the other hon. Members who have contributed this afternoon in an extremely powerful set of speeches, particularly those of Labour Members, who really brought home the human cost of the neglect in recent years.

A wide range of issues has been raised in the debate this afternoon, but the vast majority of them have related either to the pressing need to build more social homes or to the equally pressing need to ensure that our existing social housing stock is well managed and of good quality. I will seek to address each issue in turn, starting with supply.

It is beyond dispute that England’s social housing deficit is now immense. Over 1.2 million households are now on local authority waiting lists, and that number is almost certainly a significant underestimate of the number of families for whom social housing would be an appropriate tenure if it were available. The point was made by my hon. Friend the Member for Vauxhall (Florence Eshalomi) that because successive Governments have failed to build enough social homes, millions of families are trapped in overcrowded or unsuitable properties, an increasing number of low-income households have been forced into insecure, unaffordable and often substandard private rented housing, and the number of households in temporary accommodation has rocketed from 48,000 in 2010 to 99,000 in 2022.

The cost of this tenure shift has been borne not only by those trapped in inappropriate housing, who are often at risk of homelessness, but by the state in the form of a rapidly rising housing benefit bill, which now stands at a colossal £23.4 billion per year. That sum amounts to more than the total running costs of several Government Departments, yet when it comes to social housing supply, the record of successive Conservative-led Governments since 2010 has been nothing short of woeful. As my hon. Friend the Member for Weaver Vale mentioned, the Department’s own data makes it clear that just 7,528 social homes were built last year. At the same time, 21,638 were either sold or demolished. That is a net loss of 14,110 genuinely affordable homes when we know that we need to build around 90,000 a year if we are ever to meet housing need.

That meagre 2021-22 output figure is not an aberration. By means of slashed grant funding, the introduction of the so-called affordable rent tenure, increased right-to-buy discounts and numerous other policy interventions, Conservative-led Governments have actively engineered the decline of social housing over the past 13 years, presiding over an average net loss of 13,000 social homes in each and every one of them. For all that the present Secretary of State waxes lyrical about the need to build more social homes, the steps that the Government are actually taking—namely, slightly tilting the balance of affordable homes programme spending towards social rent and providing local authorities with some additional flexibilities around the use of right-to-buy receipts—are not only too little, too late but undermined by other measures that Ministers are committed to enacting; not least, as my hon. Friend mentioned, the introduction of a new infrastructure levy that will almost certainly deliver less affordable housing overall than is provided through the present developer contribution system. Labour is the only party seriously committed to a marked increase in social house building. We will set out plans ahead of the general election that will make clear the level of our ambition and how we intend to meet it.

Given the chronic shortage of social homes across England and the corresponding lack of choice available to tenants, it is critical that what social housing stock remains is of decent standard, yet we know that the lives of far too many social housing tenants are blighted by poor, unsafe and unhealthy conditions. The shared recognition across these benches of that fact and the consequential need for the Government to act—[Interruption.]

[Ian Paisley (in the Chair)]

Order. There is a vote in the other Chamber, and there will be at least two votes, possibly three. Hopefully, we will be back here at about a quarter past the hour to complete the debate.

--- Later in debate ---

[Ian Paisley (in the Chair)]

I thank colleagues for making their way back so promptly; that is very helpful. I call the Opposition spokesperson—you have six minutes, or thereabouts.

[Matthew Pennycook]

Thank you, Mr Paisley. As I was saying, the shared recognition that exists across these Benches of the fact that the lives of far too many social housing tenants are blighted by poor, unsafe and unhealthy conditions, and of the consequential need for the Government to act, enabled the Social Housing (Regulation) Bill to complete its Commons stages in short order.

However, when it comes to ensuring that standards in social housing improve markedly and rapidly, the Bill is not a panacea. The onus to drive reform is, of course, ultimately on the sector itself, and the steps being taken following the publication of the “Better Social Housing” review are a welcome sign that it may be doing just that. However, the Government are ultimately responsible for the state of social housing in England and, subsequent to the Bill’s receiving Royal Assent, the Government will still have a significant role to play in assisting social landlords to improve their stock and tackle the underlying causes of problems such as damp, mould and leaks.

The problem is that political choices made by successive Conservative-led Governments have piled significant financial pressure on to social landlords. As my hon. Friend the Member for Hammersmith (Andy Slaughter) argued earlier, the cumulative impact of having to build new, affordable homes despite swingeing grant funding reductions; the four-year 1% rent cut imposed between 2016 and 2020; the fact that the shortfall arising from this year’s 7% rent cut is unfunded; and the long-term challenges posed by decarbonisation and building safety in the absence of adequate Government support cannot be overstated.

Social landlords who wish to improve their existing stock face a monumental challenge. We need a Government who at least recognise that situation and are willing to explore what more is required from them, not least in funding and financing mechanisms to support social landlords to upgrade their stock, yet we see no signs that the present Government are giving the issue the attention it deserves. It is therefore likely to be yet another task that will fall to the next Labour Government.

The historical and ongoing failure to build enough social rented homes has seen growing numbers of families trapped in overcrowded, unsuitable, insecure or unaffordable properties. Those families suffer in terms of diminished health, wellbeing and life chances, and the state also pays in the form of an eye-watering and ever-rising housing benefit bill. Social housing is at the heart of the solution to the housing crisis, and the Labour party is committed to its renewal and rebirth through a substantial programme of social house building and further measures to drive up standards in our existing stock.

When it comes to social homes, “more” and “better” must be our watchwords. It is high time we had a Government who do not just pay lip service to the importance of social housing, but are wholeheartedly committed to providing decent, safe, secure and genuinely affordable homes for all who need them.

[Ian Paisley (in the Chair)]

I call the Minister—our third Rachel of the day.

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[Rachel Maclean]

When I have finished this point, I will. The hon. Member for Stockton North said very clearly that the last Labour Government did not build enough social homes, either to rent or to buy, and I agree with him. [Interruption.] I will let the hon. Member for Weaver Vale intervene on me, but I want to answer his point. He has set out that he thinks a Labour Government are the answer to this situation; I disagree. A Labour Government are not the answer—the last Labour Government did not build enough affordable homes, social homes or council homes. If we look at Labour-run Wales, we see that they have an appalling record of building social housing.

Two London MPs spoke in the debate to highlight problems in London. I would like to remind—

[Matthew Pennycook]

Will the Minister give way?

[Rachel Maclean]

When I have finished my remarks. I would like to remind the House that the Mayor of London is responsible for housing in London. He is a Labour Mayor of London and the problems there lie firmly at his door.

Many Members have also spoken about councils. I would like to point out my own local council’s record. Conservative-run Redditch Borough Council is delivering council housing. That is happening now that the Conservatives are in control of the borough. When Labour was in control of Redditch Borough Council, it delivered precisely zero.

[Mike Amesbury]

rose—

[Matthew Pennycook]

rose—

[Rachel Maclean]

I give way, first to the hon. Member for Weaver Vale, who first asked me to.

[Rachel Maclean]

I thank the hon. Member for his remarks. I listened carefully to the response of the hon. Member for Greenwich and Woolwich on the Front Bench. What I heard is our agreement about the need to build more social homes to rent or buy, and Government Members also set that out very clearly. What I did not hear—from any Opposition Member—was a clear answer on how they will do that, so we await that.

[Matthew Pennycook]

Will the Minister give way?

[Rachel Maclean]

No. With respect, the hon. Gentleman has had his time, and I need to get these points on the record.

I want to talk about what we are doing. To support continued delivery, in March this year we announced that local authorities will have access to a new concessionary Public Works Loan Board interest rate for council house building from June this year. Local authorities have a real part to play in that endeavour. We are giving them the flexibility to make locally led decisions that deliver the best deal for their communities.

The Levelling-up and Regeneration Bill will create a new infrastructure levy—many Members touched on that, so it is important that we set the record straight. The new infrastructure levy will capture more land value uplift. That will enable us to deliver even more affordable housing, which is badly needed.

Local authorities will continue to benefit from the £11.5 billion affordable homes programme, which we have discussed today, along with the scrapping of the housing revenue account borrowing cap. They will also benefit from greater flexibility, which someone mentioned from a sedentary position, in how they can use receipts from right-to-buy sales. I strongly urge councils to make use of those measures so that we can see more new homes built in the places where they are needed the most.

We briefly touched on social housing standards. The Secretary of State for Levelling Up, Housing and Communities could not have been clearer in his statements to the House when he said that every person in this country, no matter where they are from, what they do or how much they earn, deserves to live somewhere that is decent, safe and secure.

The tragedy of Awaab Ishak’s death made clear to us all the devastating consequences of inaction. The time for promises of improvements is well and truly over. Awaab’s law has been added to the Bill, with new requirements for landlords to address hazards such as damp and mould in social homes within a fixed period.

I want to finish by thanking all the Members who have contributed. We are committed to the abolition of section 21 eviction orders—

Oral Answers to Questions

Matthew Pennycook Excerpts

Monday 27th March 2023 Commons Chamber

[Mr Speaker]

I call the shadow Minister.

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

They will only ever deal with a fraction of the problem at best, but the developer remediation contract and the forthcoming responsible actors scheme are welcome. Yet, as things stand, all we know is that the scheme will initially focus on sufficiently profitable major housebuilders and large developers, and it may then expand over time to cover others. Blameless leaseholders trapped in unsafe buildings deserve far greater clarity now as to whether or not the contract and the scheme may eventually cover their building. Will the Government give them that certainty by committing today to publishing a full list of all developers that the Department believes are eligible and should therefore ultimately participate or face the consequences—yes or no?

[Lee Rowley]

I have the greatest respect for the hon. Gentleman, but the reality is that he cannot suggest that only a fraction of buildings are covered by the developer contract. Just in the past two weeks, it has been confirmed that more than 1,100 buildings will be fixed, with £2 billion of work covering 44 different developers. There will be more announcements in due course, but where individual leaseholders have concerns about moving those buildings forward, we are happy to hear about them, but extensive Government support schemes are already in place to allow remediation to occur without waiting for the conclusion of these developer discussions.