Roberta Blackman-Woods
Main Page: Roberta Blackman-Woods (Labour - City of Durham)Housing and Planning Bill (Eleventh sitting)
Roberta Blackman-Woods Excerpts
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
Mr Gray, it is good to have you in the Chair, so one should welcome you to it.
Before the break, I was about to voice concern that the Government were giving up on the provision of housing for people on low and middle incomes. That concern is based on evidence from Savills, which estimates that an extra 350,000 English households will be unable to access either subsidised or, indeed, market rent housing in the next five years, including many London families with an annual income of up to £60,000. Indeed, Centre for London research estimates that within the next two years people with occupations such as senior nurse and senior teacher will start to struggle to find anywhere affordable to live in London.
In my own constituency of Harrow, my local council tells me the minimum starting salary for a registered nurse is £21,692 and £25,879 for a newly qualified teacher. The reduced availability of affordable rented accommodation provided by housing associations and by councils will reduce such people’s chances of accessing housing via a waiting list or a homelessness route. According to Foxtons, the average market rent in Harrow is £235 a week for a studio, £295 for a one-bedroom flat and £372 for a two-bedroom home, so for a registered nurse starting their career, a studio at market rent in Harrow would cost approximately 56% of their gross—not net—salary, and a two-bedroom home would cost 89% of that salary, which would clearly be completely unaffordable. Reducing the supply of housing association accommodation risks further driving out of London many people who are crucial to our public services and other services on which our constituents rely.
That brings us back to the point about the implications for the national health service, the police and the fire service, as many more families say that they have to move out of London to afford to live. That is the motivation behind my support for amendment 151, tabled by my right hon. Friend the Member for Tooting (Sadiq Khan). Important as it is to help people to buy their own home, it is equally important and incumbent on the Government and the House not to give up on the provision of housing for those on low or middle incomes, and I fear that the Minister has.
I also worry about the impact on the taxpayer of the lack of a requirement to provide a like-for-like property in the same area. If there is a failure by housing associations to provide a like-for-like property in the same borough or the same region, there is a risk. Let us take the example of Westminster. Imagine that housing association properties in Westminster are sold off and there is no like-for-like provision by the housing associations. Westminster will still have its duties under homelessness legislation: it will have to provide temporary accommodation; indeed, on occasion, it will have to provide bed and breakfast accommodation. The risk is that lack of supply or reduced supply of temporary accommodation will drive up the cost for local council tax payers and put pressure on housing benefit and universal credit budgets. The TaxPayers Alliance, had it had the chance to comment, might have supported our amendment, in the clear interest of keeping homelessness costs and temporary accommodation costs low.
The amendment is also in the specific interest of outer London. Almost all housing experts predict that the incentives in the Bill for housing associations to provide like-for-like properties in central London will present great difficulty. They suggest that councils, in order to meet their temporary accommodation requirements and their duties under homelessness legislation, will push ever more people out to outer London and beyond, instead of seeking to provide accommodation in inner London, where people have well established networks and family relationships—a point alluded to by my hon. Friend the Member for Dulwich and West Norwood.
My last point is the concern about London losing out. There is a clear sense that the reason that Ministers have to date been hostile to the idea of a clear requirement for housing associations to provide like-for-like replacement in London and in each London borough is that they want to use the resources generated in London to fund the provision of further accommodation outside London. For that reason, too, amendment 151 makes sense.
I pray in aid London Councils, which makes clear in its representations to the Committee its members’ belief that the voluntary deal poses a genuine risk to the supply of affordable homes in London. They believe that boroughs’ housing waiting lists will rise and that there will be increased reliance on temporary accommodation. They point out that London already has three quarters of the country’s temporary accommodation, with more than 49,000 households in temporary accommodation, and they worry about the rising costs.
Dr Roberta Blackman-Woods (City of Durham) (Lab)
My hon. Friend makes a powerful case about housing need in London and our shared desire to address the matter. The amendment tabled by our right hon. Friend the Member for Tooting is important because we know that the proportion of London households living in social rented housing has fallen since 2001, yet London’s population has grown by 14% since 2002. That that has brought about a huge shortage of social housing for rent in London, which is why replacement within the tenure is so important.
Mr Thomas
My hon. Friend makes an important point. Indeed, the Government have exacerbated the problem by insisting, under their right-to-buy arrangements since 2012, that when a property is sold, it does not have to be a social rented property, on offer at approximately 50% of market rent; it can be a property that has an affordable rent, at approximately 80% of market rent. That makes it even difficult for those on low incomes who are trying to do the right thing by being in work, but who are unable to afford a property at 80% of market rent, of getting a property quickly.
It is worth considering another point my hon. Friend the Member for City of Durham made in her intervention: London’s population is continuing to rise. Specialists estimate that London’s population is growing at a rate of 100,000 people a year. Clearly that does not mean that 100,000 new homes are needed, but a significant increase in housing stock is needed, which gives us all the more reason to worry about the absence of a like-for-like requirement on housing associations in London. Without making amendment 151 for London and amendment 148 for other parts of the country, we risk increasing the cost to the taxpayer, exacerbating the affordability crisis in London, and making it even more difficult for those on low and middle incomes to find somewhere to live. Indeed, we risk London losing out at the expense of the rest of the country.
The Minister for Housing and Planning (Brandon Lewis)
Welcome back to the Committee, Mr Gray. I look forward to serving under your chairmanship for the rest of this week and potentially the rest of our consideration of the Bill.
Amendment 148 and amendment 151, which is for London, would require housing associations to adhere to strict rules when replacing property sold under the voluntary right to buy and, indeed, building those extra homes we all want, including rules on how much can be spent and the type, tenure and location of the properties. That strikes me as the worst kind of command and control, “Westminster knows best” approach.
I find it interesting that one of the authors of the amendment is someone who has described the Bill as the end of localism, yet here we have the most anti-localist amendment I have seen for some considerable time. It goes much further than the right to buy ever has in dictating what delivery bodies can do. The hon. Member for Harrow West may be happy to extend freedoms and flexibility to his friends on councils, but housing associations have proved themselves to be consistently far more adept at responding to the challenge of delivering new housing supply, and were largely responsible for exceeding the target of 160,000 new affordable homes under the previous Government.
Our approach is very different from the Opposition’s. We have ensured through the deal with the sector that decisions are made at the most appropriate level by professional organisations that we trust. Nationally, we have ensured that for every home sold under the deal, one extra new home will be built, thereby doubling housing supply. What type of home and where it should be are decisions that will and should be taken by housing associations in the light of local conditions and need, which are covered in local plans. That is what true localism means, and I hope the hon. Member for City of Durham will withdraw the amendment.
Dr Blackman-Woods
May I, too, say what a pleasure it is to serve under your chairmanship, Mr Gray?
Dr Blackman-Woods
I am an absolute optimist. Mr Gray.
Once again, I am disappointed by the Minister’s response. I am not sure how it is that Westminster can know best when forcing unwilling housing associations to subject their stock to the right to buy, but it is not okay for us to want to ensure—
Brandon Lewis
I emphasise, as I did this morning, that it is a voluntary agreement that the housing associations put to the Government. It is localism.
Dr Blackman-Woods
My understanding from what the Minister said this morning was that, whether or not housing associations had voted for the voluntary deal, they would all be subject to putting their stock up for right to buy. My question to the Minister is why it is not okay for us to want to ensure that enough affordable and, in particular, social rented homes exist for the most vulnerable in our communities following the exercise of right to buy. I am sorry that he did not engage with the Opposition’s genuine concern that without like-for-like, one-for-one replacement of the same tenure, we will lose greatly needed social rented stock. That is what commentators and housing associations are telling us. On that basis, I will divide the Committee on the amendment.
Dr Blackman-Woods
I beg to move amendment 149, in clause 56, page 24, line 13, at end insert—
‘(4) Grants must not be payable on properties bought and turned into buy to let dwellings within ten years’.
This amendment would prevent property sold under Right to Buy from being converted into buy to let dwellings for a period of ten years.
We have just dealt with a whole set of concerns expressed by housing associations and others on replacement. Housing associations and commentators have also raised other issues, and the amendment seeks to address some of the concerns about houses subject to the right to buy soon being turned into private rented properties.
It will be interesting to see what level of discretion housing associations might operate in the area, but it is worth hearing from the Minister again on whether he intends to put anything in guidance or regulation to suggest a period of time after a house has been sold under the right to buy before it can be bought up to be let out as part of the private rented stock.
The issue was considered to a degree by the Select Committee on Communities and Local Government, which is undertaking an inquiry into the right to buy. I have brought with me a copy of its review of evidence report so that I might convince Government Members that there is such a report and that it was commissioned by the Select Committee. Many of the issues that we have sought to address in amendments are covered in the evidence base. Given that, it is important that we test the Minister on what he intends to do about the grave questions people have asked about the right to buy and how it might operate in practice.
The Communities and Local Government Committee review of evidence report commented:
“A considerable proportion of RTB stock has now been ‘recycled’ into the private rented sector, especially in recent years. The pace of growth of private renting in the RTB resale sector may affect the demographics, dynamics and stability of some neighbourhoods.”
It also noted that
“resale of RTB property into private renting results in higher Housing Benefit expenditure”,
and that it was calculated
“that the higher cost of accommodation in the private rented sector”
has a direct impact on costs to local authorities, leading to
“an additional cost of £3.2 million per annum compared to the equivalent in social renting”
had the stock remained in the social rented sector. It is not an insignificant issue. Research by Inside Housing in 2015 estimated that nearly 40% of ex-council leasehold properties sold under the right to buy were now in the private rented sector. Average weekly awards of housing benefit in the private rented sector in 2015 were over £20 higher than in the social rented sector, which is more than £1,000 extra for each claim.
Mr Stewart Jackson (Peterborough) (Con)
The hon. Lady will obviously concede that the Chancellor took fiscal measures to disincentivise buy to let in the autumn statement, and she obviously supports owner occupation. To press her on the amendment, given that it is about the power of Secretary of State to make an in-year grant under clause 56 to a housing association, what are the mechanics of clawing back over that 10-year period? Would it not be overly bureaucratic given that she says that housing associations do not currently have the capacity to collect data on their own tenants?
Dr Blackman-Woods
That is a really helpful intervention. One would hope that the threat of grant clawback when a property is converted to buy to let or private renting would be enough of a disincentive to prevent people from doing so.
I appreciate that fiscal measures were taken in the autumn statement, but the amendment seeks to tease out from the Minister, in the absence of any information about the operation of the scheme, whether he intends to give any guidance to housing associations that would help them put together a scheme to ensure not only that people are moved into home ownership, which, as I keep stressing, we all want, but that there would be a time delay before the property could be transferred into the private rented sector. We want to restrict that, not because we have anything against private renting, but because it tends to lead to a higher housing benefit bill and can lead to a clustering of private rented sector properties in a given area, which can have ongoing management costs.
As I was saying, there can be an effect on the demographics, dynamics and stability of some neighbourhoods, which is not necessarily helpful. I am sure that anyone with a university seat such as mine will know exactly what that means in practice. The centre of Durham used to have two absolutely wonderful council housing estates that were built to high standards in the post-war era. They provided much-needed social rented housing in the city centre, which is normally quite expensive. Under right to buy, however, that good-quality housing was bought up over the years by student landlords and properties have been extended. So, instead of having social rented housing available in the city centre, we have huge clusterings of student housing, which takes a fair degree of management by the university, the students themselves and the local authority. We have to make it clear that there should be a tenure mix in an area, if at all possible, which is why we are very keen to see the Government engage with this issue at some level.
Mr Jackson
The hon. Lady is most generous in giving way and I concur that Durham is a beautiful city, having spent my birthday there this year, in the chaplain’s quarters in the castle—[Interruption.] I am not a Tory toff, as the hon. Member for Harrow West might imagine.
To deal with the issues that the hon. Lady has raised, her own Government brought in the selective licensing regime under the Housing Act 2004 which deals specifically with the issue that she raised about social and demographic change, and the deterioration of residential neighbourhoods. We do not need any more legislation primarily looking at that particular issue.
Dr Blackman-Woods
I only wish it was that easy to get selective licensing in place; alas, it is not that easy. Quite a high bar has been set. If it worked effectively, that might say something about the dynamics that can occur with that amount of private rented sector housing, particularly for students in an area. However, it does not deal with the wider points I am making about the impact that conversions to the private rented sector have on the housing benefit bill. Again, that is a matter on which we want to press the Minister.
The amendment is particularly important for London and other high-value housing shortage areas, because enabling the right to buy to convert quickly to a private rented sector tenancy simply means that it becomes unaffordable for many people. The statutory right to buy requires the repayment of the discount if the property is disposed of, with some exemptions, within five years of purchase. However, there are no restrictions on tenants who exercise the right to buy and subsequently let the property to private tenants. We think that that is an omission that should be rectified. Previous criticisms of the policy noted that it is particularly important that measures restricting the practice of sub-letting right-to-buy properties, except perhaps in cases where the purchaser has died, should be included in the Bill.
As I said earlier, it is important that we address this issue, because—unfortunately—37.6% of ex-council flats are now in the buy-to-let and private rented sector. The Chartered Institute of Public Finance and Accountancy, the public sector accountants, have highlighted the negative impact of funding the right to buy, which simply means a property ends up as a private rent with further strains on the public purse, not only from the discount—obviously—but from higher housing benefit payments.
It would not appear to be a particularly economically competent measure to put a great deal of public subsidy into the right to buy itself, then have to give even further public subsidy because those houses have quickly been converted into buy-to-let properties or private rented properties. London boroughs are able to provide evidence that illustrates this point. In Barking and Dagenham, 41% of properties purchased under right to buy are now privately let. Average eligible private rented sector rents for housing benefit increased by 45% in real terms between 2000-01 and 2010-11, which is a truly extraordinary figure. An estimated £2.9 billion, or 33%, of private sector housing benefit expenditure can be attributed directly to the conversion of properties bought through right to buy to the private rented sector.
Brandon Lewis
We are alive to the concerns about the fact that more and more homes are being bought as buy to lets, which is why, as my hon. Friend the Member for Peterborough outlined, in the spending review the Chancellor introduced a new rate of stamp duty that is 3% higher for the purchase of buy to lets. That builds on the fiscal changes made in the Budget to mortgage rate relief and sends a clear message about the Government’s direction of travel. We are doing work on a wider scale to ensure we get the balance right between people who want to own their own home and those who are involved in buy to lets.
Let me be clear about our objectives. We want to ensure that private investors, especially those who are not resident in this country, do not distort the market or squeeze out families and prevent them from buying and owning a home of their own. We are not, nor should we be, hindering the life chances and social mobility of individuals who want to use the opportunity of owning a home to move on and up. It would be wholly unfair to restrict housing association tenants who want to take the opportunity to buy a home of their own.
Tenants who bought their home under the voluntary right-to-buy scheme used the freedom available to all other home owners, including those who used the existing right-to-buy scheme under previous Governments, both Labour and Conservative. That scheme contains no restriction on letting, so it would be unfair to impose one on housing association tenants. A restriction on reselling or letting their home would limit their ability to move for work or family reasons. We do not think that is reasonable or necessary, given that the agreement includes a commitment to deliver extra homes though new supply. I hope that the hon. Lady will withdraw her amendment.
Dr Blackman-Woods
I have heard what the Minister has to say. The Opposition are aware that the autumn statement contained such changes. Why is it unfair to people who purchase under right to buy to restrict who they can sell their property to for a relatively short period, but it is not unfair to insist that housing remains for people who desperately need it at an affordable rent? We know that moving such properties into the private rented sector at market rents will put them out of the reach of many people if additional money does not come out of the public purse. I would like some time to reflect on the Minister’s response. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 56 ordered to stand part of the Bill.
Clause 57
Grants by Greater London Authority
Question proposed, That the clause stand part of the Bill.
Dr Blackman-Woods
I beg to move amendment 152, in clause 59, page 25, line 8, at end insert—
“(3) Portability of the discount must only apply where practicable in terms of availability of suitable properties for disposal and vacancy timescales.”
This amendment would ensure that portability of the discount must be practicable and able to be delivered in practice.
The Chair
With this it will be convenient to discuss amendment 153, in clause 59, page 25, line 8, at end insert—
“( ) Property offered under portability must be of—
(a) similar size,
(b) similar or improved quality,
(c) in an area agreed by the tenant, and
(d) subject to an appeal mechanism.”
This amendment would protect the tenant against an unreasonable offer of portability.
Dr Blackman-Woods
The amendment is designed to ensure that the portability provisions that go alongside the so-called voluntary agreement with housing associations have been properly thought through, so that offers made can be delivered by the housing associations within a reasonable timescale.
The issue of portability is very much on the minds of housing associations, as evidenced by their contributions to the Communities and Local Government Committee’s inquiry into right to buy. That is clear, but I will take the Committee through some of those examples. As requested, housing associations will apply portability—for example, Ian McDermott of Sanctuary Group said:
“we have stock in national parks, for example, which was built with covenants around selling. Those will not be for sale, but we will be offering portable discounts to those residents.”
Similarly, David Montague from L&Q said:
“For example, all of our stock in Richmond was acquired on the legal understanding that it would never be sold…That is just one example of many.”
He went on to say that L&Q will therefore not be able to offer its tenants in Richmond the opportunity to buy but will offer an
“alternative through a portable discount.”
Underpinning those statements is a supposition that it will be possible to offer portable discounts, but the lack of information before us about portability means that we must have this probing amendment to test how the Government see portability working in practice.
The PlaceShapers group of housing associations told us that the expectation that tenants living in exempted homes will be able to take their discount elsewhere—that it will be portable—might prove difficult to implement in places where the supply of alternative options is curtailed and constrained. If a housing association’s stock is very limited because a lot of its stock is exempt from the right-to-buy provisions, it might be difficult for that housing association to offer portability. That prompts a number of questions for the Minister. Will there be exemptions from the portability policy? Will housing associations always have to offer full portability? How many offers of portability will housing associations have to make, and in what circumstances? What is the timescale? Are there any restrictions that will enable the scheme to be more workable for housing associations with limited stock? For example, will the scheme expire after a certain period? Is there a different test of the reasonableness of an offer if a housing association has very limited stock?
Mr Thomas
My hon. Friend tempts me to take the Committee back to the question of the publication or not of the operational document that the National Housing Federation said it and the Government have committed to publish, setting out the details of how things such as, presumably, portable discounts will operate. Will she press the Minister to give a timetable for the publication of that document? Will it be published before Report?
Dr Blackman-Woods
As always, my hon. Friend makes an extremely helpful intervention. We could have curtailed our discussion of this clause if more information about how right to buy will work in practice was in the public domain. We appreciate that the Government have set up pilots, but virtually no information is available about how those pilots will operate. It is important for our scrutiny of the Bill that we seek to tease from the Minister the circumstances in which portability might not be able to be applied because of the nature of a housing association and its stock. We have no idea whether the Government are going to publish regulations with some of that detail or whether they will give guidance to help housing associations to make the pilots work.
We also have no idea what is going to happen after the pilots. Will the lessons learned be applied to others in the sector, or will the scheme be rolled out to everybody in the meantime? The lack of information is breathtaking, given the seriousness of what the Bill aims to do. Following the request made so eloquently by my hon. Friend, will the Minister inform the Committee, in writing if necessary, when the operational guide and more detail about the scheme will be available?
Mr Thomas
The Minister has not yet instructed civil servants to make that operational document available. Surely there is some indication from the five housing association pilots launched last week about how portable discounts will work. He could therefore give us some information about how portability will work in the context of those pilots.
Dr Blackman-Woods
My hon. Friend makes an excellent point. Given that those pilots were operational from midnight last Wednesday, one would assume that some consideration would be given to having an answer for tenants who got on the phone immediately—the Minister gave an example of one earlier—to register for the right to buy. One can only speculate what answer they received in the absence of any information—certainly any information in the public domain—about how the scheme should operate. There appear to be a series of questions about how the scheme will work from the housing association’s point of view. That is the purpose of amendment 152.
Amendment 153 seeks more detail from the Minister about how the scheme will work for tenants who seek to register for the right to buy and, ultimately, to purchase their housing association home. The purpose of the amendment is to see whether the Government intend to put down any parameters about the nature of the portability offer that should be made and how reasonable that might be. Will the Minister seek to put safeguards for tenants in guidance to enable them to take up the portability offer?
Paragraph (a) of the amendment suggests that a property offered under portability should be of a “similar size”. We want to prevent, for example, a family who live in a three-bedroom house that is not covered by the right to buy from being offered a portable discount on a property that is much smaller, such as a bungalow. Unless the tenants want a property of a different size, it is important that they should not be forced into a much smaller and possibly unsuitable property simply so that they can take up the portability offer. Does the Minister intend for regulations to set out the reasonableness criteria for such an offer made by housing associations?
Paragraph (b) seeks to safeguard the tenant from being offered a property that is of poorer quality. New build housing could, for example, be exempted from the right to buy, so a portability offer could be for older stock in poorer condition. Similarly, it is possible that, under discretion, housing associations would restrict the sale of refurbished property. Someone living in a refurbished property would not be able to buy it but they would be offered a property elsewhere, through the portable discount, that has not been refurbished. This is an issue that I would like the Minister to comment on. We think similar quality for tenants is important.
The Minister is looking at his watch but, as I said earlier, we could have curtailed discussion massively on this section of the Bill if the information that we are seeking was in the public domain or if we knew when it was likely to be in the public domain. If it was going to be in the public domain before we finished deliberations in Committee, we could have come back to it at a later stage. However, because we are lacking so much information, it is important in terms of our scrutiny role that we seek at least to try to have more information in the public domain.
Paragraph (c) seeks to ensure that the property with the portable discount that is offered to the tenant is either in the same area or in an area that is agreed by the tenant. This issue was raised by the Select Committee. There was a specific question asked about tenants who live in national parks, because they are quite extensive in some areas and there was a real concerned expressed, I think by the Chair of the Select Committee, that it might not be possible to offer portability in those circumstances, or not in the same area. It is important to us that, if there is going to be portability and it is going to involve another area, there has to be agreement with the tenant.
Lastly, paragraph (d) of the amendment seeks to tease out from the Minister exactly how an appeal mechanism would work. We know—we already have information from the National Housing Federation—that, if the tenant were unhappy with the alternative offered, for example because it represented a worse housing option than the one in which they lived, or it was in a location that presented difficulties in terms of employment, schooling and other commitments, they would be allowed to appeal to the regulator to arbitrate. Where the regulator considered that the association had acted fairly, it would suggest that the tenant accept the offer or, subject to available funding, offer the tenant a portable discount to purchase a property on the open market. Where the regulator considered that the association had not offered a reasonable alternative, the association would agree to offer another alternative.
I thought that that was quite interesting. Again, it begs a number of questions. Are we absolutely certain that the regulator would be independent? Is there a limit to the number of times that the tenant can go back to the regulator? If a tenant is offered a property that they think is unreasonable, they can turn it down. The regulator might agree that it is unreasonable. The housing association must then offer another property, but what if the tenant thinks that that is also unreasonable, perhaps for a different set of reasons? Can the tenant go back again and ask that it is looked at by the regulator? It seems to me that that is quite a cumbersome way to deal with just one transaction. Is there a limit on the number of times that someone can go to the regulator or a timescale that should be applied? Indeed, is there a timescale for wrapping up an offer of portability for a particular tenant? At the moment, as I have said, we simply have no real information about the appeals process, how independent it is or how fair it will ultimately be to the tenant, and whether the scheme will be workable. I look forward to hearing the Minister’s answers to our specific questions on how portability will operate.
Mr Thomas
I rise to support the amendment in my hon. Friend’s name. In doing so, I am struck by an example in Wealdstone in my constituency, where one particular housing association, A2Dominion, is engaged with tenants and leaseholders in what seems to be a never-ending discussion about a series of construction problems with the property. It has been going on since 2008, and the problems still do not seem to have been sorted out. There are extensive leaks, a whole series of flats have been affected and there is as yet no sense when my constituents in Bannister House, an A2Dominion property, will have their problems sorted out.
In the context of the amendment, the last thing that I would want is for other tenants, under the portability arrangements, to be offered a poor property such as those in Bannister House, with a history of maintenance problems. My hon. Friend’s amendment seems to be a sensible pro-tenant safety measure on which it is worth pushing the Minister. I raised a couple of questions during debate on clause 57 stand part, one of which related to portability. The Minister resorted to the classic tactic of Ministers who do not know the answer by referring to some document on a website.
Dr Blackman-Woods
As I said earlier, these are largely probing amendments seeking to elicit more information from the Minister about how the portability mechanism might work in practice. To my knowledge, we did not accuse housing associations of failing to deliver on the voluntary agreement or failing to have a regulator in place. We simply sought more information.
If I could drag us all back to reality for a moment, housing associations did not wake up one morning on 23 September or thereabouts and think, “Gosh, we must go and have a voluntary agreement with the Government on the right to buy. Let’s see if we can catch them just before the Conservative party conference and see if we can agree something.” It was within a context of the Government saying, “Come up with a voluntary deal, housing associations, or we will put something on statute.”
Brandon Lewis
I appreciate we are some way off the scope of the Bill, Mr Gray, but could I respond to a very direct point?
The Chair
Order. I would much rather that you did not go too far down that particular track. We are reserving our comments for the amendments we are considering. Dr Blackman-Woods.
Dr Blackman-Woods
Yes, I will seek to do that, Mr Gray. I was just trying to clarify what “voluntary” meant.
As I said, these are largely probing amendments and they have generated quite a lot of heat, although I am not sure that we have much more light on how portability will operate in practice. Perhaps the Minister would reflect on that in the coming weeks and we will get some more information from housing associations. On that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Dr Blackman-Woods
I beg to move amendment 154, in clause 59, page 25, line 8, at end insert—
‘( ) The discount should remain in perpetuity.”
This amendment would ensure that homes sold under the Right to Buy remain as discounted housing in perpetuity.
I might be able to anticipate what the Minister will say about the amendment, given the extensive discussion we had on a similar matter regarding starter homes. Nevertheless, it is important that the Opposition seek to get more information from the Minister about why properties sold under right to buy can attract a discount for purchase, and why it is not possible for that purchase to remain in perpetuity, so the number of homes lost to home ownership under the right to buy could be replaced in a very easy way: as somebody gets a discount, buys the home, sells it and moves on to another property that they might buy on the open market, the property they are leaving would attract a discount again.
Millions of homes have been lost in the social rented sector through right to buy, and the amendment would ensure their ongoing availability. It also means that the discount on a right to buy property would be a cheaper way to ensure that homes were available for low-cost home ownership, and probably a much cheaper way to fund the replacement than any of the other measures that we have considered. However, this is a straightforward amendment asking why we do not consider how we might provide a discount in perpetuity. I would be interested to hear from the Minister why he thinks it is not a good idea.
Brandon Lewis
I appreciate the hon. Lady’s opening remarks and her thoughts on what we might say, but I must respond to the amendment as written. Interestingly, it highlights and reconfirms the fact that the Opposition are keen to ensure that housing associations do not receive full market value for their properties; they are seeking to remove that possibility from the individual tenant. The other option is that they want the Government to pay compensation over and over again every time the property is sold. I might not be overly surprised that they have a cavalier attitude to public money, but I doubt that that is genuinely what they intend; at least, I hope it is not.
If the intention behind the clause is to protect stock, I say once again that stock will be built up, as extra homes will be built as a result of the measures. The amendment as drafted makes no sense. It would be either deeply unfair or deeply profligate, depending which way it is read. I hope that the hon. Lady will withdraw it.
Dr Blackman-Woods
If the Minister is absolutely certain in his assertions about the waste of public money, perhaps we could do a cost-benefit analysis of bringing houses back through the route in the amendment rather than completely replacing them and rebuilding elsewhere. Again, this is a probing amendment. It would help all of us in our deliberations on these clauses if we had had more information about the extension of right to buy to housing associations and how it might work in practice so that replacement continues.
I hear what the Minister says, but so far I have not seen any evidence to back up the points that he is making. I do not want to press the amendment to a vote at this point, but it would be extremely helpful to have the information to back up the points that he has made in his response. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Dr Blackman-Woods
I beg to move amendment 155, in clause 59, page 25, line 8, at end insert—
“( ) A dwelling must not be sold under the Right to Buy without the Housing Association having the ability to—
(a) verify the source of funding for purchase,
(b) establish who is occupying the property,
(c) check that the person/s seeking to purchase the property under Right to Buy has no interest in another property,
(d) have sufficient time to carry out checks for fraudulent activity, and
(e) be able to prepare reports on (a) – (d) for the Housing Association Board of Trustees to consider.”
This amendment would ensure that housing associations are able to carry out proper checks before proceeding with the Right to Buy offer.
The amendment seeks to argue that a dwelling must not be sold under the right to buy unless the housing association has the ability to do a list of things. I will talk for a moment or two about why we think that amendment 155 is extremely important. I emphasise at the outset that it is based on a range of questions that have been asked by the housing associations, which have presumably signed up to the voluntary agreement. Given that a lot of people out there are seeking to operate the right-to-buy scheme, I hope that we can get a detailed response from the Minister to the points made in the amendment.
Several housing associations suggest that they would like provisions under the right to buy, as listed in the amendment, to help them ensure that properties are not bought and resold as a means of laundering money. It is a serious concern of theirs. They also want to ensure that measures are implemented to help them assess and tackle fraud.
PlaceShapers is also concerned to ensure that it fulfils its responsibilities to counter fraud and money laundering. PlaceShapers requests that the process of demonstrating eligibility for right to buy requires an obligation to evidence provide the source of money to purchase. Mandatory fraud checks should be part of the application process and sufficient time should be allowed for completion of investigations prior to an application being accepted.
Given how quickly the Government have moved to the pilots, one would assume that one of the things the pilots will do—presumably this is not already in place—is establish arrangements to enable them to check thoroughly who is applying for the right to buy and whether they are a bona fide tenant.
Stephen Hammond (Wimbledon) (Con)
I understand the hon. Lady’s point, but surely almost all she is asking for—or the housing associations are asking for—would be required for a mortgage, if that person was going to buy. They are tenants of the property, so most of this information is already there. On the particular point about money laundering, under the stringent new rules about getting mortgages, that fear would not be present.
Dr Blackman-Woods
The hon. Gentleman makes an interesting point. However, PlaceShapers and other housing associations say that not all requests for a right to buy are accompanied by a mortgage application. They want to ensure that the source of money, if not through a mortgage, is from a bona fide source. That is a very real concern. We want to hear how the Minister thinks the right-to-buy scheme will address this particular set of concerns.
Kevin Hollinrake (Thirsk and Malton) (Con)
The hon. Lady will be aware that the conveyancing solicitor also has a responsibility to check the identity of the client and the source of funds, to prevent money laundering offences from taking place.
Dr Blackman-Woods
I simply reiterate my point that housing associations want to ensure that they can carry out due diligence and are seeking, as are we, some guidance from the Minister about what might be appropriate. In passing, I should say that the amendment is largely probing to test whether the Government have thought about how the scheme will work in practice, and whether the concerns of the housing associations that will have to operate it are being taken on board.
Mr Jackson
It is incumbent on the hon. Lady to table an amendment that makes sense. She cannot simply say that it is a probing amendment, because she will have heard at the evidence session that virtually all the housing associations said that they did not have the organisational capacity to collect robust data on their own tenants’ financial circumstances. Yet she is now asking us to believe that they can put time, effort and resources aside to become, effectively, a Financial Conduct Authority for their own tenants.
Dr Blackman-Woods
I am not sure why the hon. Gentleman does not think the amendment makes sense. It says:
“A dwelling must not be sold under the Right to Buy without the Housing Association having the ability to—
(a) verify the source of funding for purchase,
(b) establish who is occupying the property,
(c) check that the person/s seeking to purchase the property under Right to Buy has no interest in another property,
(d) have sufficient time to carry out checks for fraudulent activity, and
(e) be able to prepare reports on (a) – (d) for the Housing Association Board of Trustees to consider.”
I am not sure what the hon. Gentleman’s problem is. The amendment makes perfect sense to me. The hon. Gentleman might disagree with it, but that is a different issue from the amendment not making sense.
In addition to the concerns in the amendment, housing associations also wonder whether eligibility for right-to-buy discounts should exclude those tenants who are in arrears with their rent and those who receive housing benefit. Personally, I am not sure about that, but the housing associations have raised those issues.
In relation to tenants with an assured shorthold tenancy, the housing associations want to be sure that family members who wish to take part in right to buy have been occupying the property as their only and principal home for the qualifying period and that no applicant has an interest in another property. Those are sensible measures because of the discounts that apply under right to buy. As the discounts are now substantial, it is important that we encourage housing associations to account properly for how money is spent and that due diligence is allowed to happen. That seems sensible.
Mr Jackson
There is a modern trend called “virtue signalling,” and we have a version of it here. This is either an amendment that should be taken seriously and could be added to the Bill, or it is not. It is not a probing amendment so much as a wrecking amendment that is virtue signalling to our friends at the other end of the corridor—the unelected panjandrums in the House of Lords—who will be looking at this Committee’s decisions and debates.
Dr Blackman-Woods
If this is a wrecking amendment, does the hon. Gentleman accept that it is a wrecking amendment that has come from the housing associations themselves? If they have genuinely signed up to a voluntary agreement, one can only ponder why they would want to wreck this legislation.
Mr Jackson
It is apposite at yuletide to say that turkeys do not vote for Christmas. Anything that puts a burden on the housing associations would not be in the best interests of their tenants. Taking issue with the hon. Lady is like wandering down memory lane. Twenty-five years ago, when I had the honour to serve as a London borough councillor, the Labour party was going through a hard-left spasm, and it was then finding it difficult to contain its antagonism towards the first iteration of right to buy. The Labour party had to pay lip service to it, but it was all about putting bureaucratic barriers in the way of tenants exercising their proper, due right to buy. Although the Labour party pays lip service to the desire for more people to own their own homes—again, I cite the figure that 86% of people say that they want to own their own home and support right to buy—I get the feeling that somehow it has not caught up with that trend.
I say that because the hon. Lady knows that the housing associations specifically made it very clear at the evidence session that we attended a week or so ago that, in respect of pay to stay, they did not have this capacity to check. It seems—bizarre as it may appear—that housing associations do not routinely check the financial bona fides of their own tenants: their incomes, their expenditure, and the basis on which they were being housed by that private entity, for the time being, or by that social entity in the form of a housing association. It seems to me that the hon. Lady has disregarded that evidence by tabling an amendment that is onerous and bureaucratic, and would have a direct cost on front-line services in terms of the provision of social housing and specialist housing.
Given the very sensible points made by my hon. Friends the Members for Thirsk and Malton and for Wimbledon, the amendment is superfluous simply because it disregards the fact that there are already regulatory and statutory obligations and duties on several bodies to ensure that money laundering does not take place. The checks and balances that the hon. Member for City of Durham thinks that we should put into legislation by means of this amendment are simply not needed, and would put an extra bureaucratic burden on housing associations. Indeed, this amendment is not good enough and, in my humble opinion, it is a wrecking amendment. Even though the hon. Lady does not suggest it, I decry the fact that housing associations, which said that they are too busy to check their own tenants’ financial bona fides for pay to stay, would still be expected under the amendment—indeed, they suggested it through the National Housing Federation—to put in place an onerous and difficult bureaucratic regime.
Brandon Lewis
The voluntary right-to-buy deal sets out the work done jointly by the Government and the sector to develop an efficient implementation process. This process would include measures that exist in the current right-to-buy scheme, such as eligibility tests and measures to limit fraudulent purchases—not the least among all the points raised by my hon. Friends earlier.
In the hon. Lady’s closing remarks, she made what was almost an aside about checking whether extending right to buy is—I think I quote her correctly—a “waste of money”. I say to her that perhaps she should meet people such as Wendy, whom I met in Liverpool on Friday, and others who have been able to take advantage of right to buy over the past few decades and support the reinvigorated scheme. I am getting messages from people who look forward to being able to benefit from the extended right-to-buy scheme. They will tell the hon. Lady that home ownership is not by any means a waste of money, nor is the fact that the Government will make sure that housing associations receive the full market value to use to deliver new homes.
Dr Blackman-Woods
My point was not that the right to buy and discounts are a waste of money but that, if it went to somebody who was money laundering or was, in some other way, not fit to get the right-to-buy discount, that would be a waste of money.
Brandon Lewis
All these checks and balances will be developed as part of the detailed design of the scheme currently under way and will indeed be informed by the pilot schemes announced by the Chancellor in the spending review. It is not necessary or appropriate to include them in the Bill. The clauses in the Bill are those that are necessary to make the deal work, they are not needed to duplicate the deal. I hope that the hon. Lady will withdraw the amendment.
Dr Blackman-Woods
I said that this was largely a probing amendment to see whether there was support from the Minister for giving guidance to housing associations on the sorts of eligibility tests that they might wish to carry out. It is interesting how Government Members have sought to categorise this as just further regulation when what we are really seeking to do on behalf of housing associations is ensure that they can carry out necessary checks to make sure that money is being used widely. At the risk of boring myself, I feel I have to reiterate, yet again, that the Opposition are not against the right to buy as a principle, we are simply deeply concerned and opposed to the way that this particular scheme is being rolled out with so little information in the public domain. As the amendment was largely probing, I beg to ask leave to withdraw it.
Amendment, by leave, withdrawn.
Clause 59, as amended, ordered to stand part of the Bill.
Clauses 60 and 61 ordered to stand part of the Bill.
Clause 62
Payments to Secretary of State
Mr Thomas
I beg to move amendment 186, in clause 62, page 26, line 7, at end insert—
“except in respect of a local housing authority within Greater London.
(1A) In respect of a local housing authority within Greater London the Mayor of London after consultation with the London Assembly may make a determination requiring the authority to make a payment to the Mayor in respect of a financial year.”
This clause would devolve to the Mayor of London after consultation with the Assembly, any requirements by housing authorities in London to make payments relating to the sale of high value Council housing.
Dr Blackman-Woods
I beg to move amendment 157, in clause 62, page 26, line 11, at end insert—
“(2A) The total payment required from all affected local authorities in any financial year shall not exceed the total grant paid in that year to private registered providers in respect of right to buy discounts.”
This amendment would avoid powers being used as a general means of taxing councils and tenants for the benefit of the Exchequer.
The Chair
With this it will be convenient to discuss amendment 158, in clause 62, page 26, line 11, at end insert—
“(2B) The costs and deductions referred to in section 62(2)(b) must include an estimate of the cost of replacing each high value dwelling sold with a dwelling with the same number of bedrooms in the same local authority area.”
This amendment would allow for one-for-one local replacement.
Dr Blackman-Woods
Labour Members think that clauses 62 to 72 contain some of the worst aspects of the Bill. We are certainly interested to hear from the Minister whether he thinks it is localist to insist that local authorities sell off their high-value council housing in order to pay for the right-to-buy scheme, which, as a number of Committee members will know, is seen out in the real world largely as the forced sale of council housing. We seek in this amendment and others to require the Government to ensure that no more demands than absolutely necessary are placed on local authorities to fund the right to buy.
We have many concerns about how such homes will be replaced, and about how the Government will estimate the income that they will require local authorities to pay. I wondered last year, when the Government produced a consultation paper on transparency in social housing assets value, what they had in mind. It seemed not a bad thing on the face of it to have some information about the value of assets in the social housing sector.
However, when the consultation paper was issued and when the Government published their response in November 2014, it was not immediately apparent what they had in mind, because a number of local authorities that responded said, “Yes, we think it’s a fairly good idea that we get some information about the value of our assets. We already do this partly,” or “We already do this sometimes, internally; why do the Government want us to do this so immediately—by April 2015—without giving us adequate time to put a proper valuation system in place? Indeed, why is it restricted to authorities that have a housing revenue account?” I could go on. As I said, people were not necessarily against having some say that would put a valuation on council stock, but it was not apparent to a lot of people who were responding to the consultation why that information would be needed in the way that it was requested by the Government or in the particular timeframe.
I raised that at the beginning because it means that, somewhere along the line, for one reason or another, the Government thought about the value of local authority stock and, perhaps, what it could be used for. It is interesting that a number of the comments that came forward eventually into the Conservative party manifesto said that, under the consultation—and, indeed, more widely—it was seeking to question the efficiency of the use of council stock. This high-value housing was being used to support and house poor families, which perhaps was not an efficient use of council housing stock. I am paraphrasing, and trying to describe the intention to the Committee. If Government Members want to correct me on that supposition, I am happy to take interventions, but outside that supposition I am not sure what is meant by “efficiency”.
What came forward from the Conservative party manifesto was that there would be a question about whether using high-value housing stock with a social rent attached to it to house people who were desperately in need of affordable social housing was the most efficient use. The Conservative view was that the housing could be sold off to fund a right to buy; that, regardless of whether it was going to be sold or not, a levy would then be attached to it; that local authorities, regardless of whether they were able, or wished, to sell the property and remove it from the housing stock, would have to do so; and that the estimate of income would be applied. That is one of the things we find most difficult about the clause. That is why we have tabled amendments that would limit the circumstances when it could be applied but would ensure that, in addition to the cost of selling the stock, there would be an indication that the stock would be replaced in a similar way and in a similar area, so as not to remove from the stock of housing available to local authorities much needed social rented property, which is vital to house the most vulnerable in our communities.
We know that, under clause 62, the Secretary of State may make a determination that requires local authorities to make payment to the Exchequer based on an estimate of how much high-value housing the local authority expects to become vacant in the upcoming financial year. That is what we are seeking to address with our amendment. We already know that the Minister has no definite information about the number of high-value housing units that will become vacant in the coming years. We know that because we do not know how much high-value housing there is. It is difficult to determine how much high-value housing will become vacant if we do not know how much high-value housing there is in the first place. We do not know a great deal about either of those things.
We do think that the numbers of vacant properties that come forward will be much more limited than the Minister has perhaps estimated. That means that payments to the Secretary of State may in fact be higher than the total grant paid in that year to private registered providers in respect of right-to-buy discounts.
Matthew Pennycook (Greenwich and Woolwich) (Lab)
I asked my local authority for an estimate of how many expensive council homes would become vacant each year, and the estimate that it gave me was 19. That puts the matter in context. If they are not available in a borough such as mine in inner London, in parts of which the land and house prices are rising very rapidly, it will be a case of being forced to fall back on a more direct levy on local authorities.
Dr Blackman-Woods
My hon. Friend makes a vital point and helps to emphasise what Opposition Members are saying, which is that we have grave concerns about how the estimate will work in practice. It could bear no relation to reality whatever. I would have thought that it was very important for the Minister to have a much clearer idea of the number of homes that will become vacant and the amount of money that will be attached to them. In fact, we seem to be hearing—my hon. Friend has just made this point very well—that the numbers of vacant properties coming forward that are deemed to be of high value, however that is to be determined, are in fact limited.
Savills, the property adviser, estimates that the Government are likely to raise only £3.2 billion a year from 5,500 council home sales. Savills says that that is well below the projection made by the Conservative party of £4.5 billion in receipts a year from 15,000 sales. As we can see, that is quite a discrepancy in terms not only of the numbers of homes that will become available under the clause, but of the amount of money that will be raised.
Amendment 157 is designed to ensure that local authorities do not lose out and, ultimately, to ensure that the powers given to the Secretary of State in clause 62 are not used as a power of general taxation. We feel that that might be the case if the estimate bears no relation to reality—a levy might simply be placed on local authorities that have council housing stock. We are deeply concerned about what the measure might mean, and not only in terms of loss of stock if local authorities do sell the homes. We think that, whether they decide to sell the homes or not, they will not raise the amount of money that the Government thinks they should and therefore that a levy will be applied to them. That could be instead of selling the homes, but it is more likely that it would be in addition to that.
The Chair
I intend to suspend the sitting at 5 pm to accommodate an Opposition briefing on Syria. There will potentially be votes at 6 pm, followed by a Government briefing on Syria, so the sitting will be suspended until 7.15 pm to accommodate also time for supper.