Housing and Planning Bill (Third sitting)

Stephen Hammond Excerpts

Tuesday 17th November 2015 Public Bill Committees

[The Chair]

I now have eight Members who have caught my eye for the 25 minutes left to us. With mutual respect and by keeping things as short as possible, we can get everyone in.

[Stephen Hammond (Wimbledon) (Con)]

Q 271 Is there any evidence to suggest that starter homes will necessarily crowd out other low-cost ownership, or indeed that every starter home will be built at the maximum? Is there not some evidence, particularly from the Council of Mortgage Lenders and others, that a number of the starter homes might be built well below that cap?

Brandon Lewis: Absolutely. That is a key point to bear in mind, which we managed to flush out of Councillor Glanville eventually. Other witnesses have made that clear, including the Council of Mortgage Lenders. We have put in a cap and made it very clear what the price limit will be. We expect to see that delivered. Also, the 20% discount is at least a 20% discount. I would not be surprised if we see people coming in with bigger discounts, which would also help to move this market.

I have just listed some homes, and people can look on Rightmove themselves—I wrote a blog for it just a couple of weeks ago—and find plenty of new build homes at well below £200,000 and in some areas below £100,000. I expect to see that. When we then link that with the 20% discount on top of the market price, and if somebody can also link it with Help to Buy, then somebody earning £20,000 or £25,000 to £35,000 who has been effectively locked out of the ownership market since the great Labour recession suddenly has a chance to own their own home again. I think that is a really good thing.

You make a really good point about the mix. We will continue to see a mix. People sometimes underestimate—or maybe do not understand the housing market enough to appreciate—the way that large developments in particular work. Housing associations work in partnership with large developers. There are a number of very large developments that private sector developers are building at the moment in partnership with housing associations. They will not want to change that. They both want those joint ventures, both financially and in delivering the mix. Some housing associations are building in phenomenal numbers at the moment, and are looking to go further. We will be working with them to deliver that. In schemes in London or outer London, or indeed other parts of the country, you can see them working together. The finances of that work for both developers and housing associations, and both have made the case publicly and in this Committee about the importance of a mix of tenures on a site. I think we will see that continue.

[Stephen Hammond]

Q 272 Presumably it is that mix that gives you confidence that some of the infrastructure that is needed will be built.

Mr Spiers, and indeed the GLA, have suggested that 95% of the brownfield sites are already under development or have planning permission attached to them. Is that a number that DCLG recognises?

Brandon Lewis: No. What we have said we will do, and what we were elected on a manifesto to do, is to make sure that 90% of brownfield sites have planning permission by 2020. I do agree with Shaun Spiers and others who have commented that we need to identify these brownfield sites. I have worked with the Campaign to Protect Rural England over the past year or so to make sure that we do everything we can. We all want to see those sites built out first. The brownfield fund is also part of making sure that we deal with some of the viability issues of some of those sites. It is important that we encourage local authorities to do this. Having the register out there in a way that is transparent and in the public domain will help that. Planning permission in principle goes a long way to help that.

You also make a very good point, as Mr Jackson did earlier, about infrastructure. By having mixed sites and larger sites, of course the part of the site that is not delivering starter homes will still be creating both the community infrastructure levy and section 106 agreements, where that is appropriate and relevant for that local authority. That is putting aside local growth fund issues and devolution deals, which are also providing infrastructure. It is right to do so, and we need to make sure that we are providing infrastructure as well as well designed homes for people.

[Helen Hayes]

Q 273 Yesterday in the Communities and Local Government Committee, we heard evidence from four councils. Two of them were Conservative-led, one Liberal Democrat-led and one Labour-led. All of them gave very compelling evidence that, despite the comments you just made about the ability of the Bill to deliver a mix, it simply isn’t there. They talked about the way in which the 1% rent reduction will undermine the ability of councils and housing associations to deliver new socially rented stock. One of the councils was up against its borrowing limit on its housing revenue account already, and said that once that is taken into account the receipts from homes that are sold under the right to buy will not be there to replace homes that are lost to the rental market.

The evidence from housing associations, which was previously heard by this Committee and also by the Communities and Local Government Committee, is that while many of them say that the Bill will deliver more homes as a whole, most of them say that they as individual housing associations will be delivering fewer of those homes at social rent. I am afraid that I am just not convinced by the statement that starter homes will be part of a mix, and that they will not crowd out much-needed homes for rent. I would be very grateful if you would say a bit more about where the evidence is for those statements, because I have not seen it.

Brandon Lewis: You have conflated a few things there, so I will try to cover all of them if I can. First, the 1% cut is obviously an advantage to tenants in social housing of both local authorities and housing associations, and I am slightly surprised that you seem to be against us reducing the costs for residents.

Local government has done a phenomenal job in the last few years of realising efficiencies, sharing management, sharing chief executives, reducing its costs. I will be quite up-front about this, as I was in the Select Committee: I think local government can go further. I think it has a long way to go in doing similar things on planning. Touching on some of the evidence given this morning, I think that local authorities can go a lot further in terms of having good resilient resource as well as saving efficiencies.

Housing associations have not been subject to that kind of transparency. I think a 1% reduction year on year over the next four years is not an unreasonable thing for the public to expect them to do, which tenants then benefit from as well. Equally, I have spoken to housing associations that have made the point to me that they expect to reduce their rent by 4% to 5% next year, in one case because they are being challenged by the private rented sector. That is no doubt because social housing rent has gone up in the last four or five years by roughly double what the private sector has. We need to be up-front about that.

You say it affects housing supply, but we have housing associations saying quite the opposite. The largest, Sanctuary, is talking about increasing housing supply; L&Q just last week, I think, published the fact that it has had a very successful bond issue to go and build further. It has very ambitious plans to build more, some of which, like others, it does in partnership with private developers. It shows and backs up the point in the closing remarks of David Orr in his evidence. He said that yes, this will drive up housing supply, and yes, housing associations will want to deliver starter homes. That is a good thing.

Touching on the point about HRA, we have to be very cautious about the housing revenue accounts situation. We gave local authorities some headroom last year for those who wanted to bid to go a bit further if they were near the headroom. There is more than £2 billion-worth of headroom in the HRA nationally for local authorities to use to build, and I think that they should be doing that if they want to show they are building more. We also need to bear in mind, however, that any use of HRA affects the public sector borrowing requirement. It affects the country’s books, and we need to do what we can to make sure we are managing our deficit so that we can get on top of the debt we inherited.