Moved by Lord Stoneham of Droxford

That this House takes note of Laying the Foundations: A Housing Strategy for England.

11:38 am
Photo of Lord Stoneham of Droxford

Lord Stoneham of Droxford (Liberal Democrat)

My Lords, I am very grateful for the privilege of leading this debate and thank all noble Lords who have agreed to participate in it. I look forward to an interesting debate on a key issue for the coalition Government and the country's economy. I declare my interest as chair of First Wessex Housing Group and Housing 21, two housing associations.

My motives for initiating this debate are threefold. First, I believe that housing needs to be higher on our national agenda as it defines our national life and so many issues-the economy, health and social well-being and energy conservation-impinge on it. In fact, it underpins everything in society. Secondly, housing is critical to the national economy. It is a driver of growth, jobs and social mobility. Its multiplier impact is not surpassed in any other sector. The deputy director-general of the CBI said this morning:

"The only way to resolve unemployment in the short term is to pull out all the stops to get the economy moving and business growing".

Housing has to play a fundamental role in that.

Thirdly, there is a huge demand for more housing to be met, and we are not meeting it. More than 4 million people are on social waiting lists, and 100,000 homes were built last year while demand is growing at the rate of 232,000 new households each year. In fact, we face a critical situation in housing. As I have said, we built only just over 100,000 homes in 2010 and building since the credit crisis has been at the lowest level for many generations. The number of construction jobs has reduced by 150,000, and in the wider economy the number of housing-related job losses will be much more. As I have said, 4.5 million people are on social housing waiting lists. Over the past 30 years we have sold off more than 2 million of our social housing stock. There remains a huge need and demand for affordable housing.

The Government were right to review the housing strategy, and their document has encouraging themes, but it is arguable that it is a bit like a box of liquorice allsorts-there are some very tasty items but it is not yet a totally satisfying meal. The questions are: how far are we prepared to go and will we be able to respond quickly enough? I accept, however, that the Government see themselves at this stage as laying the foundations.

I should like to emphasise a number of encouraging themes from the document. The first requirement is that we have got to rebuild confidence in the housing market. That is not easy when house prices are still uncertain and unemployment is growing. There is huge variability across the country. Here in London and the south-east, we are relatively unscathed compared with the rest of the country. As to the measures that the Government are introducing, I welcome the new-build indemnity scheme to deal with buyers frozen out of the housing market by the need for large deposits. That is an important measure. Other funds are important-the £500 million Growing Places Fund for infrastructure, to unlock housing and economic growth; and the £400 million Get Britain Building investment fund to support building firms that need development funding but have been deprived by the banks. I also welcome the £150 million for the Empty Homes fund to bring vacant properties back into affordable housing.

Probably most important in terms of driving an increase in housing is the freeing up of public sector land to deliver up to 100,000 new homes, with its "build now, pay later" proposition. I welcome the advisory group set up under Tony Pidgley, for whom I have huge respect, but I wish that the group was a task force committed to driving the building of housing on that land.

I also recognise and welcome the commitment to the private rented sector and the recognition that it has a major role to play in future housing. The growth in this sector is remarkable: 16 per cent of households are now privately rented-an extraordinary growth of 30 per cent since 2005, representing 3.4 million households. The problem with the private rented sector is that it is a polarised marketplace. Sadly, it is still associated with Rachmanism, but there have been huge improvements. The document shows that, in surveys, satisfaction in the private sector in many categories outperforms social housing-85 per cent are satisfied with their accommodation, compared with 81 per cent of social tenants. Seventy per cent are satisfied with their repairs, compared with 69 per cent of social tenants. The private rented sector also has a better ongoing record on energy efficiency than owner-occupied properties. I also welcome the important tax changes to encourage private rented investment and the examination of barriers to investment in this sector that are laid out in the paper.

The third theme that I welcome is on social housing. I am pleased that there is now a firm commitment to providing 170,000 new affordable homes over the next four years. Together with a commitment to replace rent-to-buy properties, this Government could well achieve the first net increase in social housing stock of any Government for 30 years. Some of us have been nervous about the new basis of this funding, but I have to accept that this tranche of investment has worked and has eased pressure on government debt. The problem is that this does not actually meet the demand. The key question is how we can expand the building of more affordable housing.

I also welcome in the document the ongoing commitment to improve community designs through a variety of initiatives-the commitment to review building regulations for the improvement of energy efficiency and carbon emission standards for new buildings, the commitment to zero-carbon homes by 2016, and the launch of the Green Deal this autumn to revolutionise the energy efficiency of existing housing stock.

I emphasise one final theme which is very important. I am pleased that the Government recognise the paramount need in a recession to protect the homeless and vulnerable. Recession always impacts on the most vulnerable, and I welcome the special funding for national night schemes and the ministerial group to look at the wider implications of homelessness. Vulnerable people need particular attention in a recession when unemployment is growing, and we have to ensure that the broadest backs take the greatest pain.

We can note the foundations of the housing strategy, but how do we achieve a radical change going forward to ensure that the foundations lead to construction of more housing on a significant scale? First, the Government must have real ambition and drive. It is 60 years since Harold Macmillan was appointed as Housing Minister in October 1951. No one has repeated the mark he made in that position. We had nine Housing Ministers in the previous Labour Administrations. Sadly, neither party in the coalition had a conference resolution to build 300,000 homes a year. Nor do we have the public funding that Macmillan had available. Nor do we believe that housing can be achieved simply by top-down directives. However, there remain many loose ends that require constant drive: bullying the banks and lenders, getting the public sector to provide vacant land and encouraging, incentivising and cajoling local communities and providers to extend the capacity to build. Above all, we need new funding vehicles to meet the need for more affordable homes. We want our ministerial team to have the ambition and drive of Macmillan's team of Marples, Sir Percy Mills and Dame Evelyn Sharp.

Private funding will remain the key to success. We will have to regulate the mortgage market better, so that it does not end up in an unsustainable speculative boom once the economy recovers, but low interest rates now mean that funding housing could be cheap. Housing associations have significant surpluses this year because of lower than expected interest rates. One percentage point off mortgage rates puts £10 billion back into consumers' pockets. There is a potential revolution in housing association sector funding under way. Banks and building societies are seeking to obtain greater liquidity and are moving away from the sector. Pension funds and other funds want to lend to us direct. Last week, pension funds were investing in 30-year, index-linked government gilts with a negative real yield. Surely it should not be beyond us to develop vehicles which could provide 1 to 2 per cent real yields to fund social housing. That could benefit both housing associations and local councils. Housing seeks pension funds, which do not have the liquidity pressures of the banks but want long-term secure income. The Government also need to look at the significant level of government social grant which sits on housing association balance sheets as a liability. If part of it could be converted to equity, it could leverage rich significant funds for affordable housing.

Housing strategy must be based on a mixed housing approach involving owner-occupied, private rented and social housing. Some of our old, deprived estates remain a national disgrace. They are often hidden away by the apartheid design style of past generations. Those estates will be transformed only if partnerships are formed to transform them. I have been personally involved in the Rowner estate in Gosport for 17 years. It took the vision of a social entrepreneur to see that it could be transformed by breaking it up, selling part of it and using the proceeds to rebuild social housing, to effect a real social transformation in people's lives by providing a mix of social, owner-occupied and private rented accommodation through a partnership of Taylor Woodrow, a housing association and Gosport Council. It is no good councils telling housing associations that they can build houses more cheaply. In my view, they can do it more effectively if all sectors work together in these problem communities. The last thing the housing sector needs is to rebuild the old silos of the traditional sectors.

There are two other areas that I should like to mention briefly. The first is that planning for retirement is as important in relation to housing as it is to people. We need a closer interest in this future demand. The objective should be to cope with the underoccupation of property and reduce future care costs while enabling people to live independently for longer, and I am sure that the noble Lord, Lord Best, will have more to say on this. It is recognised but it needs much greater recognition and attention.

The second area is the Green Challenge. I do not believe that we will tackle fuel poverty unless housing is transformed. The economics of better insulation and energy-efficiency need tackling in order to reduce costs. There are huge benefits to be had in tackling older stock, and the Green Deal is a classic means by which to involve the private sector in funding it. A gradual upgrading of new build and decent home standards, covering insulation, should follow.

Many of us are concerned about the state of the economy, and therefore housing has become the focus of our attention as a regeneration force. It will not be revived by a traditional rivalry between owner-occupation and public housing. The objective should be a balanced approach involving the public sector and the private and voluntary sectors, with a choice of different housing in mixed communities. Private funding will have to leverage what limited public funds there are.

There is an action plan in the Laying the Foundations document and I suggest that it is ruthlessly followed. We should hector, probe and argue so that it is delivered and expanded. It took Macmillan three years exactly to transform housing in this country in the 1950s. The coalition has the same timeframe in which to double housing construction and make a real impression on housing provision, which will revive the British economy as well. It should be its central mission to do this.

11:52 am
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Baroness Gardner of Parkes (Conservative)

My Lords, this is a very important subject and I am grateful to the noble Lord, Lord Stoneham, for leading the debate today at this crucial moment when decisions are about to be made that will affect the lives of millions of people in the UK. He covered the subject and the report widely, and I shall not try to repeat his comments, although I endorse them.

Together with health and welfare, housing is crucial in our individual lives and in creating and maintaining a fair and just society. In this excellent report, many of the desirable options are set out clearly, but not all. I intend to draw attention to some of the significant omissions that I believe the Government should add to their considerations.

My interest is on record in the Register of Lords' Interests. As a small-scale landlord, I have had residential property for over 40 years, and I have been able to do what I see one in two people in the UK would wish to do, according to the report-that is, build my own home. In my local government days and as a member of the Greater London Council, I was responsible for almost one-quarter of the council stock, including in the Barking and Dagenham area, which features in this report. I was on the boards of the Woolwich Building Society and a housing association, and I was a vice-president of the National House-Building Council for seven years. However, none of that is current; it is all in the past, so I am giving your Lordships a view of what I saw then and how I see things now.

Two days ago, the Minister answered my Question in the House about leaseholders and the problems they experience with managing agents. One aspect not covered yet of considerable concern-and those with an interest have come back to me about it since-is the lack of transparency and the possible practice of managing agents receiving commission, which they are not disclosing and about which they often refuse to answer questions, for services they are providing, such as insurance and works.

The noble Lord, Lord Best, in his supplementary question raised the subject of an ombudsman scheme to protect leaseholders. At present, this is voluntary but I think that it should be obligatory for managing agents to belong to such schemes. There are almost 2 million leaseholders, and this lack of transparency impacts on everybody from social housing associations to those in premier leasehold properties. The right of tenants to have their deposits protected, whether held by a landlord or an agent, has been of great benefit to tenants.

The concept of commonhold was introduced in the Commonhold and Leasehold Reform Act 2002. I took part in those debates from the point of view of my direct experience of the equivalent strata title in New South Wales. Sadly, commonhold has gone nowhere and very small numbers of such developments have been built. I feel very strongly about the idea of commonhold and it is time to look further at this form of tenure which works so well. Freeholders here do not like it because it means that they lose the right to sell and resell leases over many years. It is definitely in the interests of flat owners and it is much more effective than any available right to manage.

There is no mention in this report of looking further at these issues or of encouraging developers to opt for commonhold in new blocks under construction. The Federation of Private Residents' Associations has told me that many members would be interested in converting their properties to commonhold but that the barriers are too great for existing blocks as 100 per cent of the residents must support the change. Therefore, conversion to commonhold is too difficult. The 100 per cent proviso is why there is commonhold in only a very small number of newly built blocks. It has not been given a real opportunity to test the system. Obtaining even a simple majority may be difficult, especially in blocks where some people are resident only for limited periods, such as a year.

However, it would be desirable for the Government to conduct consultation on this issue, as I am convinced that it would be a preferable system to the present leasehold management system. Commonhold is a system whereby all the leaseholders in a block are members of the body corporate which owns and controls the block. They are able to select managing agents or arrange for matters to be handled by some other person, but they are the body corporate. Paragraph 2 of the Executive Summary to the report says that,

"we need to get the housing market-and in particular new house building-moving again".

Paragraph 29 of Chapter 2 quotes 133,000 stalled units. Here is an opportunity for the Government to provide an incentive for the construction of enough commonhold properties to be able to see clearly the effectiveness or otherwise of this form of tenure.

I am pleased to see that Tony Pidgely is to lead an advisory group as, although I do not know him personally, I know that he is not only a hugely successful property developer but also an imaginative innovator with great experience. Paragraph 44 of Chapter 2 says:

"We are keen to see innovative approaches and a wide range",

of new experiences.

I have made a real mess of my papers, for which I apologise. At paragraph 46, there is talk of where infrastructure exists and does not exist. Again, I raise a point which I raised on the Localism Bill, that for areas which are supposedly green belt but have small patches of infill and where all the infrastructure already exists, I think that the documents and the advice sent out by the department should make it clear that there is a possibility of using those small patches.

I want to talk about the mortgage market because I strongly support the idea of people buying their own homes. In the past few weeks, I have been involved in helping a young person to try to buy their flat. The flat was formerly a social housing flat. It is on about the 15th floor of a block. I went with the person to Barclays, which apparently is willing to offer mortgages to most people, subject to their circumstances. The young person was going to buy the property, let it for two years and then, when they had finished their studies, move to where they were going to work and live in the flat. There was no problem about the fact that the flat was let to someone on housing benefit. The young person would buy it in that way; the housing benefit was enough, although there is no way of knowing whether that will remain the case with the coming changes to housing benefit. The young person was urged to check carefully the present circumstances under which the person on housing benefit was renting the flat.

What stunned me was when Barclays said that it lends on only a small number of high-rise properties. I asked what was regarded as high-rise and was told: everything above seven floors. In London, seven floors is not high-rise; one has only to look out of the front door here to see tower blocks everywhere. Barclays further said that its restrictions applied particularly to former local authority properties. That made it a double problem for this young person to buy a flat which was within their means and which would have given them a home to live in when the time came.

Barclays is out of date; I do not think that high-rise is something that people worry about. I know people on the staff here who live on about the 20th floor. They say that they have to get used to a small amount of movement in the building because the structure has to have a degree of flexibility. They say that you get used to it very quickly and that people are very happy in these places. To condemn former social housing because it was built by local authorities is very wrong. In my day, local authorities were still building to Parker Morris standards, which were way above any standards that could be afforded by private developers. Far from being below standard, they were almost above standard. There is something very wrong if people now say that these blocks, particularly if they are social housing, are not acceptable for mortgages. Unless people can get mortgages, how will we increase home ownership, which should be our aim?

Another thing that is not mentioned in the document is rent-to-buy schemes, of which I am very much in favour. I think that at one time that type of scheme existed in Ireland. When my uncle, who was a housing Minister-a Labour housing Minister, I may say-in New South Wales, introduced social housing, it was all done on the basis of rent to buy. People drew lots to be the first half-dozen tenants in the first houses. The policy was that every penny of rent that you paid counted for something. Why cannot the Government, in encouraging people to buy their own homes, now develop a rent-to-buy scheme? If you go to Boots or Sainsbury's, they give you points for every penny you spend. Would it not be a good idea for people to build up a tiny equity in a property that at present they can afford only to rent but which in due course they would like to buy?

I strongly support Home Swap Direct. It existed when I was on the GLC. However, it has become almost impossible for people to move from social housing in one area to a home of similar type in another. Home Swap Direct will do much to improve that.

I will comment further on the housing benefit issue. I was very disturbed to be told that many new landlords who were letting a property-I reported this when we were dealing with the Localism Bill-would not take tenants who were receiving housing benefit. The reason they gave was the possible changes in housing benefit and in people's personal circumstances, and the fact that they, the landlord, would have to meet the cost of getting repossession of the property if payment was not made or the property was not kept up to standard. There are problems here.

There is another problem with building; I have done a little bit of building over the years, and I know that the moment you develop a huge scheme, there is a shortage of builders. Whenever we have wanted to build, people who were highly skilled in their particular field become like gold dust. They train others on site-I remember a time when they were trying to train bricklayers in six weeks, because they needed them so desperately. The tragedy is that we are losing so many people who have these building skills; they migrate to places overseas, such as my homeland, because of the opportunities there. They are desperately short of engineers, even in western Australia, just as we are short of engineers here. There are major problems that have to be faced.

The issue of squatters is very important, particularly as so much squatting has been highly organised. One person who views an empty property makes a point of unlatching a window so that others can come back and say that they did not need to break in because the window was open. That really is a fraud, to say the least. A couple who were expecting a child could not get back into their own home because squatters had moved in while they had gone on a brief holiday. These are sad cases and some action has to be taken. However, first we need to produce more homes; we cannot solve anything unless we do that. This housing report gives us a great deal to think about.

12:06 pm
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Lord Whitty (Labour)

My Lords, I, too, congratulate the noble Lord, Lord Stoneham, on securing this debate and on the care and breadth of his presentation, although I should point out that he was perhaps slightly overenthusiastic about this document. Nevertheless, he described the size and immense difficulty of the housing crisis in all forms of tenure, and pretty much all parts of the country.

I declare an interest as I am chair of the campaign Housing Voice, which is looking at ways of increasing the flow of affordable housing. We are conducting an inquiry, and had our very first public session just before Christmas in the noble Lord's own part of the country, and mine too these days-the south-west. This session in Exeter spelt out some of the difficulties in the south-west.

As noble Lords will know, the south-west has some special features in relation to housing: it has the highest ratio of house prices to average income, with a significant number of seasonal tourist homes, second homes, empty homes and retirement homes. However, in essence, the problems are the same in that the cost of housing in that area, as in large parts of London, is out of the reach of even relatively well paid first-time buyers. Social housing is under stress, and rents are going up in the private rented sector, which puts it out of the reach of a lot of people. Although some more property is coming on to the market and some improvement has been made in the quality of private rented-sector housing, as the noble Lord, Lord Stoneham, said, there is also, at the margin, some very difficult property coming on to the market in which people are forced to live. It is also very difficult to get a mortgage, of course, even if the arithmetic works out.

Unlike previous housing crises, which have usually been confined to one or other of those tenures, we now have dysfunction and crisis in all forms of tenure. The difficulties in one form have a knock-on effect on the others. We have a perfect storm in the housing market, so it is important that we take a holistic approach and debate this subject outside the traditional silos of housing policy and expertise, and look at the totality.

I was therefore extremely pleased when I heard, round about October, that the Government were going to come forward with a new strategy that puts all aspects of housing together in a new document. I was glad to hear that and I am pleased that they have attempted it, but having now read about 88 pages of the document I have to ask the Minister whether it is in one document because it does not face the size of the crisis with which we are confronted.

There are a lot of little policies, some of which I approve and some of which I have doubts, but they do not add up to anything like tackling the central problem, which is, as the noble Lord, Lord Stoneham, has said and as has been repeated many times, that the rate of new household formation is running at twice the rate of housing dwellings of any sort coming on to the market. What is the aggregate of all the policies in this document? Even if they were all to work, they would come well short of meeting that rate over the period of a Parliament.

The reality is that the Government started out by going backwards. I am the first to admit that they did not have a great inheritance on this front. Indeed, during the period of the previous Administration, in government and outside, I was quite critical of their failure to come to grips with the size of the problem. Nevertheless, the new Government's first act was to make matters significantly worse by cutting social housing provision by nearly two-thirds, but they have made up for that with affordable housing in general. Although they have made up for some of it, they have not made up for the cut in the initial stages of the public spending review.

Therefore, we need to take a step back from this, to go beyond what is in the document before us today and to look at a new and more ambitious approach. Regrettably, the Government's approach has been piecemeal. Not only are the schemes relatively small in this document-although some of them might help a few families-but the legislation that has just gone through Parliament compounds the problem by dealing with this in a piecemeal way.

The Welfare Reform Bill, which is still before this House, deals with social housing. We have probably reached the point where we should ask ourselves whether the main subsidy for housing should be in the housing benefit budget or whether we should, as we used to until about 20 years ago, invest more in the provision of housing on the capital and supply side than on the demand side. The Welfare Reform Bill is solely concerned with bringing housing benefit and other housing subsidies into the universal credit system.

That may be desirable in the long term, but in the short term it is leading the Government down a lot of blind alleys. It is an attempt to exclude certain people from social housing. It is an admirable aim to attempt to move people within social housing to more appropriate accommodation, but in doing so it will move people, to their detriment, out of areas where the cost of social housing is too high to be met under the new benefit cap into other areas. It will attempt to move others out of what is called "underoccupancy" into smaller accommodation, but in many parts of the country that is not available for such people, who are often in old age or infirm. On the face of it, it should be more appropriate, but in many parts of the country, including large parts of central London, smaller accommodation will not be available for them to move into. In any case, all those moves simply move the problem around. They move it out of social housing into the private-rented system or from one part of social housing into another. In some cases, they move it into homelessness. That does not in aggregate solve the problem.

In a different part of the legislative timetable, the Localism Bill, which has now gone through, includes two parts on housing. There are provisions to ensure that more housing is available and that the planning system is modified. I am afraid that in many areas, including many small towns and rural areas, those two will negate each other. There are provisions under the housing Bill to allow local authorities rather than any more regional or central determination of housing targets to decide what housing will be built.

Over and above that, even if the local authority, the district council or whoever has approved the new development, it could theoretically at least be overridden by other provisions for localism in local referenda. I hesitate to use the word "NIMBY", because their arguments are sometimes quite good and I have some sympathy with those in rural areas who do not want to see parts of agricultural land taken over by housing, but the net effect will be that if we allow objections to all forms of housing in areas that are currently not scheduled for housing, or where no housing is being built, we will not meet the problems of rural areas and small towns in the next, let alone the current, generation of housing.

I have recently seen a study of Devon and Cornwall that shows that local people will not approve of additional housing where they currently live unless it can be shown that it will benefit local people and their families. The problem with most developments is that those people will not occupy those houses because, in the vast majority of new developments that are proposed under the planning system, they will either be sold on the open market-in which case they will be beyond the reach of the sons and daughters of those who already live there-or be social housing, where the local authority priority systems may well bring people in from elsewhere.

In most, but not all, cases, sensible propositions for increasing the housing supply in our rural and small-town areas are going to be made more difficult by the provisions under the Localism Bill and the planning guidance. I accept that the regional targets did not work to great effect, but replacing them with highly localised responsibility will not work either.

The noble Baroness, Lady Gardner of Parkes, spelt out some of the difficulties in a region at the other end of the price and income scales: London. Some of the changes under the Welfare Reform Bill and the Localism Bill will even drive out relatively low or medium-income families from areas within two or three miles of this place, where there has been a positive and healthy mix of tenure, housing types and families in the past. Next to the good and well utilised provision of social housing and other forms of affordable housing, a few streets away from where the only first-time buyers are Russian oligarchs, we see that that mix has worked. If we drive out from those areas the kind of people who are living in what was initially, and in many cases still is, social housing, the totality of the community suffers.

These examples could be multiplied in almost all areas of the country. The legislation that the Government have put before us in bits and pieces to address this does not amount to a strategy. Indeed, it is difficult to devise a strategy. I have some sympathy with the Government in this respect. Are we at the end of the period when the growth of home ownership is the natural conclusion of all housing policy? It has actually gone backwards over the past few years, but increasing home ownership, and seeing housing as a bit of a hierarchy, is still in every political party's ambitions. This is not the case in many other countries.

There are other forms of tenure. The noble Baroness referred back to commonhold, which was in the first Bill that I was responsible for, which fell at the 2001 general election. It was a useful idea, but it has not taken off. There may be other forms of commonhold, or movement from rent to ownership, that we should address. The clear division between owner-occupation, private rented-sector and social housing needs to be readdressed. There need to be new ideas about the legal structure and the landlord/tenant relationship, and about how to promote investment.

The noble Baroness and her colleagues have a big problem before them that is frankly not addressed in the White Paper that was issued before Christmas. The noble Lord referred to Harold Macmillan and Dame Evelyn Sharp. Where are they today? I hope that the Minister can reassure me but, on the evidence so far, I fear that they are not actually in DCLG just now.

12:20 pm
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Baroness Maddock (Liberal Democrat)

My Lords, I very much welcome the opportunity to discuss housing given to us today by my noble friend. I must declare one or two interests: I am a vice-president of the fuel poverty group National Energy Action, vice-president of the National Home Improvement Council and president of the Micropower Council.

I often reflect on why an interest in decent homes has dominated my political career. It is probably due to a couple of early experiences in my life. First, I spent my teenage years moving from one rented property to another, barely staying in any of them for as much as 12 months. Secondly, in my early 20s, I lived in the most wonderful newly built flat in Stockholm, Sweden, that was very well appointed and properly designed. It was insulated to a level where my fuel bills were a whole lot cheaper than they had been in my box in England before I arrived, despite the fact that one winter I experienced temperatures of minus 27 degrees centigrade outside.

On my return, I lived in the city of Southampton. In large chunks of the area I was living in there were a lot of properties in disrepair and a lot of empty properties. Some of that was because in those days we had a stop-start on whether there was to be a by-pass around that particular area. That is where my first political campaigning came in, as we tried to do something about the empty properties and to improve run-down housing in my area-so much so that I can still remember the name of the first house that we succeeded in getting done: it was 23 Langhorn Road, Swaythling, Southampton. I think it is still there as a rented property.

Over the years, I have served as a city councillor in Southampton on the housing committee and I have been a spokesperson on housing for the Liberal Democrats across both Houses of Parliament. Over that time, I have seen all sorts of policies come and go. Recently, one-right-to-buy-has come and gone and may come back again in some way. What has saddened me over the years is, first, the inability of Governments to have comprehensive housing strategies. The noble Lord, Lord Whitty, has explained how difficult that is, and he has been through it in government and is looking at it from outside government now. Those strategies must actually connect across the sectors. The second thing that has saddened me is the inability of Governments to track the changes and trends and to develop policies and actions for the long term rather than the short term. They are always trying to fix the latest crisis.

If I look at some of the problems-and previous speakers have talked about them already ready this morning-many of them are the same problems that were there when I started in this area. We have vast quantities of older housing stock that is in disrepair. We have vast numbers of properties standing empty and we do not have enough affordable homes across all the sectors. That leads to homelessness, which goes up and down, as well as to repossessions and other factors that go up and down. We also have large numbers of homes that are incredibly difficult to keep warm, and many of the most vulnerable in our society are living in those homes and living in fuel poverty.

What is even more disconcerting is that we failed to address many of these problems even over the years when our economy was growing quite strongly. The noble Lord, Lord Whitty, referred to this, but I have to say that I was particularly disappointed that, when the Labour Government were in power, they had huge receipts from stamp duty as the price of houses went up but very little of that money was actually ploughed back into trying to do something about the problems that we face today.

I welcome the fact that the coalition has put forward this housing strategy. It is a difficult subject to cover and this strategy is only the beginning of what people would like to do. I strongly concur with my noble friend Lord Stoneham in his opening remarks about the challenges and where the strategy stands. However, as others have said, strategies are not enough; the challenge is to make them effective in practice. One of the things I welcome is that there is an action plan, with some timetables, in the back of the strategy, on which I will ask some questions as I go on. I hope that when the Minister winds up she will be able to reassure us that there will be plenty of mechanisms in place to monitor and evaluate the progress we are making, so that we do not end up with schemes that are announced to great fanfare but actually run into the sand and do not go anywhere. We have all seen that happen.

Given my opening remarks, it is not surprising that I want to concentrate on two particular policy areas: empty homes, and the energy efficiency of homes and those in disrepair. First, the figures for empty homes have not changed much in recent years, although they have gone up and down a bit. We have possibly up to 1 million long-term empty homes across the United Kingdom. Many of them are privately owned but there are large numbers of empty homes owned by the Government and local authorities. It is probably fair to say that we have made better progress with bringing local authority and government-owned homes back into use than we have managed in the private sector.

The part of the strategy devoted to empty homes is particularly strong. Over the years, I have been involved on and off with the Empty Homes Agency, which is particularly glowing in its words about this part of the report:

"In previous government housing strategies it has been hard to see any mention of the potential of empty homes to meet housing supply. This strategy however devotes one of it's seven chapters exclusively to the issue, and has for the first time directed specific funding at getting empty homes into use. Whatever you might think of the government's approach ( and we think more could still be done) it is clear that at a time when less public money is being invested in housing, more is being invested in empty homes. There is no escaping the conclusion that the government thinks this is a viable and cost effective source of housing, and has put their money where their mouth is. For that they should be congratulated".

As someone who has been in this area for a number of years, I am very pleased.

The Government are proposing a new £100 million empty homes grants programme, which will pay out towards the capital costs of getting homes into use. Although the grants cannot be used on housing association and local authority homes, as I said, the private sector is the area that we have found most difficult. As part of this, there is also a community grants scheme, whereby community groups, charities and housing co-operatives will be able to apply for funding. I know that the Government are trying to make the bureaucracy of dealing with these issues as simple as possible. We were told to expect the community grants programme before the end of the year but it has not opened yet. Can the Minister give us an update on where we are on that? In addition, there is a new grant fund of £50 million, funded separately and aimed at areas where there has been housing market renewal collapse. The story of how those things have been dealt with has not been a happy one.

There is also something called the new homes bonus, which was not originally intended for empty homes but the Government have seen the sense of including empty homes in this. Councils will be rewarded for increasing housing supply, and if new homes are brought back into use, they will get a bonus, whether they dealt with it or not. Looking at the various figures, it could be up to £10,000 per property in some areas. The Government have looked at empty dwelling management orders-something the last Government brought in-and they have looked at some of the experience and changed those a little. I do not know whether they have any other plans on that, but maybe the Minister can talk to us about it.

The other thing that the Government are doing, which is quite contentious and has been over the years, is to consult on changes to council tax exemptions and discounts to see how we might influence people with empty properties. It is a bit of a tricky one, because if you do not give them a discount at all people will not come and tell you that their properties are empty and it is rather harder to collect the figures. I am also disappointed that over the years, although we have changed it, councils have been unable to use any money that they have made out of changes to the rules. The Government are consulting on that, so I wonder whether the Minister has a timetable for that and how well it is going.

As I say, the Government are putting a lot of work into providing guidance and help to local authorities to help to take up these proposals. Will the Minister tell us what else they are thinking about? Over the years there was a scheme called "Flats over shops", which tried in town centres to bring back empty properties over shops. I wonder whether they are looking seriously at this again. Also, what about redundant offices, and so on? That was not part of the programme. Could the Minister tell me whether the Government are considering that further?

Secondly, I want to move on to disrepair and energy efficiency in homes. I am a bit disappointed that there is not more on that area in the strategy. I recognise that sustainability and energy efficiency are being tackled in some other areas, but there is a lot of consultation on sustainability in new build, whereas a large proportion of our housing stock was built before the First World War and we have been very slow to bring it up to a decent standard. Over that time, even our new houses are still doing catch-up when we look at the standard of housing that we see in our neighbours in northern Europe and Scandinavia, particularly with energy efficiency.

Progress was made during the years of the last Labour Government, but people who want to spend money to make their homes better and more energy efficient still find it quite difficult to know where to go and what grants they can get. It is a challenge to us even now in government as to how you can help policies to be joined up and do not have too many little bits of things happening all over the place. So I hope that the coalition can do better with this.

There are very ambitious plans for the Green Deal, although it will be a serious challenge to make it work, for reasons that I have just explained. In that respect, I am pleased that the Government recognised the role of local authorities in helping to co-ordinate a joined-up approach to improvements. Over the years, when I was a Member of the House of Commons, I helped to steer a Bill through that was about energy efficiency in homes. That was at the end of the Major Government. Unfortunately, Labour let it wither on the vine a bit and when our Government came in I am afraid that they thought they wanted to get rid of it as well. I am very pleased that, as the Energy Bill was going through Parliament, they realised that there was something there that would be of use, although it has now been repealed. I believe that those measures will enable more joined-up thinking locally among all the people who will be involved in the Green Deal.

One other area that I am pleased the Government have committed to, although we will see how it works out, is that of properties that are not in very good condition-the really poor end of the private rented sector. We had big discussions about this when the Green Deal was going through, and I am very pleased that the Government have committed themselves to ensuring that some of the very worst properties that are rated F and G will not be allowed to be left out in future years. However, if we are really to help with the refurbishment and improvement, we need to look at the question of VAT. New build is zero-rated, whereas refurbishment and repair is taxed at 20 per cent, except for some defined categories where the rate is reduced to 5 per cent. But it is so complicated that many people do not know where they can get the reductions, and when they try to get them it is even more complicated-many little builders still do not understand it. I know that a response on VAT is probably not in the Minister's winding-up notes today, but I hope that she can take the matter back to her government colleagues and make the point that this is an important issue that affects how we see the housing market develop and how we are going to deal with disrepair.

In conclusion, I think that we have made a good start, but it depends on what happens in future and whether we monitor it properly and react at the right time.

12:36 pm
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Lord Best (Crossbench)

My Lords, I declare my various housing interests as set out in the register. I am grateful to the noble Lord, Lord Stoneham, for initiating this debate and would underline the powerful case that he has made that the nation is facing a daunting under-supply of the homes we need and that these acute shortages are creating a great deal of human misery.

Although I am currently locked in battle with the Government on their plans for radical reductions in housing support for poorer tenants, in the Welfare Reform Bill, I am pleased to congratulate the Government on the direction that they are taking with many of the measures set out in the new housing strategy, Laying the Foundations. I am going to argue that these sensible measures can, and should, now be taken further and faster forward.

I know that the Housing Minister, Grant Shapps, who has a special commitment to tackling homelessness, understands that new home building, with all its knock-on benefits for pulling the wider economy out of the doldrums, should be given greater priority. I believe that the Government have got that message and that most of their policies are pointing in the right direction, but they now need to be bolder.

On the planning side, I am sure that the National Planning Policy Framework can be rephrased to make it more acceptable to those fearful about inappropriate development. But broadly the NPPF takes us in a positive and sensible direction and is commendable in highlighting the need for speed and simplicity in the planning process. I also welcome engagement of local people in sorting out where new homes should go through neighbourhood plans, which should prove to be complementary and not oppositional to the council's own local plan.

Alongside the reformed community infrastructure levy and a new Growing Places Fund, with other measures in the Localism Bill, I welcome the Government's New Homes Bonus, which received the seal of approval from the noble Baroness, Lady Maddock. This will reward those local authorities that show leadership in saying "yes" to the development of additional homes despite local opposition. With housebuilding running at half the rate needed to keep pace with household formation, this nudge is badly needed to encourage councils to support the building of homes, not least for those in rural areas. To quote from Charles Moore writing in the Spectator last autumn:

"Only in Britain-actually only in England-do people believe they are doing country life a good turn by refusing to build houses for the next generation to inhabit. It is a more powerful attack on rural culture and the rural poor than was the Highland Clearances".

But while encouragement for the development of new homes is very necessary, it is not sufficient to make serious inroads into this country's ever-growing backlog of the homes we need.

A key problem, of course, is that housing is dependent on borrowing-borrowing by first-time buyers, borrowing by housebuilders, borrowing by housing associations, borrowing by local authorities, and, indeed, borrowing by central government itself. Yet this is absolutely not the right time for borrowing. Internationally, an excess of borrowing in the housing market contributed significantly, from the sub-prime mortgages in the US to excessive over-building in Ireland, Spain and elsewhere, to the ongoing financial crisis. In the UK we are spared the blight of millions of unsold and unsaleable homes, since our housing boom, because we have had such difficulty in delivering enough homes, has mostly comprised paying more and more for existing property. However, avoiding a glut of surplus homes has come at a price. Our acute housing shortages mean high house prices and high rents-and therefore high housing benefit costs-and leave hundreds of thousands in overpriced properties and overcrowded and substandard conditions or actually homeless.

All these problems come back to the abject scarcity of decent affordable housing that is the UK's unique national problem. How can we step up housebuilding when borrowing is now so difficult? I propose five measures. First, the Government's new housing strategy announces a new build indemnity scheme, which has already received some plaudits-help for buyers who cannot find the huge deposits now required, provided that they are purchasing new, not second-hand, homes. This should encourage the housebuilders to develop more of the extensive land banks that some now hold. I note that the big builders are now making healthy profits-I see, for example, that the largest, Persimmon, has just reported a 50 per cent uplift in profits-but housebuilders will build only if they are quite sure they can sell at a decent profit.

The Government's help for buyers, along with their build-now-pay-later sales of publicly owned sites and their revival of Labour's Kickstart programme for stalled developments, now called Get Britain Building, should give builders confidence not to hold back but to get on with the job of constructing new housing. However, I recommend that help with deposits for first-time buyers be extended those to purchasing existing properties, not just new ones. Many of those who are trying to sell-often in a chain of sales that needs to be unlocked-will be buyers of new homes too.

My special interest is in seeing more high quality retirement apartments built, since those moving into such homes will usually be releasing much needed family homes, often with gardens, for the next generation. New retirement apartments do not generate the same opposition as new family housing. They take up less land and do not lead to much of an increase in traffic. Assistance with the deposit arrangements-guarantees are pretty cheap-for those buying existing family homes from older owners could help to get the market moving and address the needs of new buyers while simultaneously assisting the older homeowner to downsize to somewhere more manageable and, indeed, release equity for other purposes.

My second recommendation to get new homes built for those unable to buy or only to afford shared ownership is that a greater stimulus be given to the housing associations. They have had their levels of grant cut by nearly two-thirds, and if they replace the missing grant with additional loans then they have to charge much higher rents, which can force working tenants on to housing benefit with consequent work disincentives, and they will run out of borrowing capacity in approximately two years and their programmes, already too modest, will dry up. An investment in grants to housing associations can be multiplied by their extra borrowing, giving the Government a hearty bang for their buck. The National Housing Federation reckons that another £l billion could mean housing associations raising £8 billion, delivering 66,000 more homes while creating 400,000 jobs, saving hundreds of millions in benefits and boosting tax revenue. Go for it.

Thirdly, I recommend that local authorities be allowed to borrow more against their assets, in the spirit of greater localism. The current reforms to the housing revenue account towards a self-financing regime for councils are very welcome but need to go further. Within the confines of prudential borrowing rules, more housing investment could be unleashed. Many councils have small parcels of land they are keen to develop; for example, for attractive bungalows that entice underoccupying older people out of larger council homes. In other cases, local authorities can work imaginatively in providing land as well as finance in partnership with housing associations, alongside using their hugely important Section 106 planning powers to secure private sector deals for affordable homes.

Fourthly, during the passage of the Localism Bill, the Government, while rejecting my amendment to allow councils to retain 100 per cent of right-to-buy sales proceeds, agreed to a concession that I proposed to allow 100 per cent of the proceeds of sales of vacant council homes to be recycled to new building or regeneration. I recommend that advantage is taken of this important change in the Treasury rules. In my view, sales of vacant properties represent a preferable way of creating a mixed community of owners and tenants on council estates, to the alternative of the Government's plans for enhancing the old right to buy. Selling selected vacant properties means no discounts, which are windfall gifts to those already satisfactorily housed, so it allows larger sums to be reused for new housing and, indeed, makes it possible to achieve a one-for-one replacement of any homes sold, which seems unlikely where large discounts are doled out. Such sales introduce new home buyers on to council or housing association estates, often with young children who then go to the local school, and achieve a mix of incomes that can avoid these estates being stigmatised as only for the poorest.

Fifthly, I ask the Government to accelerate their consideration of cost-neutral amendments to the arrangements for so-called real estate investment trusts. So far these REITs have failed to materialise in the residential property sector, yet they could draw in substantial investment for housing from pension and other funds and other financial institutions, as in other countries.

These are difficult times for an area of the economy that utterly depends on borrowing, at a time when borrowing is very much out of fashion. Yet I suggest that there are measures that build on the Government's new housing strategy and could get housebuilding going again-if not yet to make an impact on the horrendous backlog, at least to prevent the gap between supply and demand widening still further. I look forward to hearing the reactions of the Minister, who has herself proved to be a sympathetic and helpful Housing Minister in this House.

12:47 pm
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Baroness Miller of Chilthorne Domer (Liberal Democrat)

My Lords, I warmly congratulate my noble friend Lord Stoneham, not only on securing this important debate but on his powerful and overarching introduction.

I am a little sad that one of the contributions that we would have had during the past 10 years of debate would have been from the noble Lord, Lord Graham of Edmonton, on the small but important sector of park homes; but time passes. A lot of people live in them and a lot are still purchasing them; if you drive down any motorway, you will see a number of them on lorries. It is an expanding sector that, in spite of the lack of the noble Lord reminding us of it and asking questions about it today, the Government need to keep their eye on.

Before I pass to the topic that I want to address, I say to the noble Baroness, Lady Gardner of Parkes, that we will have the opportunity to debate the issue of squatting in the forthcoming Clause 130 of the legal aid Bill. I am sure that she will be aware of the briefing that went around from the Law Association saying that the law as it stands is quite adequate, and the issue is actually its enforcement. Before we leap to yet more legislation, which Governments often see as a panacea for everything, we should make proper use of the law that there is. As I say, we will have a chance to debate that when we get to that clause.

Today I want to talk about the issue of self-build homes. When the Government came in, I am glad to say that one of the first meetings that Grant Shapps had as Housing Minister was with the National Self Build Association, which has been going since about 2009, although self-build as a form of housing has obviously been going for much longer than that. Grant Shapps was very positive and keen to help the association to promote its growth. They met again in January 2011, when he announced that he was setting up a government self-build industry working group with the association to look at what could be done to boost the level of self-build in the UK. I am glad that the Government recognise the importance of the sector.

It is very good that the Government have the National Self Build Association to work with. This will not be a plea for funding but, to date, the association has not received even the smallest pump-priming grant. Its members are all volunteers. An extremely small grant to help with such things as the portal that it is creating for self-builders-I am talking about just a few thousand pounds-would be incredibly helpful.

I want to talk about why we should think about this sector in particular. What does it bring to the communities where self-build happens? To answer that, it is helpful to look at some of the examples that have already happened. I got involved in this sector when I was still a councillor in Somerset and I learnt a lot from the self-builders who came forward for planning permission in a small village called South Petherton. It had a site that was very difficult to develop. It was on a hillside, not that accessible and surrounded by other housing. The private sector was not interested in developing it but the self-builders were interested because it was a very affordable plot. They developed it using a Walter Segal method, which adapts itself very well to steep and difficult-to-develop hillsides. Since then I have seen many other West Country examples. Ashley Vale in Bristol is very much an example of an inner-city scheme, while there is a small-town scheme in Stroud. We are not talking about a small-scale thing. Self-build can lead to 20,000 homes a year, so it is a major part of the housing sector.

I want to concentrate on community self-help schemes, rather than the sort of thing your Lordships may occasionally see on "Grand Designs"-a quite wealthy person building a state-of the-art palace. That is easy to do if you have all that money. However, I am interested in the community schemes for people with very limited funds and, very often, for young people who have some skills but not all those they need. The sort of model that is productive is one in which a group comes together-perhaps 20 different individuals or households with skills that vary across plumbers, carpenters, electricians and bricklayers and people who have no skills to date but develop them. Such schemes take an awful lot of time in the planning-perhaps as long as five or eight years-because they have to find a site, which is the hardest bit and something that I shall come back to in a minute. They also have to go through planning permission. It is my hope that the Localism Act will enable and promote this very strong form of community self-help in housing. The noble Lord, Lord Whitty, said that local people often put up objections to any housing being built. I certainly agree with him on that, but if it is the sons and daughters of the community who will build their own homes, it has a much more than even fighting chance of getting community support in the first place.

Self-building is also a very economical way of gaining your own home. The plot of land will be the most expensive aspect, but after that it just depends on how much time the self-builders put in and whether they have to buy in any help. The costs can be driven down. Many people on the site I visited do their self-building in the evenings between April and October and at weekends all the year round. Working in that way, they have managed to complete their homes in 18 months to two years.

You certainly have to be tenacious to be a self-builder and not get downhearted. When one family or individual drops out of a scheme for one reason or another, it obviously puts an extra strain on it. That is something that has to be carefully built into the agreement and is part of what takes up the fairly long lead-in time.

Such homes are often much better designed, too, because people design them themselves so they suit people's very distinctive needs. They are almost always much greener; I have not seen a case where they are not. Their carbon footprint is one of their joys. People often turn to self-build for environmental and ecological reasons as well as economic ones. They make every effort to ensure that their home has a very small carbon footprint.

One of the other organisations with which I have been involved over the years is the Ecos Trust, formerly Ecos Homes, again in Somerset. The wife of the noble Lord, Lord Cameron of Dillington, has also played a leading role with it. It has created a number of demonstration models to show all the different environmental benefits that you can get-not only energy efficiency in the building of the homes but all the different materials that can be used. It runs workshops so that people can learn different methods of working and see different models that have been developed.

Self-build is a very exciting sector with many possibilities. One of the issues that has come across to me very strongly from having visited the same sort of thing in France-this addresses rural housing-is the ease with which local French mayors, especially in rural areas, consider this a viable form of housing. They will purchase for their community a small or middle-sized field on the edge of their village and put in the infrastructure so that it comes with gas, electricity, water and sewerage provision. The plots are then sold to individuals. I am sure a number of your Lordships will have seen the advertisement "lotissement", showing that plots are for sale. For the young of that village, and those from elsewhere should they want to move to that village, it is a very affordable form of housing.

This is something that I hope the Housing Minister will pursue with all vigour and some imagination. Two things would make all the difference. One is definitely land availability. My suggestion to the Minister today is that when large sites are being considered for housing, perhaps for 100 houses, some of that-perhaps 20 per cent-could be set aside for self-build. It is something on which there should at least be much more consultation. Where there is a great demand for it and a community that will take it up, it would be a very affordable way for the younger generation, in particular, to develop housing.

There are also other sites that we do not often consider, such as ex-Army sites. They often have a lot of infrastructure. You can imagine a whole self-build eco-town on an ex-Army site, which would be quite a "swords into ploughshares" experience and one that would be very exciting.

As well as land availability, the other issue is the value of self-build in upskilling people. It allows people to work on NVQs and exchange skills while they are self-building. Their local college often gets involved, which is an extremely helpful development, too. It not only upskills the younger generation but provides them with an affordable home. I hope that some positive messages are about to come from the Government on further help for this sector.

12:59 pm
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Lord Shipley (Liberal Democrat)

My Lords, I join other noble Lords in thanking my noble friend Lord Stoneham for initiating this important debate. I declare my interests as a member of Newcastle City Council and a vice-president of the Local Government Association.

It is now widely recognised and understood that the housing bubble has been at the heart of Britain's economic crisis. We know that we must not return to the days of continuously rising house prices. That means that we have to build more homes for people to live in, address the issue of empty homes where too many of them exist and ensure that land with existing planning permissions actually gets built on. Therefore, I welcome the Government's housing strategy, Laying the Foundations. It delivers a mortgage indemnity scheme to help around 100,000 buyers who are unable to enter the market to do so with 5 per cent deposits on new homes. That will reduce the pressure on the rented sector where we have rising demand and, in several parts of the country, rising rent levels. That policy will help. I welcome the new £400 million budget for the Get Britain Building strategy to help get construction going where it currently cannot do so because of a lack of development finance. That will help. I also welcome plans to reward councils that bring empty homes back into use with the £150 million which is available to councils and housing associations. That, too, will help.

The problem is that buyers are not buying and lenders are not lending, so builders are not building. There were just 115,000 new build completions in 2010-11, when, as we have heard, the number of households is rising at twice that level and is forecast to do so for the next 20 years. These things are difficult to predict, but even if this projection is too high it is still evident that the rate of new building is much too slow. Therefore, we need to break through the barriers which stand in the way of building, particularly the building of affordable homes both for rent and for first-time buyers.

Consider the following: the value of British homes is some £4.3 trillion. It has risen 6 per cent in the past five years but it has gone up 20 per cent in London and the south-east. However, owner-occupation is in decline with a 250 per cent increase in renting in the past 10 years. The south-east now accounts for 26 per cent of housing stock but 36 per cent of value. One of the Government's stated aims, which I warmly welcome, is their intention to rebalance the UK economy away from overdependence on the south-east and on financial services. However, a key element of this will be to increase housebuilding rates in the north and the Midlands.

However, we cannot escape the inevitable conclusion that constrained public subsidy is likely to be not just a short-term blip but something that is here to stay for the foreseeable future. We still desperately need to generate new affordable homes. However, if we probe a bit deeper, there are examples out there that provide a model of what the future may look like. Increasingly, those within the sector are looking to enter into longer-term partnerships and use public land in an innovative manner. There are examples of pioneering joint ventures between private sector developers, local authorities and affordable housing providers such as Home Group in the north-east of England. Working with Galliford Try and Gateshead Council, Home Group's Evolution Gateshead project is, at £250 million, one of the largest regeneration projects outside London. Home Group, with Galliford Try, is providing equity and debt, Gateshead is providing public land, and with all sides sharing the risks and the rewards it will allow a whole package of 19 sites to be developed and the creation of around 2,400 much needed new homes.

There is a real danger that long-term regeneration is slipping down the priority list in favour of asset disposals to maintain an authority's operational budget. We can understand the pressure that local authorities find themselves under yet, through these joint venture models, local authorities can have the vision to deliver long-term regeneration without having to sell off the family silver.

Then there is stock rationalisation. With constrained levels of affordable housing finance, it is not merely a case of achieving the maximum level of development possible from this round of funding. More fundamentally, it is about how housing providers adapt to a future with little or no grant. In looking at this subject over the past few days, I came across a statistic from the Savills affordable housing division. Its research shows that if you were able to alter the stock profile across England by just 5 per cent, you would be able to build an additional 50,000 units on the back of the savings. That involves a transfer of just 125,000 units out of a total stock of more than 2.2 million. That is exactly what innovative housing providers such as Home Group are now actively engaged with. Over a six-year period it plans to dispose of almost 6,000 units and exit in favour of other providers in 71 local authorities. In doing so, it believes that it can concentrate activity in more focused geographical areas, driving up service standards in those areas and generating £150 million of receipts to reinvest in the creation of additional affordable homes. Already, Home Group has disposed of nearly 2,000 units to other housing associations, which may access new ways of financing from new providers. It has reinvested the proceeds to improve the service to its current and potential customers.

Housebuilding makes a crucial contribution to our economy and is particularly crucial for jobs since it accounts for more than 3 per cent of GDP. For every new home built, two jobs are created for one year. Yet over the past four years the workforce in construction has reduced from 2.35 million to 2.1 million today. That is a 10 per cent decline, which is four times higher than the overall workforce reduction.

I have no doubt that housing growth is a prerequisite of economic growth. Housing growth requires barriers to be dismantled, which is what the Government are doing. They have allocated £500 million to the Growing Places Fund and are freeing up public sector land on the "build now, pay later" principle for builders. There is also the build your own home scheme and, as I mentioned earlier, the Get Britain Building investment fund. Crucially, local councils will have greater freedoms in their management of social housing and will play a key role in bringing empty homes back into occupancy, with the £150 million fund to turn empty homes into affordable homes to which I referred.

I wish to mention two overriding principles in the way that I think about housing. First, we should not see a house or a flat as a unit but as a home. In all our thinking about housing-for example, around issues to do with spare rooms-we should keep to an overall principle that if someone is to move from a property which may be perceived by others to be too big, the principle of volunteering to do so should be paramount. Any compulsion should be eliminated from our thinking. I believe that people think of their house or flat as their home. That home will have many memories. When I was leader of Newcastle City Council, one of the things that we tried to do was to get back to building bungalows. If you build bungalows with a little bit of space at the front and back and perhaps a small garden, but on both sides, people are more willing to move from a three-bedroom council dwelling to something that they perceive to be good for them than to be downsized into a block of flats which they do not really want to live in. Bungalow building has been on the back burner for around two decades, but they are now being built and opened in my city and elsewhere. That is extremely helpful.

Homelessness is the second overriding issue that I want briefly to talk about. It has started to increase again. Last year, in 2010-11, just over 100,000 people approached their local authority as homeless. The number of households accepted as being owed the main homelessness duty increased by one-sixth. In addition, there has been an 8 per cent growth in rough sleeping in London during the past year. At the same time, overcrowding has also been rising-reversing a previous, fairly long-term, decline.

Finally, we have heard about housing policy being a challenge. Indeed it is. One can adopt the view of the noble Lord, Lord Whitty, which I interpreted as saying that the glass is half empty. I interpreted the noble Lord, Lord Best, as saying that the glass is half full. I have to say that I subscribe to the latter view because the Government have addressed an issue that for the past four years had not been properly addressed as a consequence of the credit crunch. It has been a major source of concern for many of us since the credit crunch began as we have seen housing waiting lists rise, young people unable to buy and not enough housing units being built. Laying the Foundations has established a clear way forward and a clear set of public investment priorities. I hope and am confident that the Government will keep those priorities under review and be prepared to adjust them if necessary, but we now have a set of investment policies that can be followed to solve some of the underlying housing problems that our country faces.

1:12 pm
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Lord Beecham (Labour)

My Lords, I join all other Members of your Lordships' House who have congratulated the noble Lord, Lord Stoneham, on initiating this debate and on introducing it so fully and admirably. This is the second debate on housing-one was initiated by the noble Baroness, Lady Hollis, some months ago-which is an indication of the importance of this subject, so it is good that the House has had an opportunity to debate it.

A century ago, your Lordships' House was described as "Mr Balfour's poodle". I do not know whether Mr Pickles has a poodle, but in the shape of the Housing Minister, Mr Grant Shapps, he certainly has a Jack Russell who is very lively and busy. Mr Shapps announced, shortly after being appointed, that it was,

"easy for a housing minister to catch your eye with a headline, but much harder to deliver more homes".

He spoke whereof he knew, because there have been 127 announcements on housing since Mr Shapp's appointment-an average of about six a month. However, in the new-start figures for 2010-11, there was a reduction of 7 per cent. All this has of course been accompanied by, as we heard from my noble friend Lord Whitty, a 60 per cent cut in the provision for affordable homes. There will be more announcements to come, but most of the action plan to which the noble Baroness, Lady Maddock, referred consists of announcements, consultations and reports, rather than any actual building to take place.

The document we are debating is interesting but there are other documents that I also commend to the House, particularly to the noble Baroness the Minister- notably a series from the IPPR dealing with a whole range of housing issues. One of them looks particularly at the demand question. It calculates that the need for new homes will be in the region of 206,000 to 280,000 per annum over the next 15 years. The report also points out that in the past two decades the average has been only 160,000. It emphasises that social housing is already under enormous pressure and that waiting lists now run at between 6 per cent and 12 per cent across housing authorities. The difficulty is compounded by a halving of the capital budget, with the obvious consequences of supply being squeezed. The target of building 150,000 affordable new homes a year, assuming it was going to be met, will simply not bridge the gap-especially in the social rented sector.

The report we are debating has some interesting ideas, but there are some gaps. The noble Baroness, Lady Gardner, referred to one-what are we actually building? What standards are we building to? There was much to be said for Parker Morris standards in the social sector but also more generally. We do not see those standards being applied now. Members of your Lordships' House will recall that last year surveys demonstrated that the size of new-build properties was smaller in this country than occurs anywhere else in Europe. That is also a matter for concern.

The noble Lord, Lord Stoneham, referred to how the needs of the elderly should be reflected. There is a passing mention of that issue in the report, but it needs amplifying and needs to look beyond just the role of the Department for Communities and Local Government. Extra care housing is an initiative that has begun to prove its worth in a number of authorities. It needs to bring together the interests of adult services and the health service in looking at the kind of provision that will allow people to stay in the same place but with a range of different facilities available to them. That is worth developing.

Another singular omission in the report that has an indirect impact on the supply side is the question of student housing. In many places-the noble Lord, Lord Shipley, and I are well aware that this certainly applies to Newcastle, but it will also apply elsewhere-student housing tends to crowd out family accommodation. Just as we would seek to encourage and facilitate elderly people to vacate houses that are too big for them and move to smaller accommodation, it would be desirable to find a way of housing students in accommodation that would otherwise become available to families.

Another interesting IPPR report that I strongly commend to the Minister, who may not have come across it, deals with the extensive criticism of the development industry. The report states:

"The long-term record of UK housebuilders' levels of output tells a story of consistent underdelivery ... The value of land has risen faster than that of almost any other commodity over recent decades, so the development industry has come to prioritise trading land over building homes".

The industry has,

"bought up large land banks at high prices during the boom",

but is not sufficiently building. The report continues, stating that the,

"new Housing Strategy does not demand the reform that is needed. Instead, it offers the major housebuilders public land, money and guarantees without articulating a serious quid pro quo".

These matters are certainly worth exploring, although I would not necessarily jump to any conclusions.

We also have to bear in mind the actions that the Government have taken in addition to their thoughts about what should happen in future. Their first announcement was effectively to scrap the regional spatial strategies, against which there had been a substantial outcry-particularly in the south-east counties, which perhaps had no wish to accommodate people moving out from overdeveloped London. The result of that was that 220,000 planned homes will no longer be built and, far from delighting the development industry, the Government were immediately taken to court by a number of developers who found that their plans and agreements with local authorities were not able to go ahead.

However, there are many other matters. As we have heard from the noble Lord, Lord Best, cuts have been made in grants to registered social landlords. I happened to be in conversation with the chair of a very active housing association that is bringing together three or four associations into one. He was saying that its programme has been substantially reduced as a result of the grant cut. The association was simply not going to be able to build anything like the number of houses that it had wanted and planned to build.

The right to buy has been reintroduced for reasons that escape me. The substantial discount has been described in this debate as a free gift to people who are already adequately housed and makes no economic sense. Your Lordships will recall that during the passage of the Localism Bill, an amendment supported by this side of the House, moved by the noble Lord, Lord Best, to allow 100 per cent of right-to-buy receipts to be reinvested in housing was rejected by the Government and their supporters in this Chamber. Those are serious matters.

There is also the impact of housing benefit and other changes which are likely to generate increased housing demand. In response, we have the new homes bonus, which the noble Lord, Lord Best, implicitly described as an example of nudge theory. I have the greatest respect and admiration for the noble Lord, but on the matter of the new homes bonus I profoundly disagree with him. I am sure that that will not cause him to lose any sleep, but there are serious aspects to this. The new homes bonus involves some government money-money taken from the departmental budget for some years-and other funding which does not come out of the general pot but is a reallocation of money within local government. It is deducted from the formula grant. It is doubtful whether the scheme will achieve its objectives. The Select Committee in the House of Commons stated that it was,

"a bold experiment; but not one which, on the evidence ... we can have any confidence will be successful"-

rather short of a warm endorsement of the policy.

In addition to the question about whether the nudge will work-one must be sceptical about that-there is a huge distribution issue. The process will divert resources from the north to the south. It is interesting that the speakers in this debate have been roughly equally divided between those of us who come from the north and those of us who live in the south. The north-east, north-west and Yorkshire and Humberside will lose £104 million, while the south-east, the south-west and the east of England will gain £280 million. Tandridge in Surrey gains £20 a head; Knowsley in Merseyside loses £25 a head, Newcastle loses £5 million and Gateshead loses £4 million. That is money effectively deducted from the grant that those authorities would have received. All that to achieve the princely total of 14,000 new homes.

The scepticism that I refer to is shared not merely by Labour politicians or even the Select Committee but by the national Home Builders Federation. We have this purported remedy at a time when waiting lists are soaring and rents spiralling in the private and public sector. Shelter reports that rents are now unaffordable for working families-working families-in 55 per cent of local authorities.

The Government's record on other aspects has also been lamentable. The decent homes programme was savagely cut. In my view, the Labour Government did not do enough to secure new building, but they did an enormous amount to improve the condition of existing stock. Those programmes have effectively been uprooted. I have wearied the House in the past with references to Newcastle, so I shall confine my observations to Gateshead today, just across the River Tyne from us. Gateshead has had a significant cut-in fact, it was cut off completely. It lost several million pounds from the decent homes programme and also had a 15-year programme for housing renewal halted halfway through, with significant consequences for the local economy and housing needs of that area.

Another policy that the Government have introduced, on which we will see the extent to which it proves deleterious, is flexible tenancies-something which the Conservatives, at least, had pledged in their manifesto not to introduce. They said that they would not interfere with tenure.

The condition of the private rented sector is a matter of concern. There are significant problems in dealing with repair, some of which were touched on in passing in the debate on housing matters under the legal aid Bill last night. Instead of strengthening councils' powers in relation to empty dwelling managing orders, the Government have made it more difficult. Properties have to be vacant for a longer period and to constitute a nuisance-hardly a term that is readily interpreted-before any action can be taken. We need stronger powers to promote licensing schemes and to intervene to take over the management of poorly managed properties. They are not the majority, but they are present in significant numbers, not just in core urban areas but throughout the country. There is very little in the document about the condition of the private rented sector.

Some interesting observations have been made today about how new forms of financing and new forms of building-self-build and community build-may take place. They should certainly be developed, but we continue to have a significant imbalance between the sectors and geographically. Incidentally, while we are thinking about geography, the growing places fund, which has been referred to, underlines the inequity of the present system. The growing places programme is supposed to provide infrastructure for new housing development and the like. It was striking that Northumberland, Durham and Tyne & Wear received exactly the same funding under that scheme as the Oxford City region and Berkshire-not areas, one might have thought, of pressing social housing need and with a significantly smaller population than that major part of the north-east. The issue of equity is completely omitted from the document.

The foundations may have been laid, but I must conclude that they are fairly shaky. I hope that the Government will listen to the evidence, consider the issues of fairness and respond more constructively to the real needs of the many people who are in poor housing, who are desperate to move into better accommodation and who want communities that are mixed-as several noble Lords have commented-but in which the quality of housing, especially new housing, is better than has been provided, certainly in the private sector, for many years. We must move away from a fixation with owner occupation and look to a multiplicity of forms of tenure which will suit people at different stages in their lives.

I again congratulate the noble Lord on introducing the debate. I have no doubt that we shall be returning to the issues in the months and years ahead.

1:27 pm
Photo of Baroness Hanham

Baroness Hanham (Conservative)

My Lords, I thank the noble Lord, Lord Stoneham, for initiating this debate and for getting time for it. I also thank those who have contributed to it, because, as usual in debates such as this, within the limited number of speakers, it has brought out those who have a true interest in and experience of housing and housing strategy. I am grateful for the support we have received, by and large-the response of the opposition spokesman was a bit churlish, but there were touches here and there where he might just agree with us. On the whole, the strategy has been accepted.

The noble Lord, Lord Stoneham, has enormous experience of housing associations and the area of housing. We do not underestimate the contribution that such organisations make to housing delivery, or the importance of the affordable housing sector. I immediately agree that housing must be on the top of the Government's agenda. The provision of the strategy demonstrates that it is. I liked the description of my honourable friend Grant Shapps as being akin to a Jack Russell terrier; I think that he will feel complimented by that. He is certainly is able to snap away and get things done, and he has inspired and introduced the strategy which has now been launched by the Deputy Prime Minister and my right honourable friend the Secretary of State.

We have covered a lot of ground in this debate and I shall try to go through at least some of the issues that have been raised. The strategy is fully funded through a combination of existing budgets and the Autumn Statement, and it will provide more than £1 billion to help with all the initiatives that have been put forward.

We have debated today, as we have in the past, the need for housing of all types in this country. We know that there is significant underbuild and that we need more housing. I think that the figures quoted have been correct: in 2010, 103,000 new buildings were completed, and the expectation and requirement is that more than 200,000 a year should be built. The housing market and housing construction industry also create jobs, so we are well aware that, where the impetus for housebuilding is lacking, we lose the talents and craftsmanship that the housing industry produces and the economy is not stimulated as it should be. It is vital that we stimulate housing, not only for economic growth but for the social reasons which have been mentioned today. People of all ages need good housing, and it is our desire to ensure that as much as possible is produced.

Every million pounds-worth of new housing supports 12 additional jobs. That is quite a figure and an important one. The housing strategy sets out immediate action to get the housing market moving. The expectation with the action plan is that things will be moved along. I refer here not just to consultation, although if there is no consultation on some of the issues involved, people will say that they have not been consulted and that they do not know what is going to happen. However, consultation does not have to go on for months; it can be relatively swift for the right people, and decisions can then be taken very quickly.

The noble Lord, Lord Stoneham, raised a number of really important points which others picked up. As he said, the Government are laying the foundation for the renewal of housing structures in this country. It is fair to say-I think that the noble Lord, Lord Whitty, made this point-that it is not starting from a standpoint of great heritage, but there are reasons for that: the economy has not been very helpful for a number of years. The previous Government had laid some of the foundation but they could not resolve all the housing issues due to the economy and the ensuing difficulties. However, with regard to the economy and the development and financing of housing, all sorts of aspects can be picked up, many of which are in the strategy. For example, the New Homes Bonus-I am sorry that the noble Lord put his foot on that-encourages further development. With every home created, a sum of money is capitalised and made available from council tax to ensure that further building is carried out. It is the stimulation of other building that is important. Other areas that stimulate building are very well laid out in the housing strategy.

I was quite surprised at how little attention was given to the mortgage aspect and the Government's guarantee to underwrite 95 per cent of mortgages for first-time buyers.

A point was made by the noble Baroness, Lady Miller, about self-build and people being encouraged to build. The strategy refers to this not as self-build but as community build, and policies are laid out for helping people to build homes themselves or to set up with other people in order to build. Available public land-which, again, was not touched on very much-is now being identified across government. It will be made available for community housing or self-build housing, and it will also be available for development on a "build now, pay later" basis, which means that housing development will become possible with payment for the land being made subsequently. All this eases the possibility of making housing available to as many people as possible.

The right to buy, which the noble Lord opposite rather sniffed at, went completely out of favour under the previous Government because the discount was reduced so substantially that it did not make it worth while. It is now proposed to increase the discount, and discussions are currently taking place about a percentage of the amount taken from the deposits being available for new homes. The expectation is that for every house sold, a new house or property will be built or made available. That is one way of dealing with the issue.

We are also helping by providing £420 million for the Get Britain Building investment fund because we know that not enough new homes are being built. We estimate that approximately 133,000 housing units with planning permission are available to be built. If we can get the building investment going, we can ensure that those properties are built. We also know that under Section 106 there are already indications of where housing can be built-affordable as well as private housing. Again, this is blocked under current conditions and we need to get it released.

I need to change what I said about the new build indemnity scheme, otherwise everyone will get the facts wrong, as I did. The Government are not underwriting 95 per cent of mortgages for first-time buyers; they are offering low deposit mortgages of up to 95 per cent loan-to-value for new build. I apologise that I got that entirely wrong.

The noble Lord, Lord Stoneham, raised the question of levering in finance for housing associations and bonds. We know that between 2008 and 2010 £2.8 billion-worth of public bonds were issued by social housing providers. Also, the new affordable homes programme is predicated on providers levering in more investment from the private finance markets. The affordable rent programme enables providers to borrow more against the higher income streams.

The noble Baroness, Lady Gardner, returned to a few of the aspects that she raised a couple of days ago. She referred, in particular, to commonhold and rent to buy. Commonhold has always been very difficult, as I think we all realise. Indeed, when the noble Lord, Lord Whitty, took the relevant legislation through the House, it was recognised that there were going to be difficulties with it. I think that the noble Baroness is correct in saying that there had to be a 100 per cent buy-in, particularly in blocks of flats, and that that was almost impossible to achieve.

The Ministry of Justice, which is responsible for the commonhold policies now, does not intend to do anything more about this at the moment, but it is recognised that it is a possible way for people to get their own homes without the problems of management and freehold.

The rent-to-buy situation, raised by the noble Baroness, was a programme funded by the previous Administration. The funding for affordable housing is available under the affordable rent programme. That funding would support innovative programmes similar to the rent-to-buy programme-that is a form of rent programme. We are aware that similar approaches have been taken by registered social landlords. The criminalisation of squatting, which she raised, is also being consulted on at the moment by the Ministry of Justice.

Quite a lot of speakers referred to empty homes. I think we all agree that empty homes are not only undesirable but are a complete waste of resources. We have quite a detailed policy within the strategy for dealing with empty homes and there is a substantial sum of money to support bringing such homes back into use. The £100 million in the empty homes fund has been pursued in the housing strategy. We are also looking at the council tax discount and whether that should be stopped for empty homes. That is being consulted on at the moment, along with the flexibility for councils to do that and to ensure that councils take up the opportunity of dealing with empty homes. Of course, the new homes bonus will also be available for them.

The noble Baroness, Lady Miller, mentioned park homes. We are very aware of the problems with park homes. Some are very well managed but some are not. We are committed to providing a better deal for park home residents by improving their rights. That is being consulted on at the moment. My honourable friend Grant Shapps is very concerned about these issues and is looking to see what can be done to enforce the rights of owners to, for example, challenge unreasonable service charges more easily.

I think I touched on self-build, which is custom building in the housing strategy. We think that is important and the availability of land is coming forward.

The noble Lord, Lord Shipley, supported the mortgage scheme and drew attention to the release of public land. He referred to the Home Group, which is a very good innovative scheme. The more that we can bring the private or voluntary sector into the provision of housing the better.

There was also concern about older people and a vague suggestion that they might be forced out of their houses, if they are overhoused, and be downsized into smaller properties. There is no intention of that. We have never said that anyone will be forced to do anything. If they voluntarily want to downsize, they will be supported to do so. I agree entirely with the noble Lord, Lord Shipley, that it would be good to have housing, such as bungalows, available but that needs land and development. I do not think anyone believes that people should be forced into leaving their homes at any time if they do not want to.

This is a very wide-ranging strategy. The Government are determined to ensure that it is started and seen through. On all the policies that are put forward there is a financial commitment. There is an expectation of innovative investment to help it through. It is a very determined start and I think this is one of the first opportunities that we have had to see a comprehensive view of what is needed in housing in this country. It will boost the provision of housing, it will boost the housing market and it will try to provide housing for all those who need it, including the numbers on waiting lists, the homeless and everyone else who needs a decent home to live in. I thank the noble Lord, Lord Stoneham, and all noble Lords who have taken part.

1:45 pm
Photo of Lord Stoneham of Droxford

Lord Stoneham of Droxford (Liberal Democrat)

My Lords, I thank noble Lords for this debate. It has been very valuable in raising this issue and giving it a higher profile. I would like to say a few words in response to the individual speakers. I thank the noble Baroness, Lady Gardner, for emphasising the importance of rent to buy and I shall certainly look at her comments on commonhold leases.

The noble Lord, Lord Whitty, was very brave to admit the inheritance which the Government have received as being far from perfect. I thought that his argument that we need a holistic approach to resolving the crisis was important. He raised the dangers of hierarchy in housing and the need for new ideas to overcome the current divisions that exist between private ownership, rented and social housing.

I am grateful to my noble friend Lady Maddock. I think her emphasis on the importance of the policy on empty homes and on energy efficiency are two key issues going forward in the housing sector and her emphasis on the need to address energy efficiency in the existing housing stock. I accept that her proposals on VAT will need longer examination.

My colleague, the noble Lord, Lord Best, and I have a strong interest in retirement housing. He reminded us that the key issue in our sector is that of borrowing. I thought that his five-point plan to get the housing sector moving was very constructive and useful. I thank him for his remarks.

My noble friend Lady Miller emphasised the self-build sector and the vigour that can be applied by local people particularly in rural areas to such projects. I was particularly amused and convinced by her commitment to turning arms into ploughshares.

My noble friend Lord Shipley gave a northern dimension to the debate, emphasising the need to contribute to the economy and reaffirming our commitment to challenge the situation of the homeless.

The noble Lord, Lord Beecham, raised the significant issue of equity between north and south and the importance of fairness. I thought he was just a little negative in terms of coming forward with how we might fund what he would like to achieve and what we would all like to achieve. I appreciated his commitment to multiplicity of tenure.

I thank the noble Baroness, Lady Hanham, for her very detailed reply and commitment to pursuing the development of the foundation strategy. Housing should be a focus for the coalition. It is important to job recovery and meets a very important social need. As the noble Lord, Lord Best, reminded us, the key is the issue of borrowing and I hope that the ministerial team will take up the challenge of finding and fighting for new vehicles for funding which will enable us to build more affordable housing in this country.

Finally, I hope that the Jack Russell of a housing Minister and the coalition will continue to aspire to the ambition and example of that old bulldog, Harold Macmillan.

Motion agreed.