My Lords, this group of amendments looks at starter homes. The noble Baroness, Lady Williams of Trafford, will be aware that while this is a flagship policy of the Government, considerable reservations have been raised both inside and outside Parliament about the whole scheme. That was very evident in our previous debate.
We are in the midst of a housing crisis and these proposals on their own do not go any way to solving the crisis. They may even make things worse as funding is diverted from other programmes to support this one. That is one of the failures of the Bill; it does not do enough to support other housing tenures. The starter homes product is unaffordable to many people in most areas. At Second Reading, I pointed out that you could need an income of up to £77,000 per annum in London to afford one of these homes.
Although the Minister will not accept the point about the price cap being seen as a price guide, I certainly share the concerns of Mr Nick Hurd, the Conservative Member for Ruislip, Northwood and Pinner, when he drew that conclusion when the other place debated this Bill. The proposals actually make things worse by diverting funding from other schemes and allowing starter homes to replace low-cost rented homes within planning obligations, which will reduce supply of housing available to those on low or modest incomes. That local authorities are able to grant planning permission only for certain residential developments, as specified requirements relating to starter homes are met, is of considerable concern also. Depending on what the regulations say, this could have a very damaging effect on the supply of other tenures of social and affordable housing.
We heard a lot about localism in the last Parliament, just as we did about the big society, but it has gone the same way and is rarely mentioned from the Government’s Dispatch Box these days. My understanding of localism is that it surely must be right for local authorities to be able to utilise their understanding of local housing markets to reach agreements with developers to ensure that planning obligations are met that deliver local housing need as part of a wider duty to ensure that there is a wide range of housing tenures to meet housing needs.
We have heard that there could be a loss of up to 71 affordable homes of every tenure for every 100 starter homes. The Government, of course, talk of working in partnership with local authorities, but the worry is that the Secretary of State will use extensive powers of direction to override any local development documents identified as incompatible with starter home duties. Can the Minister comment on how the Government will work in partnership with local authorities to deliver this policy and also satisfy other housing needs and not just right roughshod over genuine concerns and a desire to deliver housing tenures that meet identified local housing needs? Also, by exempting starter homes from the community infrastructure levy, the policy reduces the scope of local authorities to secure the necessary contributions towards funding infrastructure.
The first amendment in this group is Amendment 37 in my name and that of my noble friend Lord Beecham. It adds the words,
“new homes across all tenures”, into Clause 1. It is fairly straightforward and takes account of the point that I have made that promoting one particular type of tenure at the expense of other types, regardless of local need, is not a sensible policy. The amendment would put in the Bill a more sensible statement with respect to the starter homes programme and other housing tenures.
Amendment 47 in the name of the noble Baroness, Lady Bakewell of Hardington Mandeville, and other noble Lords, is one that I am very supportive of. It would make clear in the Bill the duty of the local planning authority in relation to starter homes and other tenures. Amendment 48 in my name and that of my noble friend Lord Beecham qualifies the duty of the planning authority to promote starter homes where that would prevent other types of affordable housing being built. This is important, as the local authority would have a better understanding than the Secretary of State of the local housing need in a particular area.
Amendment 48A would require the local planning authority to take proper account of housing need and viability for particular groups of people—those of pensionable age, below average income and those in need of a statutory duty to house. The amendment proposed by the noble Earl, Lord Listowel, would put in the Bill a requirement for an adequate supply of affordable homes for key workers and families requiring temporary accommodation from the local housing authority. There are other amendments in this group, which will be spoken to by the noble Lords who have tabled them. I am supportive of all the amendments. Their aim is to ensure that proper account is taken of local housing need in considering the building of starter homes. I am sure that this will be an interesting and wide-ranging debate. I beg to move.
My Lords, I support Amendment 37, to which my name is attached. I declare at the outset that I am a vice-president of the Local Government Association. I shall also speak to Amendment 47 and, in practice, several others.
The overriding concern in this group of amendments is that the Bill must be about renting as well as home ownership. That is why we have two separate groups—the last group looking at ownership and this one looking at all tenures. The principle is very simple. Renting must still be supported for lower-income households where it is not possible for them to buy their own property. I remind the House that there are some 1.3 million people on social housing waiting lists in this country. So I hope that the Minister will understand and accept that the Bill cannot just be about starter homes for owner occupation but must include social renting.
I will draw your Lordships’ attention to the Government’s own impact assessment, which admits that there will be fewer social homes for rent. On page 38 in paragraph 1.1.26 headed “House builders” it states:
“Starter Homes are required to be sold at a 20% discount. The Government has supported this by removing the Section 106 affordable housing contribution and through not having to make a payment through the Community Infrastructure Levy and other tariff style payments”.
There is a direct consequence of that decision. Section 106 currently delivers half of all new affordable homes. It matters to the building of new social rented homes because grant funding for these homes has been reduced, funding for affordable rent ends in 2018, and cuts to social rents limit the ability of local housing bodies to build new homes. So, as my noble friend Lord Tope said at the end of his speech in the conclusion of the previous group, the Bill has to be about all forms of tenure and not just about starter homes.
The reason is that Shelter research has found that starter homes are unaffordable to people on low incomes in 98% of the country and unaffordable to those on middle incomes in 58% of the country. As Shelter says, starter homes clearly serve different markets to social rent, so they should be planned as additional—but if they are to be additional, the resources need to be provided and we cannot simply remove the ability of local housing bodies to build the homes for social rent that are needed.
The Local Government Association and a number of other bodies have produced very similar sets of statistics and the sense of direction in all of them is the same. The million homes by 2020 that the Government talk about very frequently is of course a gross figure and not a net figure and so takes no account of demolitions that may occur in that time—for example, the Prime Minister’s initiative on demolishing some estates. So we need to be much clearer about this because, since household formation on the Government’s own figures is increasing by 200,000 a year, we are not going to be solving the housing crisis by the end of this Parliament. So I hope that the Minister will take away the comments made on this group and on the previous group and think very deeply about how the problem of affordability for so many people who cannot aspire to a starter home can be achieved.
Shelter has estimated that someone seeking to buy a starter home will need a deposit of £40,000 and an income of £50,000 to afford it, and in London a deposit of £98,000 and a salary of £77,000. These are very large sums of money, and this raises questions about whether the Government have thought through the implications of all the different aspects of this Bill, which seem to be a set of silo initiatives which are not properly joined up at a local level.
That takes me to the crucial point on which the noble Lord, Lord Kennedy of Southwark, finished his contribution. It is that you have to give local authorities greater flexibility than they currently have. Will the Minister look at ways of giving local authorities greater flexibility to deliver other forms of affordable housing alongside starter homes, whether for owner occupation in the form of shared ownership, say, or through additional homes for social rent, particularly in view of the fact that in the comprehensive spending review the Chancellor provided additional funding for housing?
In the previous group, the National Planning Policy Framework was raised. Can we be clear about whether we are in fact changing it without admitting to the fact? The NPPF already requires councils to plan for a mix of housing to reflect local demand, so if it continues to say that, presumably it is accepted that it is the duty of local authorities to develop polices which fit the needs of their area.
There have been several problems with this Bill. I pay tribute to the noble Lord, Lord Horam, for identifying one of them, which is that we simply do not have enough information, partly because so much is being restricted to regulations, so that much cannot be explained, even when we attend the technical briefings. It makes it very hard to know exactly what the Government are planning to do. As we have heard, the problem is about supply. I do not think that the Government are going to solve the problem they have unless they address that problem of supply. I hope that the Minister will think carefully about what has been said, because when we get to Report on this matter we will be addressing it all over again.
My Lords, in the context of this group of amendments I should also declare my interest as a vice-president and the immediate past president of the Local Government Association. I shall speak to Amendments 48A, 48F, 50B and 50D. All these amendments are about the absolute priority being given to 20% discounted starter homes even though such housing may not be addressing, and therefore should not be replacing, the accommodation which an objective assessment by the local authority has demonstrated that an area needs.
As other noble Lords have pointed out, guidance in the National Planning Policy Framework gives local planning authorities the job of preparing a strategic housing market assessment. This is intended to ensure that their local plan is based on clear evidence and will meet the needs for different kinds of housing in a mix that takes on board demographic factors and market trends, is reflected in the size, tenure and range of homes in particular locations and includes the requisite measures for meeting affordable housing need. This NPPF framework, devised after much consultation, replaced a plethora of planning guidance and is not, course, repealed by this Bill. The noble Lords, Lord Beecham and Lord Shipley, wondered whether the NPPF would now be overturned, and the Minister may like to confirm, as I have been reassured, that this planning policy framework remains firmly in place.
This means that there is now a conflict between the NPPF guidance and the new requirement for a proportion of starter homes to be given the highest priority in future local plans. The new stipulation in the Bill cuts right across the NPPF guidance. In effect, it says, “Thank you, local authority for bringing together all the evidence on local housing need and demand as the Government have asked of you. You are now to set this aside and make way for our new initiative that may or may not meet the objectively assessed housing requirements you have set out. In particular, if the evidence demonstrates a priority need for affordable housing for rent or shared ownership, you should ignore that. Instead, wholly or partially in place of using Section 106 agreements to secure those affordable homes, you should require housebuilders and housing associations to build the 20% discounted starter homes which we in Westminster or Whitehall have decided are the real requirement for your area”.
The noble Lord, Lord Greaves, quotes colleagues who said that there are 100 local housing markets, each of which has its own special needs. For one illustration I will follow the noble Lord, Lord Campbell-Savours, in drawing on the excellent example of Bristol City Council to illustrate my point. Bristol, working with South Gloucestershire and North Somerset councils, published its Wider Bristol HMA Strategic Housing Market Assessment, which shows the need for 85,000 new homes over the next 20 years. Of these 29,000, about 35% are required for people who will need affordable housing as currently defined, in a ratio of 80% affordable rented and 20% shared ownership. However, government diktat will now stipulate that a large proportion—perhaps 70%, if the figures the noble Lord, Lord Horam, mentioned, are correct—will be replaced in future by the need to build new starter homes. This is the downside of the Bill: the potential loss of desperately needed new homes for people who cannot get a starter home.
Some of those who would have been helped under the current arrangements have incomes high enough to purchase a starter home. These young buyers will be fine. Sadly, however, there are not many of them. Savills, the property agents with the best research skills, has done the sums with the LGA. To quote again what must become the statistic of the day, discounted started homes will not be affordable to any of those assessed as needing affordable housing in 67% of local authority areas. Therefore, in 220 council areas, none of those who could have benefited under the present system of securing a proportion of affordable rented or shared ownership housing through planning agreements would be helped in the future under the starter homes scheme. Of the remaining 100 or so council areas, in 80 cases less than 10% of those needing affordable housing could be helped by the starter homes initiative—they just could not afford to buy even with the discount. Therefore, starter homes cater only very rarely for the same people as those whom the local authority planned to assist through its published planning authorities. When placing this cuckoo in the nest, displacing the housing needed by those on lower incomes, surely the Government should support councils who have analysed their local housing requirements and markets and yes, include provision for starter homes, but only where that clearly accords with the very varied local demands.
In considering an amendment I moved earlier today which sought government support for a national scheme to help vulnerable tenants, the Minister said that local authorities were better placed than central government to introduce such schemes. In that case a very modest and inexpensive guaranteed national scheme for tenants was at stake. In the case of starter homes, the national scheme—to be implemented in every locality in the country—is in every way a far more intrusive and expensive arrangement. Where now are the arguments for local discretion?
Different groups are mentioned in each of these amendments, and all of them need to be taken into account before they are set aside to make way for the first-time starter home buyers: those over pension age, those on below-average incomes, and of course, those whom councils have a statutory duty to help because they are homeless. There is also supported, specialist housing and housing for people with disabilities. Each group deserves a lengthy defence, which I do not have the time to set out tonight. However, perhaps I can say something about one of these groups, which will not be helped at all by the starter homes initiative. This is older people, covered by Amendment 50D, for whom retirement housing, housing with care, downsizer homes and other forms of age-exclusive provision can be made. If starter homes were simply to take the place of other groups who are in housing need, this would be among the worst tragedies. Here the cuckoo in the nest is displacing not only the other youngsters but their parents as well.
By definition, starter homes are for the under-40s. Many of us are trying to promote quality housebuilding for older people. I declare a special interest as chair of the All-Party Parliamentary Group on Housing and Care for Older People and chair of the Housing Our Ageing Population: Panel for Innovation. Housing is of huge importance to the parallel agendas of health and care with potential large costs to the NHS and to local authority social care budgets if housing is ignored, and with huge savings if suitable housing is made available. We would see reduced accidents in the home, fewer premature winter deaths, less bed-blocking, earlier hospital discharges and fewer readmissions, and postponement or prevention of the need for residential care. Purpose-built retirement and extra-care housing developments, including whole retirement villages and continuing-care retirement communities have so much to contribute, not least in alleviating the miseries of loneliness and isolation.
Housing for older people also helps the younger generation, the people whom those starter homes seek to help, because when we older people downsize to help ourselves, to enjoy somewhere easier to manage, cheaper to heat, without steep steps and outdated facilities —when we help ourselves by rightsizing—we help the next generation in a chain reaction that achieves, on average, more than three other moves. Therefore, Amendment 50D —and I am grateful for the support of the noble Baroness, Lady Andrews, and the noble Lord, Lord Stoneham—calls for an exemption to the requirement to provide starter homes in developments for age-exclusive housing schemes.
This group of amendments gets to the heart of the problems with this Bill. I strongly support all of this long list. All the amendments, in the end, say the same thing to Government: stay with the national planning policy guidance, let local planning authorities determine their local priorities and do not put all your eggs in the starter homes basket.
My Lords, I shall seek to redress the balance in this debate by briefly making a contribution in support of the thrust of government policy in Chapter 1. I do not think the Bill is perfect, but I do think what the Government are seeking to do in this chapter is right.
Basically, what we are trying to do is move the dial of housing policy away from renting towards home ownership. We are not moving the dial nearly as far as some noble Lords have suggested, in that there remains a substantial commitment to investment in social housing for rent. I know the Government remain deeply committed to something the noble Lord, Lord Best, mentioned earlier—getting long-term institutional funds into the private rented sector.
I do think it is right to move the dial, which is what we do in Chapter 1. I think there are four reasons for this. First, it is what we said in the manifesto we would do. Secondly, it is what people want. Thirdly, it enables the Government to get more housing for a given amount of public investment. Fourthly, it has the potential to help, not hinder, those who are on the social housing list.
In the manifesto, we could not have been clearer about what we wanted to do. There is a whole chapter entitled “Helping you to buy a home of your own”, with a commitment to,
“build more homes that people can afford, including 200,000 new starter homes … double the number of first-time buyers compared to the last five years – helping one million more people to own their own home”.
In delivering that commitment, it is the judgment of the Government that they need primary legislation in order to deliver what they promised. I have heard nothing that contradicts that belief.
Secondly, and perhaps related to the first, it is actually what people want. We heard from my noble friend the Minister that, I think, 86% would prefer to be home owners. The majority of those who are privately renting would like to be home owners. All parties in this House have accepted that it is a legitimate pursuit of public policy to promote home ownership. We all accept the right to buy for council house tenants. There is promotion through the inheritance tax system to promote home ownership. This is another step in the direction, which has been sanctioned by all parties for some time, of promoting home ownership.
Thirdly, it has the potential to provide more houses for a given amount of public money at a time of public expenditure constraint. In the 1980s, we switched resources from the local authorities to the housing associations, because if we let the local authorities borrow it scored against the PSBR, but if we let the housing associations borrow it did not. As a result, there was a substantial increase in output. The nudge of the dial enables more houses to be built for a given amount of public pounds. I was looking at my copy of Inside Housing, which has a paragraph headed “HCA confirms tenure change”, which says:
“Chichester Council was originally expecting 30% affordable housing in its Section 106 agreement for the planned 160-home Lower Graylingwell site in Chichester. This has now been changed to 50% Starter Homes, which are considered affordable by government, meaning 80 will be built in place of 48 affordable homes”.
I think we all agree that we need to increase the output of housing. One of the consequences of this policy is that that can happen.
Finally, it has the potential to help, not hinder, those on the waiting list. I respectfully disagree with what the noble Lord, Lord Shipley, said, which was that houses for sale and social renting meet two different markets. I do not think that that is the case at all. I think that there is a group in the middle who would like to be home owners but cannot and who are therefore in the social housing queue. This can benefit those for whom there is no alternative but social housing because it removes from the queue those who could afford home ownership with a little bit of help from the Government but who otherwise will remain in the queue, possibly ahead of people in greater need.
My only comment is that I would like to see the starter homes initiative initially targeted on existing social tenants and housing association tenants who, for whatever reason, do not have the right to buy—they might not have been there for 10 years—so that the initiative would enable a social tenancy by moving somebody out. Alternatively, the starter homes initiative could be targeted at those on the waiting list so that they are removed from it, enabling others to move ahead.
Although, as I said, the Bill is not perfect—I may have some doubts to express at later stages—it is in the right direction. It is delivering what we said and it deserves support.
My Lords, I will speak specifically to Amendments 47 and 48C. I will not be anything like as eloquent as the noble Lord, Lord Best, but I will do my best.
I believe that the Government’s concentration on starter homes to the exclusion of other tenures is extremely damaging to the housing market and to the aspirations of those looking for a home of any sort. There are those, as we have heard, who will never be able to afford or be eligible for the Government’s starter home programme. There are those who struggle to pay market rents, never mind repayments on a mortgage, and those who will be excluded from renting from a private landlord due to the rents being levied. These people are not to be cast aside as though they are of no importance. Each and every one of them deserves the dignity and security of a decent home in which to live and bring up their children.
Crisis has produced a brief that indicates that starter homes, as we have heard, will primarily help couples without children and on average or above-average salaries. Starter homes will be inaccessible to families on or below the national living wage in all but 2% of council areas. There are only six local authority areas where single people on an average wage or less will be able to afford a starter home. By requiring councils to prioritise starter homes for higher earners, the Bill reduces the scope of local authorities to meet the full range of housing requirements that councils have identified through their planning processes. Thus, the housing needs of low-income groups will go unmet and homelessness is likely to increase.
It is essential that local authorities can retain their flexibility to provide a full range of housing tenures and requirements, including social and affordable housing, to meet the needs of their residents. Starter homes do not do this. The Government should accept this and allow councils to make provision to meet the gap in the market that the starter home policy will create. This is essential to a buoyant housing market in the country and to meet the needs of those at the lower end of the income spectrum.
On Amendment 48C, local authorities do not carry out their planning processes and housing functions in the dark. They do not produce a map and, with a blindfold on, attempt to pin the tail on the donkey, as we did when we were children at birthday parties. No, they have detailed information which they have gathered from officers, residents, parish councils, surveys, census figures, voluntary organisations, developers, Age UK, Citizens Advice and so on. All this assists them to build up a picture of what housing is needed and where. They are able to calculate what is viable in which location and what is not.
It is all very well for the Secretary of State to require from on high that a starter home requirement must be met, but if there is no need for starter homes in a particular area but homes of a very different nature, this would seem to be a false requirement. Surely it is for local authorities using the information they have collected through their local planning processes to determine what is needed to prevent homelessness and provide for their residents in any given area. That is what their councillors have been elected to take responsibility for and which they have a burning desire to fulfil. Local authorities must be allowed to do just what it says on the tin—decide locally what is needed for their local communities.
My Lords, I speak in favour of the amendments in this group—in particular Amendment 48C in my name and Amendments 48A and 48F which I have supported. This group of amendments addresses two issues which concern me most about this section of the Bill. The first is that starter homes will come ahead of and instead of affordable rented accommodation. There is no doubt about that in the way this will play out. Secondly, the Government will dictate to a level I have never seen before the proportion of starter homes that are built, down to individual schemes. This is quite extraordinary.
The Bill gives local authorities a duty to promote starter homes. As the noble Lord, Lord Young, said, this is a manifesto policy. I acknowledge and accept that point, but it gives them an absolute duty. It does not say, “Promote starter homes as part of your wider housing plans”. Had it said that, we would now be in a different conversation. It simply says, “You will promote starter homes”. It does not say anything about any other tenure. So, yes, the manifesto does say that the Government can ask and indeed require local authorities to promote starter homes, but they should be asked to do it in the context of their primary role, which is to assess housing need and provide for it. That is the first point I really care about in this Bill.
The second point, as the noble Lord, Lord Best, has made very clear, is that we have now a well-established process through the NPPF of housing market assessment followed by a local plan and the identification of the necessary land. It is not an easy process. Local authorities go through a lot of heart-searching before they come up with their local plan. Crucially, they think about the local needs in their area before they agree that plan. What we have here is the superimposition of a government view about one tenure or even one product—it is not even a tenure—ahead of other products. It makes much more sense, as the amendment seeks to put forward, that they consider their local plan and have a duty to promote starter homes but that they do it in the context of a plan that they have already developed and are seeking to promote. If starter homes are such a popular and well-regarded product, it would be very surprising if local authorities do not rush to put it in.
I touched earlier on the requirement for starter homes in individual applications. One thing we do know is that we have massively different housing markets in this country. I will say a few words about, and declare my interest in, the London Housing Commission in a minute. Where housing markets can vary literally over two or three miles, never mind between the north and south of the country, having the Secretary of State judging the proportion of housing that needs to be starter homes in each application before that application is approved is asking for trouble. The one thing that we can be sure of is that he will get the number wrong for some part of the country. He may get it wrong for every part of the country, but he will definitely not get it right everywhere. It is in many ways the worst kind of centralism.
I will illustrate that with the results of the London Housing Commission, on which we will report on
We touched on the issue of whether they will be a substitute for affordable rented housing. The Minister has spoken of the £1.6 billion going into affordable rented accommodation—affordable rented and shared ownership, I should say. What is not said is that the £1.6 billion is in fact the completion of a programme started under the coalition Government. It is the 2015 to 2018 programme being completed, and the reason it is being carried through is that allocations have been made and money committed. If we look at the programme post-2018, we will see that it drastically falls and remains only for specialist housing. So we must not get any sense of this being a determined policy. It is a consequence of a policy agreed in the previous coalition Government that is being followed through in the current one because allocations have been made.
We should always ask the question in any policy: who gains and who loses? In this policy the people who will gain will be people under 40 who are close to being able to buy a property—maybe actually able to buy a property, because there is no income test on this, but who take advantage of the starter homes scheme. In other words, it will be people at least in the upper half of income and in London in the upper 10% of income. Who loses are the people who are the most desperate in their need for affordable rented accommodation. That is the equation we are being asked to agree in this part of the Bill. When starter homes were genuinely additional, I could see the point of them. When they replace desperately needed affordable rented accommodation, it is wrong, to be frank.
We should look very seriously at these amendments, and the Government should look very seriously at them. This policy will not work across the country and we should leave the decision for these choices where it should properly lie—with individual local authorities.
My Lords, I have tabled an amendment in this group. I declare my interest as a landlord and a landowner involved in property development, and I very much associate myself with all the amendments in this group. I particularly associate myself with the words of my noble friends Lord Best and Lord Kerslake.
Shortly after I took my seat in 1998, I remember going with a health visitor to see several families in Redbridge in east London. I was shocked and appalled by what I saw at that time. The accommodation that many families were struggling to live in was absolutely appalling, and this was many years ago. The point that may be missing from this debate, and which probably has been made, is that we have a historical deficit of investment in social housing. Some of the things that have been said in support of what the Government are proposing might be all very well but we have a profound historical deficit in social housing. These families are unheard: none—or perhaps one or two—of us politicians come from that background. They are living in houses in multiple occupation and in damp, overcrowded conditions, and they get overlooked. They have been overlooked by the Labour Party and the Conservative Party: all parties will hold up their hands to that. That is a particular problem with what the Government are proposing.
I am grateful to the noble Lord, Lord Kennedy, for supporting my amendment, among the others here. I will give one example of a mother to whom I spoke last week. She has four children. The eldest, I think, has a disability, but the youngest—a two year-old—experienced a haemorrhage while in his mother’s womb, and as a result was born with palsied arms and legs. He is blind and has hearing issues and, at two years old, is much smaller than he should be. The 10 year-old brother has ADHD and one other issue. As a consequence, she and her husband are both unable to work now; they are full-time carers for their children. She has been on the housing list for two years. She recently visited a house to look at it and found that there were 27 people higher up the housing list to look at it. She is living in three bedrooms with her husband and four children. From both her front and back doors, there are steps leading up, so as her youngest child grows bigger, it will become more and more difficult for her to enter and exit the house. So many families are like that: they are stuck with inappropriate housing because of the failure of successive Governments to provide sufficient social housing. I thank the Minister for her helpful reply and assurance earlier on.
Turning to my Amendment 48B in this group, its purpose is to ensure that a local authority, in relation to starter homes,
“must also ensure that there is an adequate supply of affordable homes in its area for … key workers; and … families requiring temporary accommodation”.
I have not spoken on the Bill yet, but I welcome much of what is in it, particularly with regard to streamlining the planning process—of which I have had experience—and many other areas. However, I am concerned—and the noble Lord, Lord Kerslake, alerted us to this—that in 2018, the Government will invest £2.3 billion in starter homes, self-build homes and other areas. However, from 2018 the funding for the sort of social housing that I have just described will be declining.
Not so long ago, I visited the University of East London, which is doing some work on the impact of homelessness on families. It highlighted to me that, all across London, the social housing stock is so severely depleted that it would take many, many years to replenish it. I understand the Government’s concerns, but the suffering of so many families in such appalling conditions really needs to be given priority.
In 2011, the OECD produced a report that found that a fifth of children in this country were growing up in a family without a father and a quarter of children in the United States were growing up without a father in the family. It predicted that in about 10 or 15 years, we would overtake the United States, and 30 % of our children would be growing up without a father in the family. Of course, living in temporary accommodation has an impact on the mental health of adults in those circumstances, and must have an impact on the parental relationships. I have just given that as one example of why we should be really concerned that so many of our children are growing up in hostels, temporary accommodation or bed and breakfasts. More than 100,000 children in this country are currently growing up in temporary accommodation.
I recently spoke to someone working on the troubled families initiative, a very welcome initiative from the Government. She told me how indignant she felt that she would make a relationship with a hard-to-reach family, begin to do some good work and then that family would be moved on elsewhere because they were living in temporary accommodation. They would very frequently move on.
I am particularly concerned by the growing information about families being moved out of London because of shortages here. Many years ago I visited the Families in Temporary Accommodation project run by John Reacroft at Barnardo’s and met many such families. Of the themes that came through, there was particularly that of isolation. So many families had been placed a long way from their community, friends and family. Now we see that families are placed far out of London and their local authority, and may well be moved on once more so become more and more isolated and separated. There are real reasons to be concerned about the increasing numbers of children growing up in temporary accommodation. I hope the Minister can offer some reassurance in her reply that that will be addressed. My other matter was to do with key workers. It is so important for these families that key workers can work close to them. That needs also to be kept much in mind.
The only thing I disagree with in what the noble Lord, Lord Horam, said—if I understood him correctly—is that this is about housing supply rather than varieties of tenure. I strongly disagree with him there. There is a desperate need to increase housing supply within the particular tenure of affordable and social housing. That is a long-neglected area and the Government need to take that issue away and think about it.
My Lords, I will speak to Amendments 48F and 50B, to which I put my name. I am aware that in this debate we are going over the same ground we covered in the debate before the dinner hour but my excuse is that I will look at it from a largely rural perspective.
I must first declare an interest, for the purposes of the Committee stage of the Bill, in that I am a farmer and landowner. I am also a farmer who donated land to a housing association for the purposes of building affordable homes on an exception site in our village—half for rent and half for shared ownership. I believe that the latter is by far the best way to get people of limited means on to the housing ladder, especially when they can gradually staircase, within their means, up to an 80% maximum—which after all puts them in much the same position as a starter home owner without the distortion to the marketplace involved in the whole starter home programme.
I cannot endorse enough the Government’s ambition to build more homes and to help our young people into home ownership. I really hope that the starter homes initiative will provide the long-term beneficial solution that the Government’s faith in it deserves. As I said, shared ownership or shared equity is more of a proven route to me and, in my view, more worthy of government support. Thus, I support these two amendments because I worry about the overriding priority the Government are putting on the starter home agenda, as many noble Lords already said. In rural areas, that could mean that the requirement for truly affordable housing—housing for rent, shared ownership and supported housing—will take an inferior place, if any place at all.
The majority of properly affordable homes in rural areas come from commercial sites, usually in or on the edge of market towns, which have a percentage of affordable homes as a result of planning conditions—Section 106 agreements and so on. In my part of the world, this can be as high as between 20% and 35% or even higher, depending on local need and the site involved. You can imagine that a 200-house site, for instance, provides a vital supply of affordable houses. Without wishing to teach my grandmother to suck eggs, I would say that in my experience these planning conditions are usually arrived at as the result of a tripartite agreement between the developer, planners and a rural housing provider or housing association.
Before the Government compelled housing associations to reduce their rent by 12% over four years, the housing associations used to buy these affordable houses at virtually cost price. No one made any profit on these particular plots; the profit for both the landowner and developer came from the commercial housing on the rest of the site. Thus, the houses filled the need as cheaply as possible. Now, with the 12% reduction in rents, the sums do not quite add up for the housing associations, and I know of two examples where they are starting to ask the developer for a discount on these houses, below even the cost price. I have heard of discounts of up to £30,000 per house being asked for, although I have not heard of them being accepted.
I am not saying that the forced rent reductions are wrong—clearly, the Government were, and are, facing huge pressures on the housing benefit bill—but the tripartite agreements will now almost certainly have to reduce the number of truly affordable homes on rural development sites in order to make the sums add up. I hope that the haggling will be hard, but it is a shame to be losing even a few of our affordable homes. It is a tragedy that the percentage of truly affordable homes, either to rent or for shared equity, will be reduced even more because of the priority to push starter homes.
As has already been said many times, starter homes are of real value to only a very small percentage of the population. I agree with the noble Lord, Lord Kerslake, that there will be a lot of people. Anyone under 40 wanting to buy a new home is bound to want to buy a starter home. Whether they need it, or need the help, is neither here nor there.
Furthermore, starter homes are here today and gone tomorrow. No doubt we will come to that in later amendments. I can see the initial attraction of starter homes to the developer, although I now understand that even developers are concerned about both the long-term effect of these homes on the marketplace and the immediate effect on the sale of their own cheaper homes. Nevertheless, the developers can still make money on them, compared to truly affordable homes.
If, in the tripartite discussions, both the developer and the local planning authority are, by central government diktat, pushing back against truly affordable housing in all its forms, then the housing associations—or, more importantly, their low-paid and potentially homeless clients—will have to shout very loudly to be heard. It would be far better if the local planning authority was on the side of the housing association or, at the very least, had obligations to ensure that they got their fair share.
If we are to prevent increased homelessness in rural areas in the long run, then we really must ensure we maintain a mix of solutions to the long-term problem of affordability. Starter homes may have their place, but when I set out my notes for this contribution, I entitled them, “Deprioritisation”. That more or less sums up my message. Starter homes will never replace the importance of a true variety of truly affordable homes.
My Lords, most of the relevant points have been made and I do not want to repeat what other noble Lords have said, but I have a simple question for the Minister.
“those over pension age, … those on below average incomes, and … those to whom it owes a statutory housing duty”.
Amendment 50, tabled by my noble friend Lord Kennedy of Southwark, refers to an exemption requirement for housing for,
“younger people; … older people; … people with special needs; or …people with disabilities”, or where there is a proposal to build,
“a homeless hostel; … refuge accommodation; or … specialist housing”.
We have, this evening, repeatedly heard the case that starter homes are to be given priority over everything else. How will those that I have just listed be protected in the new regime which the Government are promoting? In other words, how can we be assured that the groups referred to and embodied in those two amendments will be provided for under a system which gives priority to starter homes? If the Minister can answer that question, she will be able to answer most of the issues raised in this debate.
My Lords, we have had a long debate. Though I am reluctant to detain the Committee for too long, I want to speak in favour of these amendments, particularly Amendments 48A, 50B and 50D, to which I put my name. I again draw the Committee’s attention to my interest as chair of Housing & Care 21.
We have to ask the Government: are we in this together on housing? The need to build more homes is something we all agree on but I contest the point made by the noble Lord, Lord Young. I accept that a commitment has been made in the Conservative Party manifesto; I respect that, although I do not think it is right and I have some suspicions as to how that figure was snatched out of the ether and arrived at. The question is whether we will build more homes than we would have without this extra policy initiative.
I think the Government have—certainly the Conservative Party has—a problem with social housing and affordable housing for rent. That is why we have had a setback. We had a problem in the early years of the coalition in getting the Government to put more money into social housing investment. It happened only when the Chancellor became worried about the state of the economy, as far as I could see. At that point, we at last saw some initiatives that encouraged the building of social housing.
As has been admitted in this debate, we have now gone backwards. If we were really setting out to build more houses we would be building more for private ownership and more for social housing. We had begun to make progress on that at the end of the coalition Government—not enough, I accept, but we had made some. Frankly, we are now going to hit the buffers because of all the initiatives and impetuses behind starter homes and the promotion of home ownership. As the noble Lord, Lord Kerslake, said, starter homes will be at the expense of other forms of housing, and that will include social housing. The consequence is that we will build fewer houses than if we had really been in this together and planned to increase home ownership while maintaining a balance by being committed to social housing as well. As a consequence, there will be problems in terms of the design of homes and the communities we build, which will be lopsided and unbalanced. Future generations will come to regret that.
It has been made quite clear by the noble Lord, Lord Best, that there are other areas of need which the Government seem to be ignoring. We know that the retired population is increasing and we want to have more rightsizing. What initiatives will the Government use to encourage that process? Only this week, we have seen initiatives from the National Health Service, which recognises the importance of housing in health policy. I do not see where the Government will get the extra housing for the retired population.
It remains the case that homelessness is getting worse. I am sad to admit that it increased during the last years of the coalition. Which of these initiatives address that? Local communities should surely be given the flexibility to address some of those problems rather than go down a route that puts all the emphasis on home ownership. The other consequence will be that the people in real need will be driven into the private rented sector, which will compound our problem with the housing benefit bill because we will be paying out more.
I would also like to draw attention to the rural area, which the noble Lord, Lord Cameron, covered in his remarks. I cannot think of a more critical area where community needs have to be very carefully planned and provided for if we are going to have balanced communities which feed into the social life of those communities. We have to give more attention to providing affordable homes to local people—we need to make that distinction. As he says—and this is another argument that we are not actually going to increase the number of homes that are going to be built—I know that landlords in my area will be very reluctant to give up their land at a reduced price if they think that in the future people will have the opportunity to make a profit out of that, rather than what they thought, that these homes were going to be used for local people in perpetuity for their social needs and those of the communities in which they live.
Everybody agrees that there is a problem with supply. If we are going to build more homes that actually meet the demand we have, we need more diversity, mix and balance. As well as helping private ownership, we have to give more attention to social housing. If we do not, we will have all the problems I have mentioned in terms of increasing pressure on homelessness and the encouragement to older people to rightsize being diminished, and therefore we will end up with a worse and unbalanced housing situation, when there was a real opportunity for all of us to be in this together.
My Lords, we are all familiar with the concept of the starter homes project, which the Government launched with a great fanfare. It will, as we are now very familiar with, provide 200,000 affordable homes—I think that is the Government’s target—for first-time buyers aged under 40 who will benefit from a discount of 20%, which will not be repayable on a subsequent sale after five years. That is the basic concept.
Of course, the only criterion for obtaining the assistance and the discount to buy these starter homes will be age, not income. In London, for example, this could lead effectively to a handout on resale of more than £100,000 to the buyers of starter homes bought for the capped price of £450,000 after the discount—an untaxed £100,000 gain for the fortunate under-40s who secure a starter home. The Government fund all this with £2.3 billion, which represents just a part, as I mentioned before, of the housing benefit savings from the imposition of the 1% increase on social housing rents. The damage that that does to the social housing stock is, of course, studiously ignored.
Section 106 currently delivers half of all new affordable homes. Shelter describes it as being,
“especially vital to the delivery of new social rented homes, as grant funding for these homes was removed in the last Parliament”— by, I remind your Lordships, a coalition Government—
“and funding for Affordable Rent ends in 2018”.
Of course, in the mean time we will have cuts to social rents, limiting housing associations’ ability to build new homes. Shelter research found, as we have heard, that starter homes are unaffordable to people on low incomes in 98% of the country and unaffordable to those on middle incomes in 58% of the country.
The claim is that affordable homes will thereby become available for purchase but clearly affordability is an elastic concept. The coalition Government drove up council rents, deeming an affordable rent in that context to be 80% of private sector rent levels. But given the chronic housing shortage and the boom in buy to let, which dramatically drove up prices and rents in the private sector, that definition of affordability is fundamentally flawed. Affordability must surely relate to what the would-be owner-occupier or tenant can reasonably be expected to pay, having regard to his or her income, not an artificial comparison to the market rate.
Prices, as we know, will be capped at £450,000 in London and £250,000 elsewhere after the 20% discount, representing, in effect, full market prices for these new properties of £562,500 in London and £312,500 elsewhere. However, the Government claim that the average price of starter homes for first-time buyers would, after the discount, be £291,000 in London and £169,000 elsewhere. Even at those levels—which are highly questionable, especially for London—starter homes will not be affordable for a huge number of people. In fact, the Government’s figures appear to be based on the average cost of houses bought by first-time buyers, not the average price of new houses, which would be higher.
I am indebted to Savills for helping me ascertain the figures. Savills explained that the average new home values for the 12 months to November 2015 were £560,000 in London—with the 20% discount, that would give the £450,000 figure—and £260,000 in the rest of England, which, with a discount, would give £210,000. However, these are of course irrelevant, as it looks as though the Government have used the average first-time buyer house prices from the same source. A price of £364,000 in London for the average first-time buyer—not of a new house—with a 20% discount would give £291,000; in the rest of the country, £211,000 for first-time buyers, of all types of houses, would be £169,000 with a 20% discount. In other words the Minister—obviously unwittingly, I suspect—has been quoting figures which do not relate to what we are talking about, which is the cost of newly built houses, which will, as Savills put it, be higher. In fact, the email I received from Savills said:
“This seems an odd choice”— the choice of the average first-time buyer’s purchase—
“as clearly new homes sell for more than second hand homes”.
I trust that the Minister will henceforth acknowledge that the figures she has given are not quite accurate. I am not accusing her of anything except perhaps being supplied by her civil servants with figures based on the wrong comparison.
What is affordable? I hope your Lordships will forgive me for referring to the council that I know best, but in Newcastle, for example, the 5,900 applicants on the council’s housing list have average earnings of £20,000, which would be enough to support a mortgage of £70,000, leaving an effectively unbridgeable gap between that and the discounted purchase price of a starter home. Even the national average income of £26,000 would fall short of the amount required to obtain, and sustain, the required mortgage. We must also bear in mind that we have a historically very low level of mortgage interest rates at the moment, which is ultimately bound to go up. Ironically, in passing, we should note that a household income of £30,000 outside London—which could be a couple on the national minimum wage—would invoke the pay-to-stay provision for council housing, were they to be in such houses.
The LGA quotes a report by Savills that starter homes would be out of reach for all people in need of affordable housing in 220 council areas, as we have heard this evening. The definition of starter homes as affordable, which councils will have to promote together with Help to Buy, will, in Savills’s view,
“leave a gap in housing provision for those on lower incomes”, while benefiting those in London with incomes of between £45,000 and £90,000 a year.
The Town and Country Planning Association reports that 80% of councils surveyed say that starter homes would not be affordable, while only 7% say the policy would address the need for affordability in their area. It conducted a survey of authorities, 54% of which were Conservative, 27% Labour, 17% no overall control and 2% Liberal Democrat. We have a little over 2% of Liberal Democrats in this Chamber, for reasons which I will not elaborate. The results of the survey were strikingly similar. Of the councils surveyed, 61% thought that the need for affordable homes in their area was “severe”. The survey asked whether the Government’s proposal to reduce social rents by 1% a year for the next four years had an impact on their plans; 68% said that it did. Councils were asked whether the starter homes policy would address the need for affordable housing in their areas; 85% said no. They were asked whether starter homes should be classified as affordable housing; the answer, from 75% of those councils, was no. Councils were asked whether the proposed extension of right to buy would have an impact on housing available for social rent in their areas; 80% of them said that it would.
There will also be an impact on what councils can achieve under Section 106 planning agreements. The Government’s own figures suggest that for every 100 starter homes built, between 56 and 71 affordable council and social rented homes will not be built, as we heard earlier. Over the four-year period of the starter homes scheme this represents a reduction of around 50% compared to the last four years. Savills confirms that the policy will result in fewer homes being built for affordable rent. Savills also questions the impact on shared equity schemes and warns of the risks of reducing the number of new homes built. Savills is an independent commercial organisation with no political interests at all.
Amendment 37, as we have heard, seeks to broaden the objective of the Bill to include the provision of new homes across all tenures, including, but not restricted to, starter homes. The concept of building starter homes as self-contained areas—islands—is rather disturbing. We need balanced communities, with housing of all tenures for different kinds of people. The Minister and I have exchanged views about development in the ward that I represent, which has a mix of new housing for sale and some for rent. That retains the notion of a mixed community. I fear that significant developments of, almost exclusively, starter homes will militate against that kind of community.
Amendment 48 would allow councils not to provide starter homes if it would prevent other types of affordable housing being built on particular sites. Newcastle, and, I suspect, other authorities, has a policy of providing 15% of houses in new developments for affordable rent.
Amendment 49 requires the Secretary of State’s restriction of planning permission for residential developments of a specified description to those where the starter homes requirement is met, to be subject to a full assessment of the need for starter homes in that area. We should start from what is actually required before overruling local aspirations and imposing starter homes exclusively. In passing, the continued displacement of local decision-making by regulation and central government fiat is extraordinary, especially when one recalls Conservative opposition to regional housing strategy.
Amendment 50D allows regulations to permit exemption from starter homes provision in build-for-rent schemes, in the important areas of supported housing, schemes with homeless hostels, refugee accommodation and specialist housing. These, I submit, are perfectly reasonable suggestions.
The noble Lord, Lord Young, referred to institutional investors as newcomers to the market, and I welcome their involvement in the private rented sector. However, one is left wondering what the future is for council housing, in the first place, and perhaps also other forms of social housing. There seems to be a view in government that council housing is to be ultimately wound down completely. The market will be left essentially to the private sector, possibly with housing associations—although I fear for their future, too, because I suspect that the voluntary nature of right to buy will be replaced over time by compulsion. We will then be left with an essentially private sector-dominated rented sector.
We need a mixed economy of housing provision. We need good local authority housing, good social housing, good private rented housing and as much affordable owner-occupied housing as can be provided. We are moving away from that mixed economy, and I very much hope that your Lordships’ House will encourage the Government to get back on track.
My Lords, the noble Earl, Lord Listowel, graphically described why we need more social housing in this country. For one thing, it is to help the very poorest in society. I fear that the Bill will do nothing to help those people. The noble Lord, Lord Kerslake, and my noble friend Lord Beecham described how the buying of starter homes will essentially help only those who ultimately could have afforded to buy those homes on the open market anyway. It will merely exacerbate the growing inequality in our society. Until I listened to the noble Lord, Lord Kerslake, that element of growing inequality as a consequence of the Bill had not touched me too much. Now, I am thinking, “Oh my God! It is even more important that we do something about this Bill”. It is absurd that a housing Bill could add to the inequalities in this country.
In response to a consultation on proposed changes to the NPPF, the Gloucestershire Rural Housing Partnership said:
“Starter homes is a short-term attempt to implement a corrective measure to the housing market. It is unlikely to be sustainable or affordable for the Government in the long term and may not be attractive for all developers”.
“Will demand for housebuilders’ standard first-time buyers product be negatively affected by starter homes production levels?”.
I would say that the promotion of new homes across all tenures would be a much more sustainable policy for the Government, housing associations, local councils, communities, individuals and the country as a whole.
Have the Government considered the impact if starter homes replace affordable housing on a huge number of new sites? There may be no Section 106 affordable rent or shared ownership homes provided by developers in future. Have the Government thought about that? My own housing association says:
“Developers’ appetite for starter home delivery remains to be seen, since it goes up against Help to Buy product, and developers like the fact that they can pre-sell affordable homes at a guaranteed price to a housing association, accounting for 30% or 40% of the total number of homes built on the site, giving them certainty of sale, less risk and a good cash flow”.
The Bill, as we have heard so many times, will ensure that starter homes come ahead of affordable homes in the provision of housing in future, yet surveys undertaken in Gloucestershire reveal that the majority of need in rural parishes is for affordable rented homes. As so many have said, if we want sustainable communities with shops, schools, pubs, et cetera, we have to have homes where people can live. Often, they cannot afford to buy them, so we have to have good social housing.
In 1980, 24% of rural homes were affordable. That figure is now 8%. That compares with 19% in urban areas—although of course I accept that the situation in London is very difficult, and very different. But I suggest that that difference between urban and rural areas, and the fact that the Government have not really taken that into consideration, demonstrates the fact that this Bill has sadly not been rural-proofed as it should have been, and as every piece of legislation should be.
I am very supportive of all the amendments in this group but especially supportive of Amendments 50B and 50D, for all the reasons set out by the noble Lord, Lord Best. Supported housing, housing for older people and housing for people with disabilities is already under threat in many areas as a consequence of financial constraints, and this Bill could well exacerbate the situation. Lack of housing for older people is equivalent in the housing market to bed-blocking in the health service—or one could look at it like that. The excellent report, Building Better Places, is rather new, but I assume that the Minister has seen it and will have noted two of its recommendations. The report recommends:
“The Government should reconsider its proposal to include ‘starter homes’ within the definition of affordable housing. The proposal risks undermining mixed communities and preventing the delivery of genuinely affordable housing for the long term”.
It also recommends that the Government should,
“revise its proposal to require starter homes on every reasonably sized development site. Local authorities should retain the discretion to prioritise long-term affordable housing over starter homes in the planning system where appropriate”.
That is absolutely spot on. Local authorities and people in local areas know the local housing needs of their communities and, as others have said, one size simply does not fit all. The report is very new, and I am sure that the Minister will say, “Well, of course I have not had a chance to respond to it yet”. Undoubtedly there will not be a chance to respond to it before the Bill is finished—but I very much hope that the Government will do everything that they can to respond to it, because many parts of the report are salient to the debates that we are having.
I support this group of amendments, particularly Amendment 48A, so well spoken to by the noble Lord, Lord Best, and supported by my noble friend Lord Beecham, and the noble Lords, Lord Kerslake and Lord Stunell.
A few months back, the Minister took the House very skilfully through the Cities and Local Government Devolution Bill. She was extremely responsive to our concerns about the role of prescription in localism and the degree of powers that should be decentralised. We spoke a common language on this around the House on the need to devolve decision-making to the most local body that was competent to do so. That is what localism means—that is why the anti-Europeans in the Brexit group sign up to quite a lot of that position, I suspect. This amendment emphasises that point. The Minister is saying that the government, Westminster and Whitehall prescription of starter homes should be at the exclusion and displacement of any local understanding, knowledge and experience of the community. That is what the Government are saying.
Take, for example, my county of Norfolk. It is 60 miles across. Norwich has kept its own stock—then there is King’s Lynn and Great Yarmouth, as well as dozens and dozens of relatively small villages, going up to small market towns. I am time-expired as chair of a housing association that uniquely built across the whole of Norfolk. If I could have, I needed to build between six and a dozen bungalows in every rural village in Norfolk. I would have had every elderly person queuing around the block to downsize into a bungalow in their village. That would have freed up their family home, their rented housing association home or, possibly in some cases, their rented local authority home, for a young family in Norfolk, in a place that has low wages and is low-skilled, with incomes often well under £20,000 a year, often dependent on benefits to top them up. They would have been able to move into those homes and stay in their locality.
The result would have been twofold. First, those young families would have sustained the schools, which are declining in numbers, and the public transport, because those families cannot afford a car, or certainly not a second car, if he goes off to work in the old banger. It would have sustained GP surgeries, local shops and post offices. We would have kept rural Norfolk going. Secondly, those young families would have been living close to their elderly relatives. It would have allowed mums to help with the childcare and it would have allowed daughters and sons in turn to keep ageing parents out of long-term residential care by being close to them, neighbourly and supportive. That is the sort of community we have been talking about. What is going to happen? The Government are going to make that impossible.
Starter homes at these prices are irrelevant to all except immigrés, possibly coming into my former university or to a few very well-paid jobs at Norwich Union. The rest have low incomes, low skills and depend on social housing. Yet the housing that could have produced the chain that the noble Lord, Lord Best, talked about with two or three moves is not happening and the result is that villages will dwindle. This will mean young people having to move away from their homes and come into Norwich or move on further still to find jobs and homes. It will remove the support that enables elderly retired people to remain in those communities. As GP surgeries, pharmacies and post offices go into decline and close, they, too, will have to move because there will be no services.
That is what the Government are doing in this Bill and it is the extreme opposite of what the Minister skilfully, rightfully and generously argued on behalf of DCLG during the Cities and Local Government Devolution Bill just a few months ago. Back then she would have been horrified at the notion that local authorities’ assessment of the needs for their areas for the elderly, for disabled people, for people on low incomes or for people to whom they owe a statutory duty, and their local knowledge of villages and small market towns across a county that is 60 miles long, should be overridden by people in Westminster and Whitehall, many of whom have not even visited the place. She would have been appalled in the name of the Cities and Local Government Devolution Bill that the next Bill she handled would run completely at odds and rip it up. She has had some brave but fairly futile defence from the noble Lord, Lord Young, but he has been about the only person since 3 pm today to speak in defence of the Government’s policy. I hope she takes this back to her department and says that if we are saying one thing about economic development and local determination, we cannot say exactly the opposite for the major part of economic development that is housing development. And I hope that, as a result, she will understand just how angry so many of us feel that our communities are likely to be ripped apart by a housing policy which will make it impossible to build and stabilise them.
My Lords, I will address a number of amendments together. These are Amendment 37 from the noble Lords, Lord Kennedy, Lord Shipley and Lord Beecham; Amendment 47 from the noble Baronesses, Lady Bakewell and Lady Pinnock, and the noble Lords, Lord Shipley and Lord Greaves; Amendments 48, 49 and 50 from the noble Lords, Lord Kennedy and Lord Beecham; Amendment 48B from the noble Earl, Lord Listowel; Amendment 48A from the noble Lords, Lord Best, Lord Beecham, Lord Kerslake and Lord Stoneham; Amendment 48C from the noble Lords, Lord Kerslake, Lord Best and Lord Kennedy, and the noble Baroness, Lady Bakewell; Amendment 48F from the noble Lords, Lord Best, Lord Cameron, Lord Kerslake and Lord Beecham; Amendment 50B from the noble Lords, Lord Best, Lord Cameron, Lord Beecham and Lord Stoneham; and Amendment 50D from the noble Lords, Lord Best and Lord Stoneham, and the noble Baroness, Lady Andrews.
Together these amendments give me the opportunity to make clear that the Government are committed to increasing housing supply across all tenures. Earlier I stated that repeatedly and I went through the spending commitments of £4.1 billion for 175,000 shared-ownership homes, £1.6 billion for 100,000 affordable rented homes, and £8 billion for 400,000 affordable homes, including £2.3 billion for the 200,000 starter homes. Taken together, the spending review will deliver a million new homes by 2021, and starter homes are at the heart of this new ambition for the reasons I have outlined. Home ownership is particularly out of the reach of this group of people. As part of this, we are doubling the investment in housing to more than £20 billion over the next five years to support the largest housing programme by any Government since the 1970s. We will build on our track record for housing delivery. More than 639,000 new homes have been built since April 2010. There are now 887,000 more homes in England than there were in 2009. That is fact, and that is what has been delivered over the past few years. Before noble Lords think that nothing but starter homes will be built, more council homes have been built since 2010 than in the 13 years up to 2010. An important statistic is that the number of new homes in England rose by 25% over the past year, which is the highest annual percentage increase in 28 years. For those who are in any doubt, that shows not only this Government’s commitment to building housing but their record over the past few years.
However, we know that we have to do more. These clauses are about something new: a new approach to address the pressing problem of young people and home ownership. There have been slight suggestions that in some places young people might not need to own homes. There has been a huge drop in the number of young people able to access home ownership. The Bill will help deliver our manifesto commitment and will place starter homes at the heart of new developments, which is a welcome addition to our growing package of support for future home owners.
As I said earlier, and as my noble friend Lord Young of Cookham reiterated, 86% of people want to own their own home. As a Government, we should try to meet that aspiration. We need a radical shift in the way the housing market supports young first-time buyers.
Can I take the Minister back to the previous debate, where we were talking about the cost of mortgages and the price of houses? When she refers to £26,000, what does she actually mean? Some of us cannot really grasp what she is driving at, because when I looked up mortgages with a 20 or 25-year term, it was 40% of a post-tax £26,000 income. I relate that to what the Minister was saying.
What I said earlier, and I am sorry if I did not articulate it terribly well, was that the average wage in this country is £26,000. For a couple on £26,000 each—
Each? First, the Minister emphasised “mean” rather than “median”. “Mean” means that three billionaires at the top end pull the figure up, whereas “median” has 50% below that figure. The median is the figure that we use in such debates. The median figure is considerably less than £26,000; it is probably nearer £24,000 for men, and for women it is under £21,000 a year, if they work full-time. The Minister is not offering us a representative figure.
My Lords, if I take both noble Lords’ figures, a median wage of £21,000 and £24,000 respectively, and add them together, that is £50,000 on a combined wage. Sorry—the hour is late—it is £45,000. On a combined salary of £45,000 and quoting £145,000 for a starter home, that would not be out of the median couple’s reach.
I was simply giving an example of an average working couple. There are many households in which both people work.
My Lords, I was simply giving an example of two people working within a household. It may well be that both people within a household do not work and one person is earning £45,000-plus. I was giving an average example, which I intended to be helpful to the Committee, but clearly I have confused everyone. However, I can write to noble Lords about median and average wages; this was simply trying to take the average couple on an average wage and apply that on a basis which I thought would be helpful to the Committee but which clearly was not terribly helpful.
No, my Lords, I was simply giving an example of a couple who work and who are on the average wage. Every single case is different; I was simply giving an average scenario. We can make all sorts of different assumptions—for example, about a scenario where one person works in the household and they earn £50,000, and so on—but I was simply giving the example of an average working couple.
My Lords, this might help the Minister. I think it is the case that the Government’s figures on what is a median income, and therefore the affordability of a starter home, are different from the figures given by a number of the other agencies—for example, Shelter—that are giving evidence to those engaged in this debate. It would be very helpful if the Minister could, before Report, write to noble Lords who have been engaged in this debate with a clear explanation of the figures which the Government are using to sustain their case.
When the Minister writes, can she specifically say how many residents in Stockport, which is the borough in which I live, have the two full-time incomes to which she refers? That would be quite a handy ready reckoner for us as regards assessing the information she intends to give us.
The noble Lord, Lord Stunell, makes a very good point; for example, would it apply to Norfolk, where my noble friend lives? Whether it is one person or two people, they will not get to the £45,000 she is talking about.
The noble Lord is absolutely right. We talked about shared ownership earlier on. It may well be the case when one person works and they are on the average or median wage—and by the way, I will write to clarify what might be the art of the possible borough by borough if necessary, which it sounds like I am on the way to doing. Of course, if you look at my borough, it is split down the middle as regards the demographic. I have completely lost my train of thought. It may be that other products such as a shared ownership scheme might be the most appropriate to somebody where the whole household earns the median wage. I was simply trying to illustrate this by an example and I am slightly regretting it now—but I will write to clarify this.
We need a radical shift in the way the housing market supports the young first-time buyer, otherwise we condemn a whole generation to uncertainty and insecurity. As I said earlier, over the last 20 years the proportion of 40 year-olds who own their own home has gone from 61% to 38%.
In specific response to Amendment 37, Clause 1 sets out our position clearly. This consistency of approach is important to ensure our reforms are widely understood, particularly by lenders and developers, and that delivery is maximised. Starter homes are a national priority and all local authorities must play their part in delivery. But as I made clear at Second Reading, and earlier this evening, they are just one part of the package of affordable housing options, and they will increase the choices available to those who wish to own their own home. There is a range of products available, and starter homes will be, rightly, part of that mix. We support the delivery of other tenures. We have funded the delivery of other tenures over this spending review period. But we do not believe that the amendment presented here will serve any useful purpose.
The noble Lords, Lord Shipley, Lord Best and Lord Beecham, talked about the Savills and Shelter reports. We expect starter homes to be an entry-level property valued at below the average first-time buyer price for that local area by its very nature. But Savills and Shelter based their work on average house prices. We have examined the affordability of homes to those currently in the private rented sector. Assuming that those households sought to buy in the lower quartile of the first-time buyer market for new-build housing and moved within regions to areas where they can afford to buy, we found that outside London up to 64% of households currently renting privately would be able to secure a mortgage on a starter home, compared to only 50% who could now buy a similar property priced at full market value. Within London, up to 55% of households currently renting privately will be able to secure a mortgage on a starter home, while only 43% could now buy a similar property priced at full market value. I think that the noble Lord, Lord Campbell-Savours, does not believe me.
The noble Lord, Lord Shipley, made a point about starter homes and increasing housing supply. We are designing our starter-home reforms to increase housing supply and not just to change tenures. We want the planning system to release more lands specifically for starter homes, for instance on underused brownfield land not allocated for housing. This is being supported by our £1.2 billion new starter homes land fund, which seeks to propose more brownfield sites for starter homes.
On Amendment 47, the noble Baronesses, Lady Bakewell and Lady Pinnock, and the noble Lords, Lord Shipley and Lord Greaves, argued—in fact, the noble Baroness, Lady Pinnock, did not speak; I am giving her credit when she is not here. The other noble Lords argued that the duty to support starter homes should extend to other types of affordable housing. Clause 3 expects councils to actively support starter homes as a new product in their housing mix. It does not remove the ability to deliver other affordable housing alongside starter homes. Nor does it remove their local planning policy. I expect that most councils will continue to support delivery of a range of affordable housing and have planned policies to help achieve this.
Councils are very aware of their commitments to meet local housing needs, and they will strive to meet these needs. That plays into the point made by the noble Baroness, Lady Hollis, about support for localism other than the duty to provide for starter homes. The Government completely recognise that local councils will be very keen to support delivery of the range of housing products available according to their local needs.
The Government’s record on affordable housing delivery is strong. There were 193,000 affordable homes delivered in England between 2011 and 2015, exceeding the Government’s target by 23,000. In addition, councils are in a position to bring forward more land for affordable housing. More council housing has been built since 2010, as I said, than was built in the previous 13 years, and 2014 saw the highest number of council housing starts for 23 years.
Does the Minister dispute the figures that the noble Lord, Lord Kerslake, gave, that in 2018 this will dramatically drop? The reason is that these were decisions of the coalition Government, and therefore there is a question mark over the continued commitment to these building levels under this Government.
My Lords, given that some of the figures I have quoted are over the last year, it is possibly slightly stretching the point to say that it was coalition delivery rather than ours, but I am not going to argue at this hour of the night about who can take the credit for what. We have doubled investment in housing.
My Lords, the money is in the Budget. Affordable homes for rent are grant funded. Contrary to what one might think, they will be the first, not the last, to be built out because they are grant funded. They effectively act as pump-priming money for developers to build. I do not agree with that point.
I think the point that the noble Lord, Lord Kerslake, made was that this was money agreed in 2015 that covered 2015 to 2018. The noble Baroness said that the money is in the Budget. Is she saying that there is money available for future years? Is that correct, or are we talking about money that will finish in 2018 and we will then decide what will happen post that?
Perhaps I may say a few more words. The way the process works for affordable housing is that there is a bidding process through housing associations, which bid in effect in 2014-15 for the funding for a programme from 2015 to 2018. That is how they bid. What we are seeing now between 2015 and 2018 is essentially the completion of a programme that was bid for and allocated largely prior to the election. If noble Lords look at the numbers for the last Budget—this is all in the public domain—they will see that the grant funding beyond the 2015 to 2018 programme, which effectively was committed, ends, or largely ends apart from specialist housing. That was the point I was making. There is no continuation of that policy beyond what was already bid for and largely allocated.
I thank the noble Lord. That is a very interesting point. I am sure we will return to it when we consider the rest of the Bill.
Would the noble Lord like me to respond to that point? I am sorry, I have slightly lost track of who I am responding to. I will carry on and noble Lords can interrupt me if I have not covered something.
It is clear that starter homes are a new product and will provide genuine opportunities for young first-time buyers to gain a secure position on the housing ladder. We want councils to really get behind delivery. For this reason, we want the duty to focus on starter home delivery. We expect this duty on councils to encompass a wide set of activities, such as working with neighbourhood planning groups on starter home delivery and identifying exception sites for starter homes. The Secretary of State will issue guidance setting out what councils should do to meet this, which they must have regard to.
May I take the Minister a little further on the point that the noble Lord, Lord Kerslake, made? If there was a defect in the coalition Government’s housing policy, which I would be reluctant to concede, it would be that that Government failed in their first year to initiate a programme of social and public housing quickly enough. Will the Minister take back to the department the fear and belief that I believe the noble Lord, Lord Kerslake, and I share, that that mistake is being repeated? No doubt in a period of time the Government will reflect that they need to restart that programme and ensure that it continues beyond 2018. It is a question of learning from experience, which I very much hope this Government and the Minister will be willing to do.
I will certainly take the noble Lord’s point back. Our affordable homes funding is front-loaded, as we want to continue our strong tradition of delivering affordable homes for lower-income families. The noble Lord, Lord Kerslake, will recall that our previous affordable homes programme overdelivered by 23,000, totalling 193,000 affordable homes delivered in England between 2011 and 2015. From 2018 onwards there will be substantial further funding going into the system through receipts from right to buy and the sale of vacant, high-value assets to generate additional homes for every one sold.
I turn now to Amendment 48. As I have made clear in responses to previous amendments, the Government are committed to investing further in the delivery of affordable houses, and local authorities will still be expected to plan their housing development around the needs of their communities. However, our manifesto was clear that we would build 200,000 starter homes and this is central to our housing ambitions. Clause 4 provides for a starter home requirement to be set for new developments. We will publish details in a technical consultation shortly and will take into consideration all views so that we get this right. We want a degree of flexibility with the requirement to allow for exemptions and viability considerations.
Once in place, local planning authorities will need to apply their plan policies including those on affordable housing in light of the legal starter homes requirement. We expect them to seek other forms of affordable housing, such as social rent, alongside the starter homes requirement where it would be viable to do so. Local planning authorities have the option to release more land for housing to ensure they are delivering as much housing of all tenures as is needed. The amendment would serve to make starter homes an afterthought. It would deprioritise the needs and aspirations of these young people. I hope the noble Lord will recognise the importance of supporting young people into home ownership and withdraw his amendment
Amendments 48A, 48C, 48F, 49 and 50B all require that the starter homes requirement will apply in a local authority area only once a full assessment of the need for starter homes in that area has been completed. Specific types of housing are referenced, including supported housing and retirement housing. But this clause is about taking action now, as noble Lords have just articulated, and we need to help young people access home ownership due to the increasing challenges they face in getting on to the property ladder.
I understand that housing markets and needs differ across the country but the aspiration to own a new home does not. Every first-time buyer under the age of 40 should have the same opportunity to buy a starter home. I do not expect that there is a single local authority in the country where no one wants a starter home. Indeed, the 69,000 people who have chosen to register on the Home Builders Federation website for information on starter homes are drawn from all over the county—Manchester, Bristol, Birmingham and many small rural communities.
Amendments 50 and 50D seek to amend Clause 4 to exempt various types of sites from the requirement to provide starter homes, particularly where specialist housing is being provided for and in age-restricted schemes. Specialist housing is a vital part of meeting housing need. The noble Lords, Lord Campbell-Savours and Lord Stoneham, challenged me on how to protect these groups. Over the spending review there will be £400 million for 8,000 affordable specialist homes for elderly and vulnerable people and those with disabilities.
I have just realised that I have possibly missed out an amendment—yes, Amendment 48B from the noble Earl, Lord Listowel. He talked about families requiring temporary accommodation and accommodation for key workers. There are a range of tenures available which could accommodate key workers and councils can promote affordable housing schemes for key workers if that is a particular need in that area. Furthermore, under the Homelessness Act 2002 all local housing authorities must have in place a homelessness strategy setting out the local authority’s plans for the prevention of homelessness. In developing the strategy the local housing authority must work with all relevant agencies in the local area. Housing needs are already considered carefully at the local level and I do not think the amendment is necessary.
I want to answer the point made by the noble Lord, Lord Cameron, about building starter homes when more affordable housing is needed in rural areas. We are consulting on planning reforms to allow starter homes on rural exception sites to help villages thrive. That includes an option to retain local connection tests on these sites.
I think that that is probably it. I hope that at this very late hour, with that set of explanations, noble Lords will feel free not to press their amendments.
My Lords, I thank all noble Lords who have spoken in this debate today. The noble Lord, Lord Shipley, made some very important points about us all being in policy silos. That has been demonstrated by the discussions we have had in the debate this evening.
The noble Lord, Lord Best, and others, talked about the NPPF guidance, the starter home obligations and the resultant conflict which needs to be addressed very seriously by the Government. There is clearly a conflict and that cannot be right, and it will not be sustainable. The noble Lord, Lord Young of Cookham, referred to what is happening in Chichester. I had a look at the article he referred to. It went on to say that from 30% affordable housing it moved to 50% starter homes, no affordable housing, no nomination rights and no local connections—not all good news, I suggest.
The noble Lord, Lord Kerslake, spoke about the overriding nature of the starter-home proposals in relation to other housing tenures and how this will replace much-needed social rented housing. There are real issues there about what will happen in future years, as we heard earlier. The noble Earl, Lord Listowel, talked about people living in poor housing accommodation. I must say that that reminded me of my parents’ excitement when they got the letter from Southwark Council saying that we were going to be rehoused. I was about nine years old and we lived in some quite poor, damp, unsuitable property. We moved to a clean, warm, dry, safe—and, I must say, large—council flat. I am the eldest of four children. I had my own bedroom and no longer had to share with my brother. We were both delighted and the lives of the whole family improved just by moving to that new property.
The noble Lord, Lord Stoneham of Droxford, raised the important point about rising homelessness and also the increasing housing benefit bill with more homes being in the private rented sector. My noble friend Lady Royall of Blaisdon highlighted the importance of good social housing as part of a proper mix and the particular challenge in rural areas, as did the noble Lord, Lord Cameron of Dillington. My noble friend Lady Hollis of Heigham set out with her usual skill how a successful local policy on housing, properly planned and delivered, can have enormous benefits and deliver the stable communities and economic benefits that we all want to see.
This has been an interesting and useful debate, and I hope that the Minister can take back to the department our deep concern at these proposals. I hope that she will reflect fully on this debate but also on the other debates we have had today. With that, I beg leave to withdraw the amendment.
My Lords, I wonder, having regard to other affordable issues such as affordable transport for members of the staff, whether it might be possible just to refer over the next two minutes to some information from Savills which may be relevant to our further discussions. I gather that a penny or two has dropped with the Minister.
In one of its many contributions to the debate, Savills said that as it currently stands, the biggest concern is that the starter homes policy could distort a new-home sale market without significantly increasing the number of new homes delivered overall. It explained that there was a risk that starter homes could cannibalise help-to-buy sales as well as existing open-market sales aimed at first-time buyers. Furthermore, Savills states that the classification of starter homes as a form of affordable housing under planning rules, and the duty on local authorities to promote the supply of starter homes, is likely to result in fewer homes being delivered for what is currently classified as an affordable tenure. It therefore expects to see fewer homes delivered for affordable rent.
Given the lack of detail released, it is not clear what the interaction would be between shared ownership and starter homes. Perhaps as we go forward into subsequent debates about this proposal, the Minister could give a clear indication of the detail behind these schemes. It appears that there is a clear overlap between parts of the market likely to be served by Help to Buy, starter homes and shared ownership, particularly in London. We have not heard anything as yet about Help to Buy, and the relationship of this new scheme to that and the possible impact on Help to Buy. There seems to be some thinking that the two might merge. That is a matter that perhaps the Minister might consider, either in writing or in subsequent debate.
I thank my noble friend. I was getting a bit nervous there; I thought he was going to intervene on me, but we are a good double act. Having said that, I think it has been a very good debate this evening. I hope that the Minister will look at this issue very carefully because it will almost certainly come back on Report. I beg leave to withdraw the amendment.
Amendment 37 withdrawn.
Amendment 37A not moved.
Clause 1 agreed.
House adjourned at 10.41 pm.