We need your support to keep TheyWorkForYou running and make sure people across the UK can continue to hold their elected representatives to account.

Donate to our crowdfunder

Committee (4th Day)

Housing and Planning Bill – in the House of Lords at 3:07 pm on 8th March 2016.

Alert me about debates like this

Relevant document: 20th Report from the Delegated Powers Committee

Clause 8: Definitions

Amendment 54

Moved by Lord Beecham

54: Clause 8, page 5, line 29, at end insert “, and without unreasonable cost”

Photo of Lord Beecham Lord Beecham Shadow Spokesperson (Housing), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Justice) 3:09 pm, 8th March 2016

My Lords, we begin further deliberation on this important Bill with what your Lordships will be pleased to hear is likely to be a short debate begun with an even shorter speech by me from the Opposition Benches in moving Amendment 54. It deals with Clause 8, which concerns self-build and, effectively, co-operative housing schemes and relates to the Self-build and Custom Housebuilding Act 2015. Clause 8(4) defines a serviced plot of land on which such schemes will be built as one having,

“access to a public highway and … connections for electricity, water and waste water”,

or where these,

“can be provided … in specified circumstances or within a specified period”.

The amendment would add to those important conditions “without unreasonable cost”; in other words, permission should not be automatic unless the connections, which are clearly vital to any development, can be provided at a reasonable cost.

I am glad to see that the seventh cavalry, in the form of the noble Viscount, Lord Younger, has arrived to support the noble Baroness the Minister at this point. The noble Baroness was—I was going to say “manfully”, but on International Women’s Day that would not be the right adverb—boldly carrying out her responsibilities without much support on the previous occasion. We should recognise that this is a big Bill and a big responsibility, and I am glad that the noble Baroness has her noble friend’s support this time.

Can one or other of the Ministers—I take it that it will be the noble Viscount opposite me—clarify the position on funding? Is the community infrastructure levy available for such schemes, and will it be possible to continue to require contributions under Section 106 agreements, which many of us feel are being undermined by provisions, for example, in relation to starter homes and elsewhere? My own authority—I refer again to my local government interest with Newcastle City Council—only last month submitted its proposals for dealing with these matters as a policy for the local authority. The question arises as to whether these provisions would have to be taken into account if enacted, requiring further changes to the local scheme. I apprehend that there will be other local authorities with schemes already in place or being prepared around this area.

As a further and quite different point, I suggest that access to broadband be added to the requirements. There is a very uneven pattern across the country of accessibility to broadband. Some areas are simply not registering with adequate broadband connections. It would seem to me in this contemporary age almost as much a requirement as any of the others that are defined in subsection (4). Perhaps the Minister could consider this. I do not expect an answer off the cuff today, but perhaps he would take this matter back and see whether the Government would be prepared to accept this suggestion as an addition to the matters already raised.

Finally, the clause allows for regulations—yet again—to add further services; broadband might be one of them. Do the Government have anything in mind in that respect? Are other issues being considered and, if so, whom and when will they consult about any further changes? I suspect that this is not a case in which your Lordships will be desperately worried about secondary legislation coming forward, because it would only add to the provisions dealing with adequate connections and adequate development of sites rather than acting as a constraint on local authorities or other bodies involved in development. Nevertheless, it would be interesting to know whether there is anything in the Government’s collective mind or even the departmental mind on these issues. I beg to move.

Photo of Baroness Bakewell of Hardington Mandeville Baroness Bakewell of Hardington Mandeville Liberal Democrat 3:15 pm, 8th March 2016

My Lords, I support the amendment and I hope that I will not disappoint the noble Lord, Lord Beecham, in making the debate too long. Unlike other sections, this section of the Bill has not yet exercised the Committee.

I visited Exmoor National Park in the recess as it was taking part in a vanguard project on self-build. As part of that project, the park set up, as indicated by the Government, a self-build register, and there was surprise when 84 people registered. However, on further investigation, most of those people were found not to be in housing need at all and were living outside the park area. For example, one person living in Southampton with £350,000 to spare indicated that they would very much like to build in the park. On further investigation, only 15 of the 84 people were identified as being both local and having a housing need, but so far only one is coming forward for self-build who both works and has a rural connection, and therefore fulfils the local tie.

Exmoor is not an easy place to identify flat sites for development. Builders often complain about the difficulties of the terrain and the inaccessibility for their workforces. Nevertheless, the park authority has identified 250 home sites but accepts that not all will come forward for a variety of reasons. It has set up housing ambassadors in the community who are the first confidential point of contact. They will help identify people with housing need and they expect custom-build to come out of this initiative. Exmoor National Park is aware that self-build in the park area will usually require a larger plot, with a double garage. There are very serious concerns about how self-build will be financed as the local tie tends to put off banks and building societies. Even if there are people prepared and willing to engage in self-build, finance might not be available to them.

However, the real concern on Exmoor is that national parks are planning authorities but not housing authorities. They will have a duty to provide serviced plots of land, as listed in the Bill, but they are very concerned about how they will get money back from the investment in the infrastructure. Nowhere is that made clear. The amendment moved by the noble Lord, Lord Beecham, adding the words “and without unreasonable cost”, is vital for the deep rural areas that national parks cover. National parks appear caught in an unrealistic position and do not have the resources to underwrite this policy. I suggest that the wording of “without unreasonable cost” ought to be “at no additional cost” and I support Amendment 54.

Photo of Lord O'Shaughnessy Lord O'Shaughnessy Conservative

My Lords, I am grateful to the noble Lord, Lord Beecham, for moving this amendment—not, unfortunately for him, because I support it, but for the opportunity to spend a little time, I hope not too long, considering an underappreciated and potentially very important part of the Bill. I am also grateful to the noble Baroness, Lady Bakewell, for giving us an example about how it might work in practice.

In previous sittings of the Committee, my noble friend Lord Horam said that what we always need to remember in this debate is that this is a housing crisis caused by lack of supply, and it is through that lens I am thinking of how custom and self-build could contribute to solving that problem. This is an area of great potential. According to the impact assessment, only 8% of English homes—just 5,000 to 8,000 a year—were built under custom or self-build under the current regime compared with about 30% in the US and 50% in some parts of Europe and Scandinavia. At the moment, it is a cottage industry, but, as other countries show, it could be a game-changer. It could be the biggest deliverer of housing in the country. Critically, it offers an opportunity for a diversity of design that is much more sympathetic to local surroundings than perhaps is the case with some of the big builders, which produce houses to a template. One of the main reasons that people object to local housing is because it does not fit into the local vernacular.

According to Ipsos MORI, around 1 million people would like to take action to build their own homes. That might be a little optimistic, but it is an indication that there is a real groundswell out there. Indeed, the housing vanguards that the Government have established seem to have been quite popular with an average of 80 people signing up to the registers of land to build on within the first four months of their opening, which I think coheres with what the noble Baroness, Lady Bakewell, was saying. Some interesting examples are given of what that has meant.

If this is what we want to see happen, we have to will the means as well as the ends. The truth is that the crash has been brutal to SME housebuilders who will ultimately deliver many of these houses. They declined by 49% between 2006 and 2013, and as the noble Baroness, Lady Bakewell, said, they find it difficult to access finance because they are undercapitalised. This is a really critical aspect which I think is underappreciated. There is also the factor of planning delay. The FMB 2015 House Builders’ Survey of the Federation of Master Builders showed that 68% of respondents said that planning delay was significantly impacting on their ability to deliver houses. So that is the backdrop against which we are looking at this part of the Bill.

Turning to the amendment, I feel that at best it is not necessary because there are provisions for making sure that serviced plots are made available with the costs recovered by the local authority. That is my reading of it, but it would be useful to have clarification from the Minister. At worst it could become another barrier, and I think we need to be very conscious of building extra barriers into the process when we are trying to liberalise the system. We need to make it easy for local authorities to embrace the idea, and indeed make it easy for potential homeowners to take this opportunity.

My one concern with where we are in the Bill is about the timetable for compliance by local authorities, or rather the lack of it. I would like us at least to consider whether the timetable ought to be on the face of the Bill, but we have been told that it will be set out in secondary legislation. It would be useful to understand what the timetable might look like so that we know that local authorities will be held to account for their performance in delivery. If the timetable is not tough enough, I am sure that it is something noble Lords will want to consider while we are looking at the primary legislation. It would also be interesting to hear about what the Government are doing to provide capital support for SME builders. When we talk about self-build, it is not literally self-build. While there will be a few handy people who can build their own walls, most will commission a local architect and builder, but as we know, there are not enough of them. A variety of schemes are available to help the big builders capitalise, but not enough for the smaller ones. What will the Government do in that area?

As I say, the Government are providing the right mechanisms, but we need to will the means for this to happen. There is a right for citizens, which is fantastic, but we need a time-bound obligation to be put on local authorities as well as some financial support or at least underwriting to help the builders. I look forward to hearing the Minister’s comments.

Photo of Lord Taylor of Goss Moor Lord Taylor of Goss Moor Liberal Democrat

My Lords, I want to associate myself with the comments just made and those of others who have spoken to this amendment. My own view has long been that in looking at the under-provision of housing in this country, the primary issue is not enough land being made available for the homes we so desperately need. Particularly for large parts of the market, the unaffordability of a home is generated by the cost of land in a market which has been so rationed and under-provided; the cost has escalated out of all proportion. Many people in this country can afford the bricks and mortar of a home because they do not cost that much. It is the price of the land that has made those homes unaffordable.

In other parts of Europe and indeed around the world, self-build or commission-build is more common. There is confusion about these terms: we are not necessarily talking about people putting in the time and labour themselves because they may well commission an architect and a builder to design and build the home of their dreams. If they can get a plot, they can not only get the design that is right for them; such designs often have much higher environmental qualities than would otherwise be delivered. Furthermore, this takes out the profits made by speculative land developers and large housebuilders. Small local housebuilders will be prepared to build at rates of profit that the big firms would not even consider.

As I say, in the rest of the world a much higher proportion of high-quality homes are being brought forward in this way, precisely because land is accessible and available. When my former secretary when I was an MP retired, she and her husband sold an old farmhouse outside St Austell and looked to build a home appropriate to their needs in old age, on a plot anywhere around St Austell. They were unable to get a single plot on which they could build such a home because the housebuilders who owned the plots said, in many cases, that they were not prepared to have them build their own home to the high environmental standards they wanted. Others said, “You can build a home for yourself there, but it has to be our design. It has to look exactly like all of the other houses”. They ultimately ended up building a home of their own in France. The big difference was that land was in ready supply.

What the Government are seeking to do is right. My view—the Government are well aware of this—is that, to do it on the scale we need at land prices that will be affordable for many people, we need to enable people to have serviced plots in fantastically well-designed new settlements, where the value of the land has been captured in making a great place, rather than taken by the landowner for their place in Bermuda—or, if it is on a large scale, their helicopter and island near Bermuda.

The amendment touches on an important issue, and the Government are right to go down the route of making it easier for self-build and commission build to take place. To do that, we need serviced plots. It is right that this should be part of the obligations on local authorities to bring land forward. But that will not by itself answer the question of affordability for the many people who will want to do this if we cannot find ways to make land available at a price that will allow those who may have only modest means, but can afford the bricks and mortar of a home, to get a plot on which they can afford to build.

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

My Lords, we have debated with some intensity in Committee so far the need to build more homes, covering a range of tenures. There can be no doubt about the Government’s commitment. Promoting and supporting self-build and custom housebuilding is important in delivering that commitment. Doubling the amount of self-build and custom housebuilding by 2020 will not only result in more homes, but provide much-needed business for the smaller householder and housebuilder. More custom build housing will help drive innovation in alternative building techniques, and support and create new jobs.

We have made a positive start. The Self-Build and Custom Housebuilding Act 2015, which was guided through this House by the noble Lord, Lord Best, will come into force on 1 April this year, when local planning authorities must hold a local register of people seeking land for self-build and custom housebuilding, and have regard to that register when carrying out their housing, planning, land disposal and regeneration functions. This Bill is the next step: its self-build and custom housebuilding provisions will provide a much-needed definition, establishing that the essential criteria of all self-build and custom housebuilding is that the individuals have a significant input into and choice over their finished home, and intend to live in it as their main or sole property.

I know that one of the most significant barriers preventing more people building or commissioning their own home is access to land. As the noble Lord, Lord Taylor, pointed out, this is very much an issue. We appreciate his general support for this part of the Bill. These provisions will place a new duty on local authorities, requiring them to give development permission—suitable for self-build and custom housebuilding—for enough serviced plots of land to match the demand on their register. But I recognise that there may be some areas where the demand for self-build and custom housebuilding will far outstrip the available land supply. So, to ensure that we continue to protect the environment and build only sustainable developments, we must be able to exempt relevant authorities that are simply unable to permission sufficient land to meet demand for self-build and custom housebuilding.

As a result, Clause 10 will insert a new section into the Self-Build and Custom Housebuilding Act 2015, which will enable relevant authorities to apply to the Secretary of State for an exemption from the duty to permission sufficient land to match demand for self-build and custom housebuilding in their areas. The detail of the exemption will be set out in regulation.

I thank the noble Lords, Lord Kennedy and Lord Beecham, for the opportunity to discuss the financial implications of the self-build and custom housebuilding policy. I agree with them that it is important that local authorities are protected from disproportionate or unreasonable burdens. The reason the Bill requires local authorities to permission suitable serviced land is that people wanting to build or commission their own home usually want to be able to start building as soon as they have purchased their plot of land. It is therefore important that the plot of land they buy is ready, or can quickly be made ready, for development.

The price paid for the land by the prospective self-builder or custom builder will, of course, reflect the actual cost of servicing that land. Hence, the landowner should be able to recoup what they have spent servicing the land at the point of sale. Land where the cost to put in basic services would be greater than its final market value would not be considered as suitable land and the local authority should seek alternative sites to permission in order to comply with their duty. A local authority should never feel that it has to permission land with very high service costs simply because there are insufficient areas more suitable for development. I draw attention to Clause 10, whereby we intend to create an exemption system for areas with a high demand for self-build and custom housebuilding and very limited land for development.

The Bill does not require the local authority itself to service the land. In many cases, including where it is the authority’s own land, we would expect the authority to work with a developer to put in the services, with the cost reflected in the sale price of the land. I hope that this will reassure the noble Baroness, Lady Bakewell. I know that my noble friend Lord O’Shaughnessy recognised this in his short intervention. Our £150 million serviced plots loan fund is available to builders, contractors, developers, registered providers, community land trusts and community organisations. Local authorities can also bid for funding, provided that they partner with a third party which can comply with the eligibility criteria. I strongly encourage local authorities to work proactively with such organisations in their areas in order to take advantage of this loan.

We believe that the amendment is unnecessary because the Government are providing local authorities with money to cover any new burdens in order to ensure that they can comply with the new duty. We are also enabling authorities to charge those on the register a fee which will cover the genuine costs incurred by the authority. The noble Lord, Lord Beecham, asked whether the Section 106 agreements will apply. I can confirm that they will, as long as they do not undermine the viability of the scheme. He also asked about a potential exemption relating to community infrastructure. I can confirm that that is the case.

I was struck by the speech of the noble Baroness, Lady Bakewell, and the example she gave of Exmoor. I have some sympathy; it is very much for the local areas to look at such an area of great beauty and work our between them which sites would be suitable, or unsuitable, for development on that basis. She also raised concerns about how self-build is financed.

My noble friend Lord O’Shaughnessy raised the issue of the timetable. Until the registers are in place and we can really understand the level of demand, it is hard to predict the impact of this legislation on the ground. We therefore need to wait until the registers are in place and as such, it is entirely appropriate that the detail is in the secondary legislation, so that it can be changed if necessary. Much of that regulation, including on fees and the time given to authorities, will be debated in both Houses so there will be further opportunities for input.

The noble Lord, Lord Beecham, raised the interesting and important question of whether servicing will include broadband. The Secretary of State has a regulation-making power to amend the definition of a “serviced plot of land” to add other services. At the moment, he has restricted the definition to electricity, water, waste water and highways, because we do not want to be prohibitively burdensome. The aim, after all, is to encourage more plots of land to be found. However, if broadband ought to be added in the future, we can certainly return to that issue. I believe I have covered the questions that were asked and I therefore ask noble Lords to withdraw their amendment.

Photo of Lord Kennedy of Southwark Lord Kennedy of Southwark Shadow Spokesperson (Housing), Opposition Whip (Lords), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Home Affairs) 3:30 pm, 8th March 2016

Will the noble Viscount say a little more about the point on planning delay made by the noble Lord, Lord O’Shaughnessy? He has made that point a number of times in the Chamber. I am a member of a local authority and I do not necessarily agree with him but it is important to clarify the issue. As this is my first intervention today, I declare that I am a local councillor in the London Borough of Lewisham, a trustee—this is particularly relevant to what we are discussing—of the United St Saviour’s Charity, which runs a number of supported housing schemes in south London, and a member of the Co-operative Party.

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

The noble Lord, Lord Kennedy, makes a good point. I stress that powers to speed up planning are included later in the Bill. My noble friend Lord O’Shaughnessy made a good point. It is very important that we speed up planning.

Photo of Lord Kennedy of Southwark Lord Kennedy of Southwark Shadow Spokesperson (Housing), Opposition Whip (Lords), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Home Affairs)

On that point, I am a member of a planning committee. Most of the planning matters go through under delegated powers; very little comes through committees now. I do not see this delay.

Photo of Lord O'Shaughnessy Lord O'Shaughnessy Conservative

I knew that I would run into trouble when I mentioned planning and local authorities, given how many noble Lords represent, or have represented, local authorities. Page 21 of the impact assessment states:

“In June 2015, 68% of respondents in the quarterly survey of homebuilders, conducted by the Home Builders Federation— which, obviously, may have a dog in the fight—

“considered planning delays a major constraint”.

Photo of Lord Kennedy of Southwark Lord Kennedy of Southwark Shadow Spokesperson (Housing), Opposition Whip (Lords), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Home Affairs)

I thank the noble Lord for that. I can see that we are not going to agree on this because I just do not see the delays that he referred to. This is an issue for regional planning committees and planning departments. Certainly, in Lewisham many plots of land have multiple planning permissions but they are not being built on. That is the problem.

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

My Lords, to complete this short debate, I repeat that the issue of planning will come up later on in the Bill. But I make the point that compulsory purchase orders can slow up planning. This is one of the issues that we are looking at in order to speed up the planning process.

Photo of Lord Beecham Lord Beecham Shadow Spokesperson (Housing), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Justice)

My Lords, I am grateful to all noble Lords who have participated in this debate. I am glad that the noble Viscount is connected with broadband up to a point. But perhaps he will go a little further and be more proactive than reactive and initiate discussions with the sector about whether this would be a useful addition rather than wait for somebody to pop up with the idea in due course.

The noble Lord, Lord O’Shaughnessy, referred to capacity in planning departments and my noble friend made some response to that. It is the case that there are several hundred thousand outstanding planning permissions up and down the country, where builders have done nothing and are presumably sitting on rising land prices and what they hope will be the rising price of constructed buildings. But, in addition, local authorities with housing planning responsibilities face very large cuts in their budgets. It will be difficult to sustain the planning function—or, indeed, any other function—to the extent which is desirable. That has to be a real concern.

The Government need to bear in mind the possibly self-serving response of the builders, which has been referred to, and lean on their political friends—not normally to be found on this side of the House—to ensure that authorities have the wherewithal to meet these new responsibilities. There is such a thing as the New Burdens Doctrine. We are getting the burdens but not the outcome of the doctrine, which is that these additional responsibilities should be funded.

I will end on a slightly different note, which is more of a question. Again, I do not anticipate an answer. During the discussion and the emphasis on the value of self-build and community schemes of this kind, which I entirely endorse, it struck me that there is the possibility here of involving those bodies—further education colleges and the like—which train people in construction industry skills to enable them to get involved in these projects. This may be useful in terms of the cost of a project and in training much-needed skilled workers to carry out not only this kind of work but others as well. Perhaps the Minister would ask his officials to look at this—not immediately, as it is not a crucial issue at the moment—to see whether the industry and training bodies such as FE colleges and others could be persuaded to look at this small area. This might help get both the buildings on the ground and the skills in the industry.

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

I agree with the important points raised by the noble Lord about skills and I will certainly take them back to the department. There are other, broader issues of developing skills such as architecture. The noble Lord has made some very good points.

Photo of Lord Beecham Lord Beecham Shadow Spokesperson (Housing), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Justice)

My Lords, that being the case I beg leave to withdraw the amendment.

Amendment 54 withdrawn.

Clause 8 agreed.

Clauses 9 to 11 agreed.

Amendment 54A

Moved by Baroness Parminter

54A: After Clause 11, insert the following new Clause—

“Carbon compliance standard for new homes

(1) The Secretary of State must within six months of the passing of this Act make regulations under section 1(1) of the Building Act 1984 (power to make building regulations) for the purpose of ensuring that all new homes in England built from 1 January 2018 achieve the carbon compliance standard.

(2) For the purpose of subsection (1), “carbon compliance standard” means an improvement on the target carbon dioxide emission rate, as set out in the Building Regulations 2006, of—

(a) 60% in the case of detached houses;

(b) 56% in the case of attached houses; and

(c) 44% in the case of flats.”

Photo of Baroness Parminter Baroness Parminter Liberal Democrat Lords Spokesperson (Environment, Food and Rural Affairs)

My Lords, the Government’s attempt to solve the current housing crisis needs, at the same time, to address the issue of what types of homes are built. They should be of high quality and high energy efficiency standards which drive down future energy bills, help to protect against fuel poverty and provide healthy living environments. The Explanatory Notes to the Bill make it clear that its principal aim is to bring forward proposals that make homes more affordable. This laudable aim was dealt a serious blow by the scrapping of the zero-carbon homes policy by the Chancellor last July. Without this standard, which until last July had cross-party and cross-industry support, the new homes promised by the Government will not be as affordable as they might be. They will lock their owners into a cycle of higher fuel bills and the need for costly retrofits. The amendment requires that all new homes built in England from 1 January 2018 achieve the previously agreed zero-carbon homes standard.

Reinstating this housing standard will not only help keep homes affordable for the long term, it will help meet our legally binding climate commitments. We are committed to reducing UK emissions by 50% by 2025. Buildings accounted for 34% of the UK’s total greenhouse gas emissions in 2014, with 64% of building emissions coming from homes. It is in the building sector that most of the cost-effective potential carbon savings are to be found. Housebuilding must, of course, remain financially viable for the private sector, which will deliver the bulk of future housing. Yet the scrapping of zero-carbon homes by the Chancellor was not accompanied by any evidence that building homes to that standard would affect the speed at which the UK can build new homes. Indeed, evidence to the House of Lords Select Committee on National Policy for the Built Environment showed that the removal of the zero-carbon homes requirement has generated uncertainty for homebuilders. Moreover, they were provided with no clear evidence that the removal would lead to an increase in housebuilding. This evidence persuaded the committee—and I declare an interest as a member—to call on the Government to reverse the decision to remove the requirement for new homes to generate no net carbon emissions.

Reinstating the zero-carbon standard would help deliver affordable homes for the long term, and not burden occupants with needlessly high energy bills. This would also make the UK’s statutory greenhouse gas emission targets more achievable. Post-Paris, it is surely time for leadership and not backsliding. I beg to move.

Photo of Lord Krebs Lord Krebs Crossbench

My Lords, I support the amendment. I put my name to it because I believe that, as the noble Baroness, Lady Parminter, said, we have an opportunity to ensure that the proposed 1 million new homes are not just suitable for their immediate occupants but for the long term. I declare an interest as a member of the Committee on Climate Change and the chair of its adaptation sub-committee. The committee, established under the Climate Change Act 2008, is the statutory body that provides advice to the Government on how to achieve the legally binding target, already referred to, of reducing our greenhouse gas emissions by at least 80% below 1990 levels by 2050. The adaptation sub-committee advises the Government on how to prepare for the inevitable impacts of climate change.

I thank the Minister for the meeting we had on 3 February and the associated exchange of letters. In my capacity as chair of the adaptation sub-committee, I wrote to the Minister on 21 December to set out my concerns. I said in my letter:

“Housing built now will exist for many decades, if not a century or more. Choices on where to build, how homes are insulated, are heated in winter and kept cool in summer will have lasting consequences and will be difficult and costly to change. There is an opportunity through this Bill to make sure that the aspiration to build an extra one million homes by 2020 does not come at the expense of burdening their occupants with long-term costs and climate impacts, whilst also rendering the UK’s statutory greenhouse gas emissions targets more difficult to achieve. We have to be confident that the new homes will be as energy and carbon efficient as possible, whilst also resilient to the impacts of climate change”.

I went on to say, specifically about heating and energy efficiency, the purpose of this amendment:

“In ending the programme of work and policies associated with Zero Carbon Homes the Government threw away many cost-effective aspects that had widespread industry support. The EU Energy Performance Directive from 2021 will introduce a ‘nearly zero energy’ requirement. The Bill should build”— excuse the pun—

“towards this by requiring new homes to go beyond the current Part L requirements”.

As an aside, Part L requirements are the part of building regulations that deal with conservation of fuel and power, dating to 2006. I went on to say:

“At the same time, the new housing should begin to achieve the widespread adoption of low carbon heating that is needed. The uptake of low carbon heat should be consistent with what is needed to meet the fourth carbon budget”,

which has been legislated and is now binding on the Government.

The matter is really very simple. Why build homes now that will not be fit for purpose in a few years’ time? To me, it is a no-brainer—we should be thinking of the future. As the noble Baroness, Lady Parminter, said, it is not as though the industry objected to the concept of zero-carbon homes; in fact, there was widespread support. When the initiative was abolished, Kate Henderson, chief executive of the Town and Country Planning Association, said:

“The cancellation of the policy marks the end of any benchmark for building the high quality, sustainable homes that we so desperately need”.

Paul King, managing director of sustainability, communications and marketing for the developer Lendlease Europe, said:

“Industry needs as much policy clarity and consistency as possible in order to invest and innovate, and after almost 10 years of commitment and progress, UK house builders and developers have come a very long way. It is therefore extremely disappointing that the Government has today removed a World-leading ambition for all new homes to be zero carbon from 2016”.

So we have support for this; it is a no-brainer to prepare these homes for the future. Why should we not do it? Is it cost effective to build to a higher energy standard? My understanding is that under most likely scenarios, the extra building costs will be in the order of a few thousand—1% or 2% of the total cost of a new home. We heard much in earlier debates on the Bill about the affordability of housing. As the noble Baroness, Lady Parminter, has said, affordability is not just about the cost of purchasing the house but also of maintaining it, heating it and of retrofit if, in a few years’ time, we decide that standards have to be increased.

The Minister’s reply of 25 February to my letter and our meeting was somewhat less than clear. I hope that some clarification will be shed on it at the end of this debate. I quote what I think she said on energy efficiency as follows:

“During the last Parliament the standards were raised by 30%—most recent uplift only coming into effect in April 2014. This has been a big ask of the industry, which is why we are not taking forward a further uplift this year. We have also said that we will keep energy requirements under review”.

But I think there has been enough review. We do not need to keep it under review; we need to act now through the Bill to bring about the necessary change.

I hope that the Minister will not only clarify the contents of the letter but will reconsider the Government’s position and accept the principle of this amendment. To summarise, there are three reasons for that. First, as the noble Baroness, Lady Parminter, said, in order to meet our legally binding greenhouse gas emissions target, we will need to reduce the one-third of our emissions that come from buildings, two-thirds of those from homes. We have many old and poorly insulated homes that are proving hard to retrofit, so building new homes that are not of the highest possible energy efficiency, including the use of low-carbon heating, will simply make it more difficult to meet the 2050 target. If the Government are not prepared to add this amendment to the Bill, they should explain where else the savings are going to come from in meeting our 2050 target.

The second point is that the new homes will be cheaper to run if they are built to the highest energy-efficiency standard, reducing the risk of fuel poverty, as the noble Baroness, Lady Parminter, said. One estimate I have seen is that a zero-carbon three-bedroom semi would have an annual energy bill of £1,220 less than the equivalent Victorian house. So it would be a very short time indeed until the extra costs of purchase had been paid back through energy savings. Thirdly and finally, if we do not adopt the highest standards now, we will inevitably have to retrofit the houses in coming decades, which will be both costly and inconvenient.

If we do not adopt this amendment, I predict that home owners and policymakers alike will look back in 20 years’ time and say, “Why didn’t they just do it? What were they thinking of?”.

Photo of Baroness Young of Old Scone Baroness Young of Old Scone Labour 3:45 pm, 8th March 2016

My Lords, I am very pleased to join the noble Baroness, Lady Parminter, and the noble Lord, Lord Krebs, in adding my name to this amendment. I declare an interest as a member of the Select Committee on National Policy for the Built Environment and, many years ago, as a founder member, with the noble Lord, Lord Krebs, of the adaptation sub-committee of the Committee on Climate Change.

It is rather bizarre. At a time when we are talking about building 1 million new houses by 2020, of which 200,000 will be starter homes and even, allegedly, some will be affordable homes, and we are planning to build at a faster rate than previously and for households that are likely to have lower incomes, George Osborne’s cancellation of the zero-carbon policy, which had wide cross-party and industry support, represents a major missed opportunity. It is a missed opportunity to ensure that new homes make their contribution, as the noble Lord, Lord Krebs, said, to achieving our climate change targets and to ensuring that homes are affordable on an ongoing basis, with reduced fuel bills and protection against fuel poverty.

The zero-carbon homes standard is important for climate change targets: 22% of our total CO2 emissions come from energy use in homes. It is very practicable. It was agreed originally by a cross-industry task group, based on a balance between costs and benefits. It is becoming an increasingly cost-effective proposition because the supply chain has evolved and the design and construction industry has got the hang of it. The additional costs of a zero-carbon home have halved since 2011 and could well be less than £3,500 per home by 2020. As the noble Lord, Lord Krebs, said, this is small-scale compared with the potential annual savings, which the National House-Building Council and the Zero Carbon Hub calculated would be about £1,200 less for a three-bedroom zero-carbon home than an equivalent three-bedroom Victorian semi.

This is also an amazing volte-face in government policy. In 2013 the Prime Minister launched DECC’s energy-efficiency mission with the following ringing endorsement. I will quote it in full because it was rather splendid. Mr Cameron said:

“I want to tell you why I believe energy efficiency is so important. Yes of course it is a vital part of how we cut carbon emissions and continue to meet the ambitious targets set out in the Climate Change Act … Of course that is important, but my argument today is not just about doing what is right for our planet, but doing what is right for our economy too. Because make no mistake we are in a global race and the countries that succeed in that race, the economies in Europe that will prosper, are those that are the greenest and the most energy efficient”.

He said he wanted the Minister,

“to bring together everything we are doing in one coherent strategy to make Britain the most energy efficient country in Europe”.

However, not very long after that, George Osborne unilaterally removed the zero-carbon buildings provision, despite his Prime Minister’s aspiration, causing a major backlash against the change among industry leaders. In an open letter to the Chancellor, senior leaders from 246 organisations, including the major housebuilders, developers, product manufacturers and energy firms, warned that the policy U-turn had,

“undermined industry confidence in Government”,

and would,

“curtail investment in British innovation and manufacturing”.

We have a real problem here, and this amendment is a splendid opportunity for the Government to graciously backtrack on a wrongheaded decision by the Chancellor. I recognise it is quite difficult, because the Chancellor at the same time pretty well trashed the feed-in tariff, which provided the economic basis for the zero-carbon homes policy, but this nevertheless has to be remedied if we are going to see through this massive push to get 1 million homes built by 2020. They must be affordable, they must make a contribution to tackling climate change and—beyond those two, since noble Lords have already stressed those points—they must support innovation by British business.

Photo of Lord Foster of Bath Lord Foster of Bath Liberal Democrat

My Lords, in supporting my noble friend Lady Parminter’s amendment, I echo the words of both the noble Lord, Lord Krebs, and the noble Baroness, Lady Young. The noble Baroness was absolutely right to say that the move towards zero-carbon homes had cross-party support; importantly, it also had cross-industry support.

It is interesting to reflect that the policy was first introduced by Gordon Brown in 2006. When he announced the policy, he said that it would mean that this country would be the first in the world to introduce such a commitment, which would help us to meet in turn our commitments in relation to tackling the real and growing problems of climate change. He understood the policy at that time as meaning that all new houses built from this year, 2016, would generate as much energy on site through renewable energy—wind, solar and so on—as they would use for heating, lighting, ventilation, hot water, cooking and so on.

Over time, as people considered the policy, it was recognised that there would be some occasions when trying to build an individual zero-carbon housing unit would prove very expensive indeed; hence the idea of introducing a mechanism that would allow developers to have an off-setting mechanism—so-called allowable solutions—whereby, if they could not get a particular home completely zero-carbon, they could provide funding or carry out work that would off-set the amount of carbon by other means. For example, that could be through building a combined heat and power unit for a group of housing units, putting solar panels on some existing housing or—although, as the noble Lord, Lord Krebs, said, this can sometimes be very expensive—retrofitting energy efficiency measures to some existing homes.

The policy was developed with all-party support. It was certainly true that when I took over from my noble friend Lord Stunell as the Minister in DCLG, he had been battling to persuade his Conservative colleagues in the department at that time to keep going with the policy. I certainly had some difficulty in doing that, but to be fair, under pressure, they were prepared to stick with it. It even appeared, very clearly, in the Chancellor’s Budget of 2013. I was able to go ahead and strengthen Part L of the building regulations, which as the noble Lord, Lord Krebs, pointed out, increases the energy efficiency requirement on buildings. It was good to hear then that there was support across the industry for the increase being demanded in energy standards for new homes that were being built. John Alker, one of the industry’s spokesmen, said,

“it’s a victory for all those who know that industry can continue to innovate, to improve standards and reduce carbon cost-effectively … it is encouraging to see government remains committed”,

to it.

While I was Minister, I was also concerned about an issue that has not yet been mentioned. Buildings are sometimes built to particular energy efficiency standards, but after they are built and measurements take place, we discover that they do not live up to those standards; there is a gap. The Government were able to fund research through an organisation called the Zero Carbon Hub to try to identify the cause of that gap. As an aside, following the earlier debate on self-build, it is interesting that self-build provides not only an opportunity to give jobs to small builders but often the development of off-site construction techniques that appear able to bring together the actuality with energy efficiency standards. When the Minister replies, I should be interested to hear where we are with the work from Zero Carbon Hub on that issue.

There was growing concern among some Conservatives within the coalition Government that continuing with the policy of zero-carbon homes would be expensive, that builders would become dissatisfied with it and that we would reduce the number of homes being built. I was able to convene a round table of all the major builders and ask them what they thought of it. All the major housebuilders, developers and others involved in the industry wrote to the Government saying that they were fully behind the zero-carbon homes policy. They wanted it because they believed it was right, it did not add significantly to the costs of building and it meant that they could make their contribution to tackling the problem of climate change. They are all incredibly disappointed—as am I and Stephen Williams, who eventually succeeded me in the department—that the Government decided last July to renege on the cross-party commitment by different Governments since 2006. I therefore hope that noble Lords will recognise that in my noble friend Lady Parminter’s amendment, we have the opportunity to reverse a catastrophic decision and to give housebuilders the opportunity to contribute to dealing with climate change and reducing energy consumption in this country.

Photo of Baroness Whitaker Baroness Whitaker Labour 4:00 pm, 8th March 2016

My Lords, I, too, support the amendment. When the Select Committee, of which I was also a member, recommended measures to reduce carbon emissions, it recognised, on copious evidence, not only that mitigating climate change was of overwhelming importance but that there was a need for clarity, as the noble Lord, Lord Krebs, said, as a means to achieving that objective, which also enables much cheaper energy. As I see it, clarity is exactly what the amendment provides.

Briefly, it looks as though the Government have lacked leadership to drop those requirements. If it was decided under the influence of the Treasury, surely that was a culpable abdication of a rational, long-term view of our national interest. I hope that the Minister will take the amendment very seriously.

Photo of Baroness Maddock Baroness Maddock Chair, Works of Art Committee (Lords)

My Lords, during the previous Parliament, we discussed this policy in some detail in other Bills. The Minister will have heard that everything was in place to make it happen. The Government owe it to the Committee to tell us what big thing happened to cause this reverse in policy. We have heard that everything was in place, so we are owed an explanation on that.

Secondly, this morning I hosted a breakfast for the National Home Improvement Council. We were discussing energy efficiency, and one of the big criticisms was about why Governments cannot give some consistency to policy. When we set up the Committee on Climate Change and passed the Climate Change Act, I thought we would have consistency of policy because all parties agreed on it. I cannot tell you how disappointed I am that, since last year, so many of the things that we thought we all agreed on have been reversed. The Government owe it to us to explain why. What are the big factors that have changed their mind?

Photo of Lord Cameron of Dillington Lord Cameron of Dillington Crossbench

My Lords, I had not really intended to intervene in this debate because better, more knowledgeable people than me have spoken. However, I add my voice in support. I have built houses in Scotland and England in the past 10 to 12 years and therefore put in a very low-carbon spec. No consumer of any intelligence would build a house without a low-carbon spec because the annual savings in heating that you get give you a nearly 50% return on your money, but unless builders and developers are obliged to give the consumer what they really want, it is unlikely to happen in all cases.

It is interesting that this debate should follow the one on self-build because I cannot believe that anyone who is building their own house would ever dream of not putting in a very good low-carbon spec. The Government should ensure that consumers—also known as voters—get what they want.

Photo of Lord Stunell Lord Stunell Liberal Democrat

My Lords, I support the amendment. I do so as somebody who in the other place proposed the Sustainable and Secure Buildings Act, which was the foundation for the changes to Part L which were introduced in 2006, and also as the Minister who preceded my noble friend Lord Foster in the department in 2010.

I am disappointed to find that the arguments that were going on between the Department for Communities and Local Government and the Treasury at that time appear still to be burning. Those arguments were repeatedly put and repeatedly refuted, yet this time the Treasury has come out on top. This amendment provides an opportunity to revisit that, and I hope that the Minister will take away the spirit of this debate as well as the substance of the amendment. The problem is that there is a completely false tension between quantity and quality in housing. There seems to be a very firm grip in the Treasury on the concept that, if it is cheaper to build, more homes will be built and, as good building costs more than bad building, it is obvious that you have bad building rather than good building in order to get more building.

The Minister gave us some figures on Thursday which she described as the,

“implied first-time price of new build”.—[ Official Report , 3/3/16; col. 1014]

She went on to distinguish that from “demand price”. I am not quite sure what the difference is, and I am not quite sure what the first-time price of new build is, but for the south-east of England she gave an implied price of £352,000 for a property which would be affordable and within the scope of the starter homes project. That is an interesting figure because it highlights the fact that something approaching £250,000 of that price is nothing to do with the construction of the house, which will be about £100,000, and everything to do with the land price, which is actually what drives house prices universally. The construction cost is a minor part of the house price cost that the retail purchaser has to pay. It does not set the retail price, let alone whatever the demand figures are, which I strongly suspect would be higher sums of money than the Minister gave us last Thursday. The costs of complying with this amendment per house are trivial in relation to the construction costs, let alone the total retail price at which a house will be put on the market.

I will be interested to hear what the Minister’s brief tells her is the right figure for the extra cost of zero-carbon homes. I would be astonished if it did not have such a figure in it; mine always did. If there is one thing that history tells us, it is that that estimate will be too high. I say that because back in 2010, when the original improvements were made—I say “original”; perhaps I just mean original to me—and that 30% rise in building standards that took place in that five years was initiated, the UK Green Building Council, which has already been referred to, estimated that a typical cost addition would be £5,000 per home. The Treasury disbelieved those figures and believed that it would be an additional £10,000 per home, and it was those figures that were hotly debated between the departments and which formed the basis of impact assessments and so on at the time.

Actually, the cost per home has turned out to be £3,000 lower than the Green Building Council assumed and only one-third of the cost that the Treasury assumed. A £3,000 price differential in building a house is absolutely lost in the noise of housebuilding, purchasing and disposal. The cost is marginal, as the noble Lord, Lord Krebs, rightly said—something around 1% of that south-east London house going on the market, at a time when house prices in the south-east are rising by something like 6% a year. Indeed, if they were not, there would be some kind of political backlash because people would fear that their houses were losing value.

So the barrier to more private sector building is not construction costs. Rather, it is the knowledge that, if a home is completed next year rather than this, the seller will be 6% better off because of the rising price of land and of sales. The very last thing that a developer wants to do is to produce so many houses that the price falls next year; indeed, you can see with some building in the centre of London that that is exactly what is happening. So the quality versus quantity argument, which is the only slightly tenable point of view in this U-turn, is not actually credible or realistic.

On the other side, there is the reputational risk to the Government. “The greenest Government ever—not!” is the message that seems to be coming through, and that is a really sad outcome, both for the present Government and for the country. There is an environmental risk because so much CO2 comes from our housing stock. As the noble Lord, Lord Krebs, eloquently put it, if we put up another 1 million homes alongside the 22 million that we have at the moment, and deliberately make them of lower quality than we could, then that affects not just the environment but our international reputation regarding, for instance, last year’s Paris agreement.

There are economic and social risks as well. Poor energy efficiency means higher costs to those poorer householders who are going to be moving into the starter homes that the Government want to see built. People whose income is so stretched that without the starter home they would not be able to get into the market are going to be saddled with an extra £1,200 a year of running costs simply because of this U-turn. It occurs to me that this sort of process usually takes longer than Ministers hope, and that those starter homes will start to come on to the market in a significant way in about 24 months’ time, which is of course pretty much the time when interest rates will no doubt also be rising, so their mortgages and fuel prices will go up but their energy efficiency will be deliberately lower than it needs to be.

I ask the Minister to have a rethink, to go back and yet again have a good push back at the Treasury, and to ensure that by Report we have a rather better picture of what the Government intend to do to be the greenest Government ever.

Photo of Lord Campbell-Savours Lord Campbell-Savours Labour 4:15 pm, 8th March 2016

My Lords, I had not intended to speak in this debate at all until I heard what I can only describe as the brilliant exposition by the noble Lord, Lord Stunell, of the economics of housebuilding. He showed quite clearly that the cost of land is the critical factor in all this, and the additional cost of building in environmental protection issues, such as solar energy or whatever, is marginal. The only reason why I rise is to draw to the attention of the Committee the series of amendments which will come up later—Amendment 89L and a number of attached amendments—which deal with the cost of land. At the heart of the Bill is the failure to deal with the cost of land. If we could deal with the cost of land in the United Kingdom and bring it down to the prices charged for land abroad, we would not even need the Bill or any of the incentives in it. The whole Bill is predicated on the need to compensate for the benefit that landowners make out of selling land at huge profits, which the rest of the country has to bear when they buy their houses.

Photo of Lord Kennedy of Southwark Lord Kennedy of Southwark Shadow Spokesperson (Housing), Opposition Whip (Lords), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Home Affairs)

My Lords, Amendment 54A, moved by the noble Baroness, Lady Parminter, has our full support. As noble Lords have heard, the amendment seeks to ensure that the Secretary of State makes regulations that will require that all new homes built after 1 January 2018 achieve the compliance standards as set out in the amendment. This is achieved by using an energy-efficient approach to building design and reducing the CO2 emissions on-site through low and zero-carbon technologies. As noble Lords have heard, Britain has been a world leader in taking measures to reduce carbon emissions. With that in mind, it is disappointing that we have to have this debate at all. The amendment is achievable and realistic and pushes us further forward as we seek to reduce the energy demands of new homes. I very much agreed with the noble Baroness, Lady Parminter, when she expressed her regret that the Government have removed the zero-carbon target for new homes.

I do not often agree with what the Prime Minister said, but I also agree very much with the quote from him that my noble friend Lady Young read out. However, it puts the Prime Minister at odds with his Chancellor, who removed it a few days later. It will be very interesting to hear the response to that from the government Benches. The amendment will of course help to support innovation in construction by requiring high standards and will help future-proof homes, reducing the need for retrofit later, as the noble Lord, Lord Krebs, said in his contribution. In particular, I will be interested to hear the response from the Minister to the points made by the noble Lord, Lord Foster of Bath, about the whole issue of agreements that are made and then reneged on. I will also be interested to hear the Government’s response to the very challenging points made by the noble Lord, Lord Stunell, made, in his excellent speech.

The amendment would allow the housebuilding and supply industries, related trade associations, consumer representatives and bodies with a specific interest in environmental objectives to play their full role in being properly consulted in what is achievable and what is the way forward. I agree with the noble Lord, Lord Krebs, who posed the question, “Why build homes today if they are not fit for purpose tomorrow?”. I will listen with interest to the Minister’s response and I may have a few further questions depending on the Government’s position.

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

My Lords, first, I applaud the noble Baroness, Lady Parminter, for braving the Chamber today with what sounded like a few unwanted gremlins in her voice. I heard her loud and clear. I thank her for giving us the opportunity today to debate her proposed new clause, which seeks to put into primary legislation a carbon compliance standard for new homes from January 2018. The proposed carbon compliance levels are well intentioned—we all share the desire to see energy-efficient homes built that help to reduce carbon emissions and fuel bills—but the new clause is a step too far at this time. I listened very carefully to all the comments and, as the noble

Baroness, Lady Maddock, pointed out, this issue has certainly been much debated in this Chamber in recent months.

Over the last Parliament, we implemented significant strengthening of the energy performance standards for new homes—a 30% improvement on requirements before 2010. These standards are reducing energy bills by £200 annually on average for a new home and saving carbon. At this stage, we need to give the homebuilding industry breathing space to build the highly energy-efficient homes already required by the recent changes to building regulations, and I will say more about that in a moment.

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

Perhaps I may make some progress. We all recognise the need to build more homes, and they should be sustainable, but we do not need to make building them more difficult than necessary. We need to consider whether it is realistic for the majority of builders to deliver even higher standards without unduly affecting site viability or housing delivery.

In the productivity plan, Fixing the Foundations: Creating a More Prosperous Nation, published last summer, we committed to keeping the energy standards under review, and we will ensure that any changes that may be introduced are cost effective. This includes looking at not just new buildings but across the whole of the existing building stock, where carbon emissions tend to be higher and energy efficiency is poorer than for new homes.

In raising or lowering the energy requirements for new homes, it is always necessary to consult carefully with industry. We should not forget that we are talking about a technical area which impacts across the construction sector. It would therefore not be workable to deliver the proposed standard within six months. Even if it were, it is not prudent to have such a rigid framework for delivery in the Bill, or to set requirements such as this in primary legislation. If, in the light of consultation, any slight adjustments to requirements were needed, we would not be able to make them without further primary legislation.

I understand the intention of the new clause proposed by the noble Baroness, Lady Parminter, but it would create a significant regulatory burden on housebuilders at a time when we need to increase housing supply and access to home ownership. We are giving the industry breathing space to ensure that it catches up with the already highly energy-efficient new standards that came into force only in 2014.

I would like to say more in attempting to address many of the questions that were raised, particularly by the noble Lord, Lord Krebs. Some builders, big and small, already go beyond the current minimum standards. New homes built to the performance requirements introduced by building regulations in 2014 are highly energy efficient. They need to have high levels of insulation, double-glazed windows with low-energy glass, and A-rated, high-efficiency condensing boilers.

Perhaps the nub of this debate is the difference the amendment would make to new homes. I understand the strength of feeling on the Liberal Democrat Benches in particular, but the current regulations have already pushed the fabric energy performance of homes to the point where further increases may result in only marginal returns in energy efficiency. Therefore, to meet the proposed levels of carbon compliance, homebuilders would need to consider further technical solutions for providing heat and power to the home—for example, photovoltaic panels, solar hot-water systems, and air and ground-source heat pumps. These would add considerably to construction costs for homebuilders. The noble Lord, Lord Stunell—

Photo of Lord Beecham Lord Beecham Shadow Spokesperson (Housing), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Justice)

Can the noble Lord comment on that question? The noble Lord who spoke before indicated that the cost would be around £3,000. Does the Minister have a figure to counter that suggestion?

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

Yes, I was just coming to that point. The noble Lord, Lord Stunell, raised the issue of costs. Research by the Zero Carbon Hub indicates that, for an average semi-detached home, the lowest cost of meeting the proposed standard would add almost that sum of £3,000 to the construction costs. Originally we thought it would be £10,000—indeed, I think that figure was mentioned by somebody in this debate.

The new clause proposed by the noble Baroness, Lady Parminter, would increase the bill cost for all housebuilders, irrespective of their size. With regard to small builders, the availability of small sites is declining and extra regulatory costs would impact on the viability of these developments, leading to even fewer small sites.

Photo of Lord Stunell Lord Stunell Liberal Democrat

Will the Minister reaffirm that his brief tells him that the additional cost would be £3,000 per dwelling of the type he just described? If so, I am absolutely delighted to see that that reflects reality rather more closely than some of the Treasury’s figures.

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

That is the figure I have mentioned and I am very happy to reaffirm that. However, in the same breath I would also say that it is deemed to be a step too far in adding costs to housebuilders, particularly given that the focus is on the smaller housebuilders who need the breathing space to build such houses.

Photo of Lord Krebs Lord Krebs Crossbench

Can the Minister confirm that his brief contains a full cost-benefit analysis of these additional measures and, if so, over what time period the analysis applies?

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

This is definitely getting into a technical area, and I am happy to write to the noble Lord with the details of the research to establish the figures we have come up with.

Photo of Lord Beecham Lord Beecham Shadow Spokesperson (Housing), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Justice)

May I ask a non-technical question—I am about as technical as the Minister—if £3,000 is an excessive amount, what would be an acceptable amount?

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

I reiterate the figure that we have. I am very happy to write to the noble Lord, Lord Beecham, and to the noble Lord, Lord Krebs, to give the specific technical details as to how we reached that figure. But that figure is the figure we have.

Photo of Lord Beecham Lord Beecham Shadow Spokesperson (Housing), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Justice)

It is not about how the Government reached that figure but what, in their eyes, would be an acceptable increase in cost to provide the result the amendment seeks to achieve. If £3,000 is too much, what would be acceptable?

Photo of Baroness Young of Old Scone Baroness Young of Old Scone Labour

I wonder whether the Minister might clear up a confusion that is arising in my mind. It strikes me that we are not talking about a cost that falls upon the builders of these homes, because it will be reflected in their price. The point we are making is that, if an additional cost of £3,500 would genuinely be passed on to the purchaser of the home, within a period of less than three years they would have recouped that amount and be in profit thereafter, for however long they stayed in that home. It is not about an undue burden on the builders, but about trying to remove an undue burden on the purchasers and residents of those homes in perpetuity.

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

It does depend on where in the country we are talking about. Prices, as we know, can go up or down. However, with the same theme in mind, I would like to address a point made by the noble Lord, Lord Foster, and the evidence he produced. We have strong evidence from the Federation of Master Builders, which represents small builders—a broad and very important sector in terms of building the houses we need to build. The federation welcomed the decision last July not to proceed with zero-carbon homes, saying that it will boost the supply of housing via this very sector—small and medium-sized housebuilders. I will quote its press release, because it is relevant to this debate. It said that the policy would have “held back” small builders’ ability to build more new homes and that,

“over recent years it has been these smaller firms which have been hit disproportionately hard by the rapid pace of change”.

Hence our view that the breathing space is there; it is not that it will never happen. I reiterate the point I made at the beginning of debate: we are reviewing this and we want to have carbon-neutral homes.

Photo of Lord Foster of Bath Lord Foster of Bath Liberal Democrat

I am very grateful to the Minister for that. He is absolutely right to point out that any government decision will be supported by some people and opposed by others. However, although he has cited one organisation, he will acknowledge that an open letter was sent from more than 230 major organisations in the construction industry opposing what the Chancellor has done. Given that the Minister has said that the whole purpose of this is to give breathing space to the industry, is he prepared, either now or later, to share with Members of your Lordships’ House the letters and documentation he has received requesting that pause?

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour 4:30 pm, 8th March 2016

Before the Minister replies to that, perhaps I may follow up the point made by my noble friend Lady Young. What consumer research

—that is, purchaser research—have the Government done, as opposed to listening to selective representatives or voices of the building industry? I think that very few consumers, if asked, “Would you prefer to pay £3,000 which you’ll pay off in two-and-a-half years and thereafter make £1,250 profit a year on your energy bill?”, would regard that as a poor deal.

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

I listened carefully to the evidence produced by the noble Lord, Lord Foster. Of course, I am very happy to make available whatever I can to the noble Lord and to copy in other noble Lords who have taken part in this debate.

Perhaps I may come back to the noble Baroness, Lady Hollis, on purchaser research. But I make the point that we are talking about the costs of building a house, which is a housebuilder matter. Whether those costs can be passed on to the owner of the house will depend on the area and on the prices, but this is to do with stimulating the building industry to build more houses—that is extremely clear.

I would like to move on if I may to a similar theme raised by the noble Lord, Lord—

Photo of Lord Stunell Lord Stunell Liberal Democrat

Before the Minister does so, could he tell us what evidence he has taken on the connection between construction costs and the number of homes built, either over the last five years or any interval of time that he has statistics for, and whether he regards the argument that I advanced, that land costs are the overwhelmingly important factor in house sales, as having validity?

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

The evidence is pretty strong from the Federation of Master Builders, but in the same letter that I shall write to other noble Lords I will include any further evidence that can be produced to back up the evidential information that we have.

The noble Lord, Lord Krebs, asked about the scrapping of the zero-carbon element and where else carbon savings might come from. I reassure him that we are already starting to look at heating systems in existing homes. As noble Lords will probably be aware, heat accounts for around 45% of our energy consumption. More than 1.2 million new boilers are installed in our homes every year and we want to consider whether the time is right to raise standards upon boiler replacement, and what the benefits and risks are if we do.

I will also make a point that I wanted to raise slightly earlier in this debate about being overzealous in protecting homes. There is an issue which I know has cropped up in previous debates about overheating homes. There are concerns about making homes so energy efficient and airtight that they can contribute to health issues, so DCLG is looking at that. We need to create a balance between stimulating the building of new houses and making sure that they are user-friendly for people to live in.

Photo of Lord Kennedy of Southwark Lord Kennedy of Southwark Shadow Spokesperson (Housing), Opposition Whip (Lords), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Home Affairs)

The Minister suggested to my noble friend Lady Hollis that people would not be able to pass on the £3,000 cost. Is he suggesting that people will be building houses and selling them for less than they cost to build? If so, it seems extraordinary.

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

Yes, it is at build cost rather than purchasing cost.

Photo of Lord Kennedy of Southwark Lord Kennedy of Southwark Shadow Spokesperson (Housing), Opposition Whip (Lords), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Home Affairs)

I assume that the builder would pass that on when they sold their houses and make sure that it was paid for when they were bought.

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

The point is that the onus of the £3,000 is on the housebuilding sector.

Photo of Lord Kennedy of Southwark Lord Kennedy of Southwark Shadow Spokesperson (Housing), Opposition Whip (Lords), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Home Affairs)

Of course, the properties are bought at the end of the day; that is what they are built for. That is an extraordinary comment from the Minister.

Photo of Lord Porter of Spalding Lord Porter of Spalding Conservative

My Lords, can I declare all of my interests, although we might be here forever? I am chairman of the Local Government Association, leader of South Holland District Council, chairman of South Holland homes, which is a community interest housing company. I am also a private sector landlord. One of our rural housing providers delivered six code level 6 homes for us about four years ago, which are the closest to real zero carbon. The zero-carbon homes that the Committee has spent the last hour talking about are not really zero carbon. There was no proposal to ever deliver proper zero-carbon homes in this country because they are far too expensive.

The code level 6 ones that we delivered a few years ago did not save people a few hundred pounds on their electricity bills; they generated a few hundred pounds. Once the feed-in tariff had been factored in through the solar panels and the wind turbines that were installed on the site and the way that they were built for carbon mass heat production, which maintained the homes at a standard 18 degrees, the tenants actually made money on those homes. So that is really good news. We built six of those, and that is really bad news because the same capital cost of delivering those six would have delivered 12 standard construction three-bedroom semis that we were also building on a similar site at the same time. The homes on the affordable site were built on rural exception sites. There was hardly any land cost in there and the capital cost of the physical build was almost twice as much as for the three-bedroom standard semi-detached properties.

We can talk all we like about a few thousand pounds being saved, but that is not an accurate figure and I do not know where that figure came from. Zero carbon costs considerably more than £3,000 a unit. Even if you only put a 4 kilowatt solar system on your house that would be at least £6,500, and that would generate probably enough electricity to run your lights during the day when you do not need them.

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

My Lords, I had concluded my speech, but my noble friend made an interesting and useful intervention.

Photo of Baroness Parminter Baroness Parminter Liberal Democrat Lords Spokesperson (Environment, Food and Rural Affairs)

I thank the Minister for his comments and I will be understandably brief, but I was very disappointed to hear that he thought this amendment was a step too far. Two of the main points that were reflected in the debate were not satisfactorily addressed in the Minister’s summing-up remarks. First, there was the outstanding issue of whether the costs of building homes to a standard that would guarantee them for the future would prevent sufficient housing being built. That was not satisfactorily answered. The Minister made it clear that the Government believe that the figure of £3,000 per property would be a material barrier to the housebuilding that we all accept is needed. That did not satisfy a number of our concerns.

The second issue is that the Government seem to respond to every single request by saying that it would impose a regulatory burden on the respective industry. But that is not clear from the evidence collected by the recent House of Lords Committee, which did not just listen to one area of the housebuilding fraternity but took evidence from across the industry including, as my noble friend Lady Young said, from consumers as well as housebuilders. This was not seen by the industry as being a regulatory burden. The industry had agreed to these standards and was clear about the future investment trajectory. But it now does not see how to make the investments to help us meet the targets that we have as a country—the legally binding targets that we have to deliver.

I thank all noble Lords who spoke in the debate this afternoon, but I point out to the Minister that while the strength of feeling on these Benches is great, there was strength right across the Committee. This is an issue that we will return to. On that basis, I beg leave to withdraw the amendment.

Amendment 54A withdrawn.

Clause 62: Grants by Secretary of State

Amendment 55

Moved by Lord Beecham

55: Clause 62, page 28, line 8, at end insert “with the exclusion of—

(a) supported housing for older people;

(b) supported housing units (including self-contained homes where floating support is provided for vulnerable people);

(c) key worker housing (which includes self-contained flats subject to nomination agreements with third-parties);

(d) units that form part of major regeneration schemes planned or already under way;

(e) rural settlements;

(f) homes built for charitable purposes without government grant and homes provided through s.106 agreements (agreements under section 106 of the Town and Country Planning Act 1990 (planning obligations)) requiring stock to be kept as social housing in perpetuity;

(g) cooperative housing;

(h) ALMOS (arms length management organisations); and

(i) alms houses.”

Photo of Lord Beecham Lord Beecham Shadow Spokesperson (Housing), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Justice)

My Lords, the Committee will now deploy its energies to the part of the Bill that deals with the extension of the right to buy. Clause 62 is prefaced by two lines identifying Part 4, “Social housing in England”, and Chapter 1, “Implementing the right to buy on a voluntary basis”. The effect of this part of the Bill will of course substantially undermine the provision of social housing in England and the voluntary basis on which the provision purports to rest will, I predict, prove temporary and will not survive the re-election of this Government, should that misfortune occur.

The radical changes to the provision of social housing by “private registered providers”, as the Bill terms the housing associations and kindred bodies which have played and are still playing a hugely important role in the provision of decent affordable homes for millions of people, will result, as has happened already in the case of council housing, in a substantial reduction of affordable homes to rent and a substantial increase in the proportion of private rented properties let at higher rents. One of the perverse effects over time is likely to be an increase in the amount of housing benefit paid to private landlords. The anodyne wording of the 53 lines that encompass this radical change belie their importance and their impact, as do the 14 lines of the so-called Explanatory Notes. It is a measure of the importance of the issue and of the concern it has aroused that it has stimulated the tabling of 16 amendments in this and the following groups.

Amendment 55 sets out a list of proposed exemptions from the provisions of Clause 62 which permit the Secretary of State, or at his direction the Homes and Communities Agency, the right to provide grants to fund the right to buy discounts. I would not normally read out such a list, but in this case the mere recital of the nine categories embodied in the amendment serves to reinforce the concern they have aroused. Unless they are excluded, the following will be subjected to the right to buy:

“supported housing for older people … supported housing units (including self-contained homes where floating support is provided for vulnerable people) … key worker housing (which includes self-contained flats subject to nomination agreements with third parties)”— the latter, I interpolate, infringing on the interests of such third parties who would have no redress—

“units that form part of major regeneration schemes planned or already under way … rural settlements”— about which I and others will have more to say both in relation to this group and the groups of amendments that follow—

“homes built for charitable purposes without government grant and homes provided through s.106 agreements … requiring stock to be kept as social housing in perpetuity”— thereby interfering, I again interpolate, with freely negotiated arrangements unsupported by government funding—

“co-operative housing”— completely undermining the ethos which led to its provision in the first place—

“ALMOS (arms length management organisations) and— ironically—

“alms houses”.

Amendment 59B, also tabled in my name and that of my noble friend Lord Kennedy, adds “tenant management organisations” to this list, and one or other of us has subscribed to Amendments 57B, 57D,

66D, 67A, 68D and 69B. Underlying our support for these amendments are the fundamental concerns which have repeatedly been expressed about this Bill both outside and inside this House, and from all parts of this House. These include worries about the impact on communities of a reduction in affordable rented homes, and huge uncertainties about the number, location, cost and quality of possible replacements. In particular, there is opposition to the application by diktat of a one-size-fits-all policy by central government, exemplified by the inclusion of rural areas in the right to buy provisions in the social housing sector, even if this is initially, but I suspect temporarily, left to individual providers to adopt.

I ask the noble Baroness the Minister to say which if any of the list of categories of social housing the amendments identify should not be excluded from the provisions of this part of the Bill, and in each case why. She will no doubt say that it will be up to individual housing associations providing homes within any of the categories to decide whether or not to allow tenants the right to buy, but she must know that an expectation will have been created among some tenants, and it is not too cynical to suggest, their families, which it will become increasingly difficult to resist, thus in addition paving the way to converting a voluntary scheme into a statutory one, as has of course been the case with council housing. Moreover, that possibility in itself is surely likely to have a chilling effect on the willingness of the sector to invest in the provision of new affordable social housing.

One particular area of concern relates to the provision of housing for the elderly, where the double whammy of right to buy and the alternative impact of the proposal to sell high-value properties as they become vacant could significantly restrict access to appropriate properties such as bungalows. A Joseph Rowntree Foundation report states that one in five elderly people live in bungalows, with the proportion increasing as they reach the age of 75. Of course, not all of these are in council or social housing properties, but the foundation estimates that 25% of high-value sales would be bungalows, representing 9% of all the relevant housing. This could lead to the loss of 15,300 bungalows in the next five years—one in 15 of the relevant total in England. The foundation points out that replacement would be unlikely because of the larger site requirements and the cost of building single-storey properties. The policy and research manager of the foundation warned:

“The Housing Bill will reduce the number of affordable homes at a time of an acute housing crisis”,

and that we risk holding a “Great British bungalow sell-off”, which will,

“make things worse for elderly and disabled tenants who are trying to find suitable, affordable accommodation”.

Nowhere have concerns about the impact of right to buy been expressed more profoundly, in this House and well beyond it, than on rural areas. The Campaign to Protect Rural England, as might be expected, declared its opposition to the proposal, together with Hastoe Housing Association, about which we heard last Thursday, the Country Land and Business Association, the National Association of Local Councils, the Lincolnshire Rural

Housing Association, Exmoor National Park, the Rural Services Network and the National Parks association—none of which, as far as I know, are affiliated to the Labour Party. I half expected to see the entire cast of “The Archers” and “Downton Abbey” joining that. They specified concerns that rural affordable housing lost to the open market would not be replaced; that a portable discount alternative would not help rural areas; and, as we heard last Thursday from Members including the noble Duke, the Duke of Somerset, we are unlikely—if he will excuse the pun—to see more landowners offering to provide land for social housing if there is no guarantee that the homes built on it would remain available for letting at affordable rents and not be sold on as second homes or buy to let.

The CPRE and its partners in resisting crime point out that, under the agreement reached with the sector, one-for-one replacements need not be created in the locality where the right to buy is exercised, but could be anywhere. Moreover, the portable discount, seen as an alternative to buying the house one lives in and permitting it to be used to buy a different housing association property, does not minimise but merely relocates the damage. Affordable housing already accounts for only 8% of the stock in rural areas, compared with 20%—itself an inadequate proportion—elsewhere. These low levels of affordability, already exacerbated by lower average incomes in rural areas and by house prices higher than in many urban areas, foreshadow a dire future for rural communities.

The chief executive of Hastoe, England’s largest specialist rural housing association, states that the situation,

“makes a mockery of the Government’s plan to replace affordable homes to rent with ‘starter homes’ to buy—at nine times the median salary of rural workers”.

In her words, the right-to-buy deal,

“will mean that young workers on lower incomes are bound to see their chances of rural accommodation disappear; many of the houses sold to tenants will … be resold on the open market at prices far beyond the reach of the people they were designed for”.

The campaign of the CPRE and its partners has been endorsed by its president, the former Poet Laureate Sir Andrew Motion—perhaps an appropriate name for our discussions. He asserted, in blunt prose rather than verse, that if the countryside is to be prevented from turning into a “gentrified museum”—or as I would add, being given over to second homes or holiday lets—there must be a “full rural exemption”. He called for an exemption for,

“communities of under 3,000 inhabitants, as well as rural market towns”,

with a population of up to 10,000,

“where there is a significant need for affordable housing”.

I await the Minister’s reply to that call later this afternoon.

I made brief mention of starter homes, which we discussed at some considerable length last Thursday. Since then, some important information has come to light which I must draw to the attention of the Committee. The respected magazine Inside Housing has reported:

“Major lenders have warned government officials they will not support Starter Homes unless ministers agree to a major climbdown over the discount period.

An ‘impasse’ has been reached between a number of major lenders and the government over its plans to allow buyers to sell the flagship housing product at full market value after five years … This would allow buyers to cash in the original 20% discount, meaning they could make profits of £141,000 by selling an average home bought under the scheme after five years.

Large lenders have now reached a deadlock with government, as they fear this could distort market values and incentivise people to overpay. Most large lenders therefore want the 20% discount to be held in perpetuity, or for the period where the discount applies to a resale to be extended to 20 years. However, it is understood Department for Communities and Local Government … officials have so far rejected potential compromises, including a 15-year discount period with a taper after the first five. One lender said: ‘There is an impasse … no one has communicated an absolute red line, but if there is no compromise then some [lenders] will opt out of supporting the scheme.’

Another source close to the discussions said: ‘There has been an enormous amount of pressure brought to bear [on lenders]. If the government carries on like this, the scheme won’t work’. Stephen Teagle, managing director of affordable housing and regeneration at Galliford Try, who is part of the group helping to develop the policy, said there is ‘keen support’ across the sector to extend the discount to 10 years. He added: ‘That may be the amendment required to ensure we can all get on and start delivering the Starter Homes programme’.

The Housing and Planning Bill does not commit to the five-year period of discount, and it is understood Downing Street officials have privately hinted at a willingness to ‘listen’ on this point. As a result, lenders hope the government will extend the discount period via a forthcoming consultation on regulations. The government did not comment”.

I have to say that this is an extraordinary revelation. I cannot believe that the Minister was a party to these discussions. After all, she is only a Minister of the Crown, not a Downing Street official. Had she been aware of them, she would surely have made some reference to them last Thursday, if only to the extent of saying that the Government were in discussion with the lenders about the very issue this House spent hours debating. So what is the position? If the Minister is not in a position to tell us today—doubtless because she was not included in these discussions—I expect that she will agree to write to us accordingly.

Are the Government considering changes to the discount period or not? Will they be in a position to clarify the position by the time we get to Report? What options, if any, are they considering? Members of your Lordship’s House need to know before we start tabling amendments at Report. What answer do the Government make to the critical concern of lenders that the scheme, as presently drafted, could distort market values and incentivise people to overpay? Would this not also impact upon the rest of the housing market and drive sale prices on the existing stock?

There is a further extremely worrying issue raised by the report, namely the reference, yet again, to the possibility that the Government will extend the discount period via a forthcoming consultation on regulations. Since we will be spending a good deal of time debating rural concerns today, I hope I may be forgiven for suggesting that, in the absence of clarity about the Government’s intentions, we are, in effect, being invited to buy a pig in a poke, something which, on religious grounds alone, I am reluctant to accept.

The Government may have chosen not to comment on the Inside Housing report thus far. I believe that the House will wish the Minister to do so today, or, at the very least, before the end of Committee, and I invite her to confirm that she will do so. I beg to move.

Photo of Baroness Royall of Blaisdon Baroness Royall of Blaisdon Labour 4:45 pm, 8th March 2016

My Lords, I shall speak to Amendments 56 and 57A. In doing so, I add my support to the other amendments in this group. I associate myself with all that my noble friend Lord Beecham has said.

Many of the amendments in this group share the same definition of “rural area”; that is to say,

“(a) any settlement with a population of fewer than 3,000 people at the most recent national census, or

(b) any settlement with a population of between 3,000 and 10,000 people at the most recent national census, and designated as a rural area by the Secretary of State following representations from the relevant local authority”.

Does the Minister agree that that is the definition the Government will use in respect of this Bill, and in all legislation in which such a definition is required? To have differing definitions is both confusing and open to contest.

Rural communities are not just a smaller version of urban communities. They have different strengths and different challenges. The lack of affordable housing is one of the greatest challenges and the extension of the right to buy to housing association tenants in rural communities will exacerbate the already chronic shortage of affordable properties. Indeed, without affordable homes, villages become unsustainable. The only people able to live there are incomers, who often do long-distance commutes; second-home owners and those who rent out properties for holiday lets, when what is needed are homes for those who have grown up in the area and who wish to stay or return, and for those who work in the local area, including teachers, tractor drivers and community nurses. At the moment, the homes provided by housing associations enable communities to thrive, with a school, a shop and a pub. There is great anxiety that, with the extension of the right to buy in these areas, villages will no longer be sustainable. That is not merely a personal concern, as we have heard from my noble friend, but is shared by a wide-ranging coalition from housing associations such as Hastoe to the CPRE, the CLA, the LGA and many more, all of which have a real understanding of the needs of rural communities. Indeed, a representative of the CLA said at a recent meeting that the right to buy could be a further barrier to what is already a very difficult situation, and could lead to community breakdown.

In 2011, already only 8% of the housing stock in rural areas was owned by housing associations and local authorities. The Minister has told us of the Government’s support for social housing, which I have to say, judging from this Bill, looks dubious. However, I would be grateful if she would say what percentage increase in social housing in rural areas they envisage over the next five years as a consequence of the Bill. Does she agree that an increase is absolutely necessary for the sustainability of our rural areas, where wages are low and house prices, even at a discount, are out of reach for most local people?

There is compelling evidence from previous incarnations of the right-to-buy policy to show that, when stock is lost from the social rented sector, it is not replaced in the same quantity or in the same geographical area. This is particularly true in rural areas, where development is constrained and where it is often significantly more expensive to build due to the cost of land and the lack of main services. It can also take longer to bring forward through planning applications. Between 2012-13 and 2013-14, the ratio of sales to replacement was eight to one. That is nowhere near the one-to-one figure vaunted by the Government. With the current Bill, there is no robust and fully modelled funding mechanism in place to pay for replacement. In addition, there is currently no requirement for replacement stock for homes to be sited locally, which means that housing association properties sold in small villages will undoubtedly be replaced on larger windfall sites elsewhere.

The NHF has reached its understandable—but, I believe, very regrettable—agreement with the Government to make the right to buy voluntary; and, furthermore, that tenants should have a right to a portable discount. We do not yet have any further details, which is frustrating, especially for those working in the sector. However, I know that the noble Baroness is aware of the frustrations and I will not press her further on this at this stage. However, I believe that both concepts pose more problems than solutions to the housing crisis. Indeed, I would go so far as to say that the portable discount makes absolutely no sense at all.

In relation to the voluntary agreement, what would happen in an area where at least two housing associations have homes but only one decides that its tenants can exercise their right to buy? Apart from the understandable anger, what would happen? I wonder how long the voluntary concept will remain voluntary. Amendments 57A and 57B are identical and rather similar to Amendments 57C and 57D, with all of which I agree. However, for me, as well as for Sir Andrew Motion and the rural housing group, they are very much second best.

My strong, strong preference is for Amendment 56. Although the amendment was not laid at Second Reading, there were many cogent arguments supporting it. I remind noble Lords of two very powerful contributions. The right reverend Prelate the Bishop of St Albans said:

“The simple fact of the matter is that, as things stand, houses in rural areas sold under the right to buy will not be replaced in the same area—or indeed, in all likelihood, in any rural area. In so far as they are sold, they will be lost for those who need access to affordable rented accommodation and will be replaced by affordable housing in urban areas, where the costs of development are usually cheaper and where more sites are available”.—[Hansard, 26/1/16; col. 1205.]

The noble Lord, Lord Cameron of Dillington, made the case eloquently when he said:

“It is dangerous, however, to introduce the concept—or the possibility—of the right to buy in rural communities. Farmers and communities will have to grapple with new safeguards to protect their sites in perpetuity and will naturally be suspicious, making these much-needed exception sites less likely than ever to come forward. I would, therefore, like to see a blanket protection in law from this right to buy for communities of under 3,000 people”. —[ Official Report , 26/1/16; col. 1212.]

Hear, hear.

I have no doubt that the Minister will not accept this amendment today, but I hope that she will not dismiss it out of hand. All those who best know and understand rural communities and their specific challenges, and who are passionate about their sustainability, agree that extension of the right to buy should not be allowed in rural areas. To continue with this policy would imperil their vitality and viability.

Photo of Lord Cameron of Dillington Lord Cameron of Dillington Crossbench 5:00 pm, 8th March 2016

My Lords, I will speak to Amendment 57B, tabled in my name, and also Amendment 57D, where I am an also-ran behind the noble Lord, Lord Best. First I restate what I said at Second Reading: I am keen to encourage the Government’s desire to develop more home ownership. There is no doubt that the big change in social mobility since my post-war youth has been assisted by the growth in home ownership that has happened during my lifetime. So I am all for encouraging that direction of travel.

Nevertheless, in the countryside at any rate, where the availability of housing is limited, and while the desirability of country living is so deeply embedded in the English psyche, we have to make absolutely certain that we do not leave any casualties behind on the road to the home-ownership ideal. Unless we cater for the high demand for affordable homes for the less well- off, we will undoubtedly leave such casualties. The Government recognise this, which is why they agreed to only a voluntary right to buy for housing associations in the expectation that, in the most rural areas, the associations would choose not to allow it.

But in an effort to compromise and refine that, so that we do indeed maximise the potential to provide extra rural, local affordable housing, Amendment 57B, which stands in my name and those of others, ensures that if any party—a housing association or a householder —decides to take advantage of the discount available from the Government, the resulting sale will only take place if a new affordable house is provided in the parish or adjoining area. The key word there is “adjoining”. It is important that the new affordable housing replaces the existing homes being sold within the same community or group of local communities. It is no good having the replacement housing on the other side of the county or, in the case of the amendment in the name of the noble Lord, Lord Berkeley, even on another island in the Isles of Scilly. We both go on holiday to the Isles of Scilly so we know a little bit about them.

It goes without saying that the housing association houses being sold must not be on an exception site, as that would undoubtedly result in the abandonment of the “in perpetuity” for locals that would have been written into the original planning permission and by which the site is forever legally bound. We are talking here about Section 106 housing, on sites where the housing association houses are within a larger commercial development adjacent to or part of either a large village or market town. It behoves all parties, the vendor housing association, other housing associations and the local planning authority, to pull together to make this work. If the local planning authority can use its strategic housing land availability assessment review—known to its friends as SHLAA—to encourage landowners, farmers and indeed parishes to assist in the finding of new sites for new affordable homes, so much the better.

It will not have escaped your Lordships’ attention that the advantage of this amendment over the mere existence of the voluntary undertaking on the part of the housing association is that if the scheme works and is seen to work, we might get more housing for locals in our villages, even if the house being sold eventually gets sold on, inevitably, to an outsider and is thus lost for ever to the people of the village. In this way, our amendment and others of a similar nature in this group promote the Government’s agenda of greater home ownership, so I hope that it will be acceptable to them. Without amending the Bill in this way, and without the co-operation of all parties to encourage this extra housing, I do not see many responsible housing authorities volunteering their rural properties for the right-to-buy scheme—which I suspect is contrary to what the Government would really like to see. I look forward to the Minister’s response.

Photo of The Bishop of St Albans The Bishop of St Albans Bishop

My Lords, I support Amendment 56, tabled by the noble Baroness, Lady Royall, to which I have added my name. I, along with other noble Lords, have received a number of letters from people living in rural areas who are deeply concerned at what seem the inevitable consequences if this issue is not addressed.

The major force of this amendment, as the noble Baroness pointed out, would be to change the emphasis in the current right-to-buy arrangement from one in which housing associations can choose to exempt themselves from exercising right to buy in rural areas, as per the current agreement, to one in which housing associations would be unable to exercise right to buy in rural areas, unless in exceptional cases, as set out in proposed new subsection (1A) of the amendment.

The rationale for the amendment is pretty simple. Affordable housing should not be sold off in communities where it will not be replaced. Among the other options, adjacent areas, for example, may be quite some way away and include urban areas, so there are issues about definition. The broader definition of “rural” that is included in the amendment—as well as the inclusion of dwellings in national parks, areas of outstanding natural beauty and rural exception sites—is designed to capture those additional settlements in which planning restrictions and natural features make the replacement of affordable housing sold under right to buy highly unlikely.

Everyone in the Committee will understand that affordable housing in rural areas is essential for the long-term sustainability of local communities, yet despite prices that are beyond the reach of many of those who live and work in rural areas, the level of affordable housing in rural areas is very low—only 8% compared to just 20% for urban areas. There is a variety of reasons for that, one being that it is so difficult to build in these areas. Planning regulations mean that rural villages struggle to produce any new developments, and what new developments there are tend to be much smaller, yielding little in the way of affordable housing through Section 106. Of course, proposed changes to the Bill to the requirements of developers to include affordable housing in any new developments will only make the situation far worse with regard to the provision of affordable homes for rent.

All of this means that any measure that puts existing rural affordable housing stock at risk needs to be treated very carefully—but the current right-to-buy arrangements make exactly the threat that I am concerned about. The chances of any rural affordable housing that is sold under right to buy being replaced by similar rural affordable housing is very small, as one sees when one visits rural areas and talks to people working on the ground. It is far more likely that those housing associations which choose to sell off expensive rural housing will choose to build replacement homes in urban areas, where the costs of development are likely to be far cheaper. That might be good for the housing associations which are facing a period of belt tightening over the coming years, but it will be devastating for rural communities.

Another reason for considering the amendment is for the sake of simplicity. Tenants require clarity about where they will be able to exercise the right to buy, as has already been pointed out, and a system based on housing association discretion is almost designed to create disappointment. I know that noble Lords on all sides have serious concerns about the feasibility of providing a portable discount as an alternative. It is also true that initial indicators suggest an enthusiasm for right to buy that will far exceed the Government’s ability to provide replacement funding—again leading to disappointment. Excluding areas that are most likely to be harmed by right to buy will ensure that resources are directed to the areas where they can do the most good. I hope the Government will reconsider and will listen very carefully to these arguments before pushing ahead with this.

Photo of Baroness Bakewell of Hardington Mandeville Baroness Bakewell of Hardington Mandeville Liberal Democrat

My Lords, I draw the House’s attention to my interests as a vice-president of the LGA and a councillor on South Somerset District Council. I support all the amendments in this group, including those in the names of the noble Lords who have already spoken, and I will speak specifically to Amendments 56, 56A, 57A and 57C. This extremely important group of amendments will have far-reaching effects on communities throughout the country.

As indicated previously, I visited Exmoor National Park to talk to the chief executive. Exmoor has a population of 10,000 people and 5,500 homes actually in the park for those who can afford them. Exmoor National Park wants to provide homes for people who will never get mortgages or loans. Its focus has been on affordable homes for renting. All its new houses are intended to be affordable in perpetuity. It aims to build up its stock of homes to the level it was before the first round of right to buy depleted it. In recent years 100 homes have been provided and 200 people have been accommodated—its policy is working. Some 30% are privately rented or privately owned and 50% are socially rented, but all require a local tie or connection.

The Exmoor and Northumberland national parks are the most sparsely populated areas in the country, with very small settlements. Other national parks have larger settlements, where it is easier to provide affordable homes. The statistics are stark. Of the first tranche of right-to-buy sales, a majority have gone to outsiders and for holiday lets. In Lynmouth, in a row of terraced properties sold under the right to buy, only two are not now holiday lets and 20% of the properties have no usual residents. We must prevent this from happening a second time. In Northumberland the undersupply of affordable rented properties at rates related to average wages has led to a gradual decrease in housing. Hard evidence is difficult to obtain due to the paucity over nearly 30 years—young couples have just accepted that to get a home they have to leave the park area. However, when 30 homes were built in Norham, they were let to the relevant people in a morning, despite only four or five appearing on housing lists.

Incomes in Exmoor National Park are in the lower quartile for England, at around £12,000 for a household. Many people have no regular work. Their work is seasonal or portfolio work. The majority of people on the park are in work but on very low incomes. Affordable housing schemes are very popular. However, when rents went to 80% of market rents, people pulled out as they could not afford them; 80% is still unaffordable on Exmoor. The self-employed on Exmoor are nowhere near the living wage. Lambing is a good example of seasonal work which pays cash in hand. These people can never get mortgages due to their inability to prove a living wage over the relevant period of time. The “at least 20%” discount will need to be considerably more to assist these residents. A home at an affordable price of £130,000 would have to be discounted by nearly 30% to be truly affordable to the workers on the park.

Young people living on Exmoor are in dire straits. The park has conducted a survey to assess their housing needs. One young person felt that he did not have a housing need because he was able to sleep on the floor of a friend’s caravan. There has to be more to life for these young people. Residents, particularly young people who work on the land on Exmoor, need properties suitable for their lifestyles. They need somewhere to keep dogs, store their equipment and hang soaking wet waterproofs when they come in at night from lambing et cetera. Properties provided in the park for those who have a connection to the park, and are lucky enough to be housed, must be protected in perpetuity for those coming after them—not sold off at a profit to those seeking to make a quick turnover. New market homes must be the principal residence of the occupier and have to be lived in, and not a second home.

New homes are the lifeblood of these very rural communities, as we have already heard. Twenty new homes at Wheddon Cross made a huge difference to the school. It is no fun at all if you are a child in a class where there is only one other child of your age group. Children need friends in order to thrive and develop, just as the rest of us do. New housing in isolated areas for local people is an essential, not a luxury. There has to be a small rolling stock coming forward. I support this amendment and have to ask the Minister just what the Government’s view is for the future of rural England. What of the small farmers, the beaters, the shooters, the carers of the vulnerable, frail and elderly—just where will these people live?

Turning to Amendments 56A and 57C, I declare my interest as the chair of the National Community Land Trust Network, an organisation of communities based and led by residents keen to provide housing in their locality for those who cannot afford traditional open-market homes. The effect of the right to buy on the growing CLT movement is likely to be disastrous, hence it is important to achieve exemptions in the Bill. The 175 CLTs across England and Wales are run by local people to develop and manage homes as well as other important assets valued by communities. The very purpose of these CLTs is to develop homes that are affordable in perpetuity. These homes are not just to benefit one generation; they are intended to benefit every future occupier.

The right to buy, if extended to CLTs, would go against their basic aim. It would threaten the very existence of this small but vibrant community-led sector. Many CLTs are nervous that an exemption in a voluntary agreement leaves them vulnerable to coming under pressure to sell their homes. It is vital for the stability of this small but energetic sector that the Bill gives them the clarity and certainty they need to plan securely for the future. This should be in the Bill.

Farmers and local landowners have in the past, as we have heard, either donated their land or offered it for CLT schemes at well below the market value. This is unlikely to continue if they feel that the homes built will be sold off. Community support will also disappear if there is doubt whether the homes will be there for this and future generations looking for a home in their community.

The journey from the inception of the idea of a community-led scheme to the homes being occupied is only possible through the many hours given by volunteers from the community. It requires great patience and perseverance on the part of all those involved. At a single stroke, this commitment and hard work could all be swept aside and the aim of the organisation undermined by the right to buy.

Villages and urban neighbourhoods need younger people to remain there and not be forced to move away in order to be able to afford a home. Town or country local businesses will only thrive if there is a local workforce. The fabric of our communities is dependent on there being people from all walks of life. Too often we see villages becoming enclaves for the elderly, all experiencing decreasing mobility and increasing frailty. They need younger people to assist them in their daily lives and to maintain their dignity. They can do this only if they are living close by and not travelling out on a daily basis from the nearest town.

CLT developments usually provide a mix of tenures: some for affordable rents, some for shared ownership and some for sale at discounted prices. This mix of tenures is the lifeblood of communities which seek to provide for those in them who are less well off and to maintain a healthy balance among the residents.

I turn to Amendment 57A. It is not unreasonable for the grant paid to housing associations under the right to buy to be retained in the area where the original dwelling was situated, and for the proceeds of that sale to be reinvested in that area. That is particularly important when we are considering rurality. Where villages and hamlets are small but had local authority, council or social housing in the past, tenants took advantage of the first right-to-buy legislation—and who can blame them? However, that has resulted in a dwindling supply of homes in rural locations, to the point where many housing associations report that they have only two or three homes in some villages, having taken over housing from local authorities.

The Bill means that those dwellings and homes can now be sold to the tenant, who could well wish to sell on the open market, make a quick profit and move on. It seems that the Government do not object to that, but it will drastically reduce the already shrinking supply of homes in rural areas. Rural properties are on average about £43,000 more expensive than their urban counterparts, and local wages are lower. As we have heard, someone on a lower-quartile income would need to pay almost eight times their annual salary to secure a home. The Rural Housing Advisory Group believes that the Bill will, over time, drive out people who live and work in rural communities, threatening the economic and social vitality of those areas.

As we have heard, only 8% of housing stock in communities of less than 3,000 people is classed as affordable, compared to 19% in urban areas. A universal right to buy could see the remaining rural social housing disappear. Is that the Government’s intention?

Photo of Baroness Redfern Baroness Redfern Conservative 5:15 pm, 8th March 2016

My Lords, the amendments reflect an effort to address concerns about adequate housing provision, as well as how best we can ensure that everyone has somewhere they can truly call their own. I should first declare an interest: I sit on the Ongo board, which is a housing association in my local area, and am a leader of a local authority.

As noble Lords may be aware, since the right to buy was introduced in 1980, nearly 2 million people have used it to get on the property ladder. This is a noble feat of which we should all be very proud. Home ownership provides stability to families, and should not be restricted or out of the reach of some. Since breathing new life into the policy in 2012, we have found that the appetite of social tenants for home ownership is even stronger, and it is an aspiration for many people.

The Bill is therefore about not just bricks and mortar but providing suitable homes that meet people’s current or future circumstances and how best we can meet that demand. These clauses illustrate the Government’s continued commitment to extend the right-to-buy scheme to housing association tenants and increase house supply.

I am pleased with and fully support the agreement that Her Majesty’s Government reached with the National Housing Federation to enable the right to buy to be implemented on a voluntary basis. The agreement potentially gives all the 2.3 million current housing association tenants the opportunity of home ownership through right-to-buy discounts. This offer would provide a significant increase in the supply of new homes in

England by ensuring that every home sold is replaced with a new property. In return, housing associations will be fully compensated by the Government for the cost of the discount.

It is particularly welcome that in some cases housing association tenants would be offered a portable discount to purchase an alternative property to the one they live in, should that better suit their circumstances. Housing associations would also have the freedom to replace the properties sold with alternative tenures, such as shared ownership, where that is more appropriate.

There is no doubt in my mind that the continuing benefits of home ownership will have a positive impact on the lives of people like you and me. I welcome the continued co-operation of the federation, its members and the Government in developing new and innovative products so that every tenant in England, if they wish to, can buy a stake in their home.

I mentioned earlier that the Bill will ensure that we provide suitable homes that meet the demands of those who may or may not wish to buy their home. Evident in that regard is the success of the continued partnership of Her Majesty’s Government and housing associations in delivering new homes that the country really needs. Both have the essential shared ambition to extend the benefits of home ownership to existing and future tenants. We should congratulate those housing associations which have already developed innovative approaches to enable their tenants to access the housing market through flexible tenancies and equity stakes, to name all but a few. We should not forget that the Government also introduced, for the first time, the commitment to deliver a one-for-one replacement of housing stock when sold, and 165 out of 167 stockholding local authorities chose to do so.

This Bill has shown the importance of the role of local government in the local decision-making process. Many local authorities play a lead role in building new homes, and it is crucial that each and every authority respond to the needs of residents. They need to respond to the economics in local housing markets, as assessed locally by councils as part of their local plans, and encourage more smaller housebuilders to be involved in these contracts. We heard earlier from the noble Lord that small builders are particularly important in self-build schemes where they can increase the supply of housing far faster than some of the national builders and utilise their bespoke skills. Let us also not forget that this Bill will get the country building again, further housebuilding starts, which are at an all-time high, and increase the 100,000 jobs already created in the sector in the past two years. This opportunity will boost employment in the construction industry, create thousands of new jobs and apprenticeships for young people, support local economies and reduce the link between poor housing and poor health, which costs the NHS £2.5 billion.

We should be determined to maintain this momentum. The Bill’s implementation will not only improve people’s health but will save public money in the long term. This Bill will provide the potential positively to transform housing and planning operations in a way we have not seen before.

Photo of Lord Best Lord Best Chair, Communications and Digital Committee

My Lords, we are now deep into the debate on the implementation of the voluntary right to buy for housing association tenants. I did not feel able to add my name to the amendments in this group that seek to exclude some or all housing association tenancies from the grant to be made available to pay for the discounts for these tenants. I am, however, alongside my noble friend Lord Cameron of Dillington, and I support amendments in the names of a number of other noble Lords directing where the proceeds from any right-to-buy sales should be reinvested.

A good deal of controversy greeted the promise of a right to buy for housing association tenants when it appeared in the Conservative Party’s election manifesto last year. In the event, the initial right-to-buy policy was changed to a voluntary scheme negotiated between the National Housing Federation and the Government. The resulting agreement has led to the federation being criticised for doing a deal with the Government rather than fighting to get this measure abolished. Parallels have been drawn with the last time the Government proposed a right to buy for housing associations, in March 1983. I was the chief executive of the federation at that time, and it mounted a campaign to persuade this House to reject the proposal. The House, which was largely Conservative then, did so by a large margin. As a result, the Government abandoned the measure and the stock of housing association homes has avoided being depleted by sales at heavily discounted prices over the past 33 years.

Should I now be exhorting your Lordships once again to reject this measure? The revamped policy still subsidises housing association tenants to purchase their homes, and therefore still means that they are not available to be re-let in the future to lower-income households. However, the deal now done differs from the earlier proposal of a statutory right to buy in fundamental ways.

First, no statutory right is being offered to housing association tenants. Rather, tenants will be able to buy, and receive substantial discounts to do so, if the housing association’s board so decides. This acknowledges that housing associations are independent bodies, mostly charities, and they should decide on matters as important as this, rather than being told what to do by central government. It means that housing associations can protect some or all of their housing stock where, for example, they do not believe it can be replaced. For example, Hastoe Housing Association, a leading rural housing association, has announced that it will not be offering the right to buy to its tenants in rural areas, as defined in several amendments to the Bill.

Secondly, again in contrast to the proposition that came before your Lordships in 1983, housing associations will receive 100% of market value of any tenanted property that they sell. The discount for the tenants will be paid in full to the housing association. This will therefore generate a capital receipt that could and should be used to replace the home that is sold and, sometimes, to produce more than one for one. Getting the full market vacant possession price for a tenanted property, which had previously been on the books for much less, strengthens the housing association’s balance sheet and enables it to recycle assets tied up in property to build more homes. These funds are clearly very important at a time when grants for affordable housing have been considerably reduced.

Those two big differences contrast favourably with the previous proposal for every housing association to be compelled to sell on the very generous terms dictated by the Government, with no compensation for giving the tenant their hefty discount. Sadly, that remains the position for councils, which have no discretion in the matter and have to take the hit of the right-to-buy discount and, even after that, have to send a substantial chunk of the remaining sales proceeds to the Treasury. So I do not criticise the National Housing Federation and its chief executive, David Orr, for the arrangement it negotiated.

There is a further significant reason why that deal was necessary. It concerns the reclassification by the Office for National Statistics of housing associations as public bodies. At the time when the voluntary right-to-buy scheme was being negotiated, there were fears, which were subsequently realised, that housing associations—or “private registered providers”, as the new jargon tediously calls them—would be reclassified from their private status to that of public bodies. Reclassification is a matter of considerable disquiet for the Government as well as for housing associations, because it means that borrowing by these bodies is regarded as public expenditure. Loans by housing associations then form part of the national debt, adding over £60 billion to it; worse, they increase the annual deficit by £3.5 billion per annum at a time when reducing the deficit is the Government’s very highest priority.

Abandoning the idea of a statutory right to buy for housing association tenants did not head off the ONS; it declared that government controls over housing associations had already passed the point where these bodies could be regarded as private, and the ONS duly reclassified them as public non-governmental bodies. Hence the need for the deregulatory measures in the Bill, which we will come to later. If any statutory right-to-buy provision had been in the Bill, these legislative changes to deregulate housing associations so that they can be reclassified as private would have had to be wound back to cover the right to buy. The hazard here was rightly pre-empted by the federation’s deal. If the negotiations had failed, the Government, with their manifesto commitment to give housing association tenants the right to buy, might have felt compelled to accept the ONS’s changed classification of housing associations, affirming their public status. That would of course have been followed by imposing spending controls and borrowing caps on housing associations, as on councils, nullifying housing associations’ future development plans.

Still, we are not out of the woods entirely on this aspect of the reclassification issue. The case still has to be made to the ONS that housing associations are genuinely independent of government control over the sale of their homes. The ONS must not be faced with a statutory right in all but name. Therefore the more that is left to the boards of housing associations to decide, and the less that is set out in statute, the better.

Hence my reluctance to support a variety of exclusions in the Bill that would remove the entitlement to a grant to cover the discount for some groups of tenants and thereby appear to confirm the entitlement in respect of the other groups. At the same time, excluding some groups from this part of the Bill would mean that the tenant did not get a portable discount, which tenants denied the right to buy would otherwise receive to help them to purchase elsewhere. Denying tenants the opportunity to move out with a portable discount, which costs the housing association nothing, might seem churlish.

I am bound to say that the portable discount remains something of a mystery until the regulations relating to the new scheme are known. The noble Lord, Lord Young of Cookham, has suggested that portable discounts should not be confined to helping tenants to buy other council or housing association properties but should be available for those tenants to buy new homes on the open market. That would encourage increased supply and would not diminish the existing stock of much-needed social housing. It sounds like a valuable suggestion. With or without that improvement to the portable discount scheme, excluding certain tenants from access to these portable discounts, as well as excluding them from the opportunity to buy their own home, could be viewed as going too far.

So is everything now okay with this voluntary right-to-buy scheme, ignoring the question of whether a voluntary right is not a contradiction in terms? In a later group of amendments we shall come to the controversial mechanism by which the Government have chosen to raise the money that pays for the new discounts. I strongly disagree with that measure but it is not part of the voluntary deal, and no opprobrium should accrue to the National Housing Federation on account of that arrangement.

At this point there are some different concerns. Amendments in this group aim to ensure that the proceeds from sales not only achieve a programme of new homes but finance those homes in places where they are most needed. Since housing associations will receive significant grants to compensate for paying discounts, attaching some conditions on the use of those grants does not sound too interventionist. A key condition expressed in Amendments 57B and 57D is that in rural areas, if precious housing association property is sold, proceeds from sales should be reinvested in the same rural localities, either in the same parish or in an adjoining one. As the noble Lord, Lord Cameron of Dillington, set out, and as we discussed last Thursday in endeavouring to prevent the developments of rural exception sites being switched from affordable rented homes to starter homes, many village communities face acute shortages of homes for local people who cannot afford to buy.

We know that the boards of several housing associations that concentrate on rural housing, including Hastoe, which I mentioned, will not be offering their tenants the voluntary right to buy in rural areas. I believe that Ministers understand the special position of rural housing, which is at such dangerously low levels in many areas. I am sure that the regulator that monitors housing association behaviour in this regard will respect the conscientious decision of these associations, including all the fledgling community land trusts that are now making such a welcome contribution in several areas. Housing associations working in rural areas would welcome any words of reassurance from the Minister today to the effect that the Government fully accept—perhaps indeed fully applaud—their decision to abstain from right-to-buy sales in those localities. The associations are not just acting in accordance with the agreements that they made with landowners and local authorities to assist local people but are increasingly in accord with the new neighbourhood plans.

Nevertheless, fears have been expressed that not all housing associations with property in rural areas will opt for a policy of no sales. Some, it is suggested—although I would be surprised by this—could see their homes in villages as a cash cow, with sales there netting substantial gains. They would expect handsome profits, not only because property prices are on average 26% higher than in urban areas but also because they have often obtained the land at a heavily discounted cost, usually because it was on a rural exception site but with no covenant or legal agreement to prevent sales.

I am doubtful that housing associations, which will most likely have had to go through a long struggle to add a few extra cottages in a village setting—frequently in the teeth of local objectors and sometimes only because of help from specialist rural housing enablers—would favour sales that would be bound to mean resales later to commuters, second-home owners and so on, which would undermine all their hard work. However, to guard against rural housing assets being plundered to pay for urban developments elsewhere, Amendments 57B and 57D would ensure that reinvestment of sales proceeds in the same rural locality. Therefore, while steering clear of putting exclusions from the voluntary right to buy in the Bill, I support these rural-focused amendments.

Photo of Lord Horam Lord Horam Conservative 5:30 pm, 8th March 2016

My Lords, it is very good to hear from the victor of 1983, if I may call the noble Lord that. It is also good to hear from my noble friend Lady Redfern, who speaks with the authority of a local authority leader.

I was rather disappointed by the rather gloomy tone taken by the noble Lord, Lord Beecham, and the noble Baroness, Lady Royall, earlier in the debate. Indeed, the noble Lord was uncharacteristically doom-laden. I know that the spirits of everyone who comes from Newcastle are entirely determined by the results of Newcastle United over the weekend, so from that point of view I can well understand his excessive gloom. As a supporter of Manchester United, I feel for him. What also worried me was a tone in his remarks which indicated so little trust in housing associations. I was there at the beginning of housing associations back in the 1970s, when I was chairman of a housing association called Circle 33, which is now part of the Circle Housing Group—I have nothing to declare, because I was directly involved in it a long time ago. However, I remember vividly the social concern which drove housing associations. Indeed, their critique was very much to deal with tenants and people who needed affordable housing at reasonable rates in a different and better way than local authorities dealt with them. Very often in Islington, where Circle 33 had its main operations, the local authority just turfed people out of areas and shoved them into quite different parts of London or the borough without any nem con.

Photo of Lord Beecham Lord Beecham Shadow Spokesperson (Housing), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Justice)

Perhaps the noble Lord would take it from me that it is not housing associations that I do not trust but the Government.

Photo of Lord Horam Lord Horam Conservative

I am sorry but from the noble Lord’s remarks I felt that he showed a lack of trust in the motivation of housing associations. All the things he had down in his long list, which was almost Uncle Tom Cobbleigh and all—or perhaps the proverbial kitchen sink, which is rather more appropriate in the circumstances—would almost inevitably be taken into account by housing associations given the social concern they have at their call. Indeed, the noble Lord, Lord Best, pointed out that Hastoe, for example, has already ruled out having the right to buy in rural areas because it operates in rural areas. I understand these concerns—clearly, they are very real. For example, we understand the problems associated with supported housing units, co-operative housing, rural settlements and regeneration schemes in large urban areas. These are all real issues, which the House is absolutely right to draw to the Government’s attention. However, they are also absolutely the things that housing associations themselves are concerned with. Indeed, I cannot imagine a housing association which would not take them into account when deciding whether the right to buy was appropriate in particular circumstances. Therefore although I understand the concerns expressed by the Labour Party and its spokesman today, and the Liberal Democrats, they have been excessively gloomy on this.

Photo of Lord Campbell-Savours Lord Campbell-Savours Labour

Is the noble Lord then suggesting that a housing association would have the right to say, “You can’t buy that but you can buy that”? In other words, would it be able to be selective within the policy?

Photo of Lord Horam Lord Horam Conservative 5:45 pm, 8th March 2016

Indeed, the right to buy is at the behest of the housing association. It can decide whether a house is up for sale or not. If that particular house is not appropriate for sale it can of course offer the tenant another house, and there is the question of a portable right to buy somewhere inside or outside the public sector. Therefore all of that is possible, and I am sure that a sensitive housing association, after having a proper consultation with its tenants and so forth, will do the right thing in the end. It may make mistakes along the line but it has the full power and flexibility to do that, and long may it be so.

I will explode another issue which has come up, which the noble Baroness, Lady Royall, mentioned—that housing associations and others are not replacing houses on a one-for-one basis. Historically, she is correct—that is undoubtedly the case. The numbers have been very low; I think the figure is that one out of every 10 has been replaced by a new home. However, since the new right-to-buy provisions came in, it is more or less one for one. That is the fact of the matter over the last two or three years. As the noble Lord, Lord Cameron of Dillington, pointed out, we hope to do better. We hope that this will galvanise housing associations. The truth of the matter is that in the housing association world, while there are many dynamic and quite large housing associations—

Photo of Baroness Royall of Blaisdon Baroness Royall of Blaisdon Labour

I am sure that the situation has got a lot better but the figures I have are from 2013 and 2014, when the figure was eight to one, so there is still a long way to go. My problem with the financing is that it is not absolutely clear yet. We are at sea. We do not know what will happen vis-à-vis the financing, and to feel secure I want to know exactly what the formulae are—where the money is coming from, how it is coming, and so on—and we do not have that information at the moment.

Photo of Lord Horam Lord Horam Conservative

With respect, financing is a different issue, which we are not discussing on these amendments.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

My Lords, I challenge the noble Lord on that. Clause 62 stand part is grouped with this, and that clause establishes the discount scheme.

Photo of Lord Horam Lord Horam Conservative

Yes, but that is a stand part debate; we are talking about amendments here. None the less, fundamentally, we are talking about the exceptions, the rural issues and all the rest of it, not about the financing of the right to buy—which comes up in later clauses which deal with how the whole issue is to be financed, not here.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

Given that the debate on whether Clause 62 should stand part is, by consent, grouped with this group of amendments, and Clause 62 establishes the discount scheme for housing association tenants, it is perfectly appropriate in this debate to raise the issue of who pays as well as who gains.

Photo of Lord Horam Lord Horam Conservative

I am sure that the noble Baroness will raise the issue if she wishes to. I will certainly not stop her from giving one of her very eloquent speeches.

The point I wanted to make was that, historically—the noble Baroness, Lady Royall, is right—there has been a disproportion between the number of houses replaced and the number lost. However, that has changed in recent times and we are now getting one for one. As I was saying, the noble Lord, Lord Cameron, is right that this whole exercise is designed to galvanise housing associations into doing very much better. We know from the experience that we have had with housing associations that some are very good, some are very large and some are quite small and sleepy. Frankly, to some extent, there should be some merging in the housing association world, and there should certainly be a greater degree of activity than has sometimes been the case in the past. I look forward to that.

Finally, I agree with the point that the noble Lord, Lord Best, made, that there is a danger of over-regulating in this area simply because of the “Office for National Statistics problem”, if I may put it like that, of it being part or not part of the public sector. I doubt very much whether any amendments of the kind that have been tabled here would be welcomed by the federation and housing associations, and I doubt that they would be appropriate. It would certainly not help them to get out of the Government’s clutches. The Government want them to leave their clutches and they want to get out of them, otherwise it will lead to all sorts of problems.

What I hope will happen is that, as a result of this debate, noble Lords’ concerns will be heard not only by the Government but by housing associations, and we will in effect be nudged—if I may put it like that, using the psychological term of the nudge factor—into recognising that these issues are of concern to people in both rural and urban areas, and I hope that housing associations will take them fully into account, as I expect they will. None the less, I believe that the Government are right to proceed down the path that they are following.

Photo of Lord Taylor of Goss Moor Lord Taylor of Goss Moor Liberal Democrat

My Lords, I draw noble Lords’ attention to my list of interests but I declare a couple in particular. One is that I am president of the National Association of Local Councils, which has a particular interest in rural communities. The second is a past but recent interest in that I was chair of the National Housing Federation for six years until September, therefore covering the period during which the voluntary agreement was negotiated with the Government.

I particularly associate myself with the comments of the noble Lord, Lord Cameron, and especially with those of the noble Lord, Lord Best, about some of the background to this issue. I was disappointed when the Conservative Party put forward the right to buy policy in the run-up to the general election and was even more disappointed to see it feature in its manifesto. However, I have to accept that it featured in the manifesto and, inevitably, the policy will be delivered. My disappointment stems from the fact that, if the Government feel that they have those kinds of sums to spend—or, more accurately, are going to require local authorities to sell houses in order to have those funds to spend—there are better ways of investing the large sums involved than giving a one-off benefit to a particular tenant who, at a particular time, happens to be in a certain property. There are many others who cannot afford a home and who are not in that privileged position.

None the less, that was not the context in which the voluntary agreement was negotiated. It was negotiated in the context of a Government with that manifesto commitment and a clear intention to deliver it, and they would always be able to see it through the Commons with their majority. I do not think that this issue would divide Conservative Members of Parliament in principle but they might have concerns about elements of it, and it is a particular element that we need to address today.

I take the view of the noble Lord, Lord Best, that it is extremely important that this House always defends the principle that the charities that are housing associations —the great majority are charities—are independent organisations. There are many reasons for defending that principle of independence. It is extremely important to the organisations themselves. It bears on their history and on their ability to do what is right for their tenants and their communities. It has produced enormous diversity and, through that diversity, has allowed them to face many different challenges. The negotiations around the voluntary agreement were above all intended to preserve that principle of independence but they also achieved an important series of exceptions in principle. Those were acknowledged and therefore there was no question that housing associations would be able to make decisions about whether, in particular circumstances, a right to buy was appropriate.

The portable discount is an important element of that. If tenants in general have a right to buy and the discretion to refuse is with the housing association, it seems to me that that discretion cannot lead to a particular tenant being disadvantaged compared with other tenants. Therefore, I accept the principle of the portable discount in the circumstances in which we are now.

However, I believe that the circumstances of rural communities and villages are exceptional. In 2008, I conducted a review of rural planning for the then Government. One thing that I particularly focused on was the delivery of affordable housing in small rural communities, and the importance of that was clear. Many of these communities had seen affordable housing stock lost—not just council houses which had been sold but old farmers’ cottages. In the past these cottages had often been rented out by landowners but they were gradually sold off at very high values to people who might be retiring to the community or might have a holiday home there. Unlike what had traditionally been the case with those more affordable properties, the people who bought them did not work on the farms or in the school, the shop, the pub or the local businesses. They did not have children who would go to the local school and they did not spend money in the shops and the pubs. Therefore, the risk was that these rural communities would become more and more unsustainable. They were becoming enclaves of wealth and retirement and enclaves of holiday homes, and they no longer supported a living, working countryside.

I observed that that had become of huge importance to many villages and parishes. We saw a transformation in the willingness to address the problem through the delivery of affordable housing. Increasingly, we saw communities support small numbers of affordable homes on exception sites, often with the support of the landowner, who would get little, or in some cases nothing, for the land. Places that traditionally had always opposed development were willing to support it for the delivery of affordable homes. In the Living Working Countryside report, I argued that we should extend that principle further and empower these communities to take those decisions through the parishes—in effect, neighbourhood planning. We have encouraged that and I very much welcome the fact that the last Government empowered communities in terms of neighbourhood planning.

I talked about empowering communities because it was evident that when people looked at their own issues, such as keeping the school open, how the children would be able to live and work within the community, and how the pub and the shop would be sustained, they recognised the central importance of people on lower incomes—working people within rural communities —being able to live within those communities. On sustainability grounds, frankly it makes no sense that these communities have become places for retirees—places where the land that gets farmed at all is farmed by people who live in the town because they cannot afford to live in the village. If care is provided at all, it is provided by people who live in the town because they cannot afford to live in the community. Therefore, that principle seemed to me on every ground absolutely fundamental, and local communities supported it.

However, above all local communities supported one principle, which was that the homes should be affordable for the community in perpetuity. They supported that because the landowner would not make land available if someone was going to make a profit from the sale of a house a few years later and it was going to become just another retirement home or just another done-up cottage to be used as a holiday residence. The community would not extend its support for that sort of planning through neighbourhood plans and, in the past, parish plans. I saw communities go through the process of finding the right site and welcoming the homes that were built, but it was always understood that these would be affordable in perpetuity.

Some of those homes were guaranteed to be affordable in perpetuity because the landowner was wise enough to put a clause in the contract on the sale of the land. In other cases, the landowner was far-sighted enough to include it as a planning condition. However, in many communities that was not the case. The houses were understood to be affordable in perpetuity, and it was understood that there was no right to buy. There was some discretion but a process with the regulator had to be gone through if the sale of a home was to take place. However, without the discount there was no great incentive for it, and these homes were not sold off.

We now have a different circumstance in two respects. First, the discount offer makes it infinitely more likely that tenants will come forward, if not with an eye to making money for themselves, very often with an eye to wanting to secure the home for their children—an understandable human response. Secondly, with the rent cuts and the falling away of grants, housing associations will inevitably be aware that if a sale takes place, it is unlikely that it will fund one-to-one replacements; it will actually fund a multiple of that. Therefore, if they sell one house, the truth is that it will, as a result of the rental streams and so on, allow multiple investments in new housing, potentially somewhere else.

The rural specialists understand the deal that was done with the rural communities, and, anyway, their charitable purposes are all about in-perpetuity affordable housing for rural communities. However, a number of housing associations have been invited to build these homes on these exception sites and in these communities on the understanding that it would be in perpetuity, and they may feel that they have a wider social obligation that goes beyond the village. If they can provide multiple homes in an urban area at the cost of a sale of a rural home, they may feel that that is the right thing to do in terms of their social purpose. In my view, that raises some very big issues, because it is a breach of faith with the people who brought forward the land at low cost—very often the church, but otherwise the landowner—and with the community that supported the building of housing that would not otherwise take place. It also misses a fundamental issue: the reason we have exception sites is that we take the view that many of these villages should not simply grow indefinitely; that they are protected from development because of their particular character. Therefore, one cannot just assume that if we sell some houses, we will build some more. That would be to throw the baby out with the bath water and to say, “We might as well just grow all the villages, and that if we want to just grow all the villages then we don’t need to have this discussion because there will be plenty of housing. But there will be very few villages—there will just be a lot of towns around our coast, beautiful countryside and national parks”. Well, that is not going to happen.

I issue a general call to housing associations not to sell these homes in these circumstances. However, I make a particular call to the Minister to listen to the comments that have been made and, whether or not she feels that the particular amendments are right, to accept that there should be a role for the communities that have given permission in these exceptional circumstances to say no to a sale, as well as to the housing association. This is one area where I do not think it should be entirely at the discretion of the housing association. At the very least, if that sale is made and there is still the local need, there should be a guarantee that that funding will be spent within that local community to provide replacement homes. However, if there is a breach of faith on the understanding that these homes built on exception sites where housing would not normally be allowed was done with the support of the community on the basis of in perpetuity, I find it hard to believe that many communities will willingly step forward to offer another site on the same basis that they offered the previous one.

Photo of Lord Kerslake Lord Kerslake Crossbench 6:00 pm, 8th March 2016

My Lords, I declare my interest as president of the Local Government Association and chair of Peabody. It is important to be clear that when housing associations signed up to the voluntary agreement, as Peabody did, they did so because they believed that it was the lesser of two evils. The alternative, as my noble friend Lord Best has very clearly described, was a mandatory scheme that would give much less flexibility and would, in effect, have made certain the prospect of being regulated, rather than a possibility of deregulation and being outside the public spending arrangements. The choice was difficult but was on balance rightly made to go for the voluntary agreement. However, we should not confuse that with an enthusiastic endorsement of government policy. We should be clear about that point.

This undoubtedly has created some tensions with local government. We should not beat about the bush here: local government feels that it is now picking up the bill for that voluntary agreement, and that housing associations sorted themselves out and left local authorities in a difficult position. I acknowledge that feeling, which I have had expressed to me—very directly, I should say—by a number of councillors from across London. There is work to be done by the national federation, and, indeed, by housing associations, to rebuild some of the connections they had with colleagues in local government. I applaud in particular the initiative by the g15 group and David Montague, the chief executive of London and Quadrant, to go out and talk to local authorities about the reasons why the decisions were made on the voluntary deal and where it led. That bridge-building has to happen, and it is an important part of the debate between what should be very strong partners—housing associations and local authorities.

It is in the nature of a voluntary agreement that it is very hard to build in statutory protections without taking yourself straight back to the issue of regulation. That is the problem: in a sense, we are trying to put statutory protections into a voluntary agreement. In the end, this is a voluntary agreement that is going to have to rely on a great deal of trust—first, trust that the Government will honour the spirit of the agreement and not force housing associations through the regulatory process to sell what they do not want to sell. In the case of Peabody, a critical issue for us is that 10,000 or more of our properties were built without any government subsidy touching them at all. We would not want to sell those properties, and we do not intend to do so. We must trust the Government and the regulatory body, the Homes and Communities Agency, to respect the spirit of that choice.

The second element of trust is that housing associations must deliver and honour the replacement process. It is critical that that replacement, so far as is practical, is in the same place and of the same type. It is not going to be acceptable to replace a social rented property with a starter home 20 miles away; that is not the same thing. It is particularly not the same thing in a rural area.

The third thing we are going to have to trust is that housing associations understand the fine grain of their area and work closely with their local authorities to get this right, particularly in rural areas, where the choices are very constrained—I may have left a rural area for the bright lights of the city, but I know exactly what the issues are. So we are going to need to exercise a lot of trust and if it does not work out, there may have to be future such debates. In the mean time, the amendments from my noble friends Lord Best and Lord Cameron are the best we can achieve by way of protections in the current circumstances.

I leave until last the issue I am most concerned about: the nature of the discounts and their financing. However, we will return to that in a later amendment.

Photo of Baroness Royall of Blaisdon Baroness Royall of Blaisdon Labour

My Lords, on a point of clarification, the noble Lord said that Peabody, rightly and understandably, will have thousands of homes that it does not wish to sell. What will a housing association like Peabody do in relation to portability?

Photo of Lord Kerslake Lord Kerslake Crossbench

As has been said by a number of people, there are real issues about what we mean by a portable discount. In my eyes, if we are unable or unwilling to offer a property or take a policy decision not to do so, the alternative discount may be offered on another housing association property, potentially one of Peabody’s newbuild properties—we build some 1,000 properties a year. I have real difficulty with an open-ended portable discount, particularly those into the private sector, which the noble Lord, Lord Young, is very keen on. That is for one very simple reason: it will be extraordinarily expensive—I do not know whether anybody has done the maths on this. There are major issues about the financing of this policy already, which we will come on to. In my view, it should not be an open-ended offer: it should involve a reasonable effort—as per the original wording—to find a suitable alternative if the property you live in is not currently on offer.

Photo of Lord Young of Cookham Lord Young of Cookham Conservative

My Lords, I shall make a brief contribution to what I suspect is the most controversial part of a fairly controversial Bill. The background is two sentences in my party’s election manifesto:

“We will extend the Right to Buy to tenants in Housing Associations to enable more people to buy a home of their own. It is unfair that they should miss out on a right enjoyed by tenants in local authority homes”.

As the noble Lord, Lord Best, explained, that is being delivered not by legislation but by a voluntary agreement. This clause allows the Government to honour their side of that voluntary agreement by enabling them to pay grants to housing associations for the discount they give to their tenants. The amendments would not stop the housing associations selling anything to anyone, but they would stop the Government giving a grant to the housing associations if they do.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

The noble Lord said that the Government would give the grant. Would it not be more accurate to say that the Government would port the grant from local authorities?

Photo of Lord Young of Cookham Lord Young of Cookham Conservative

The Government give the grant, but—I think this is the point the noble Baroness is making—they get the money from the local authorities which sell high-value assets. But it is the Government who give the grant to the housing associations.

The key thing about the voluntary agreement is that, while the tenant has a right to buy, the housing association has a right not to sell. Although there are lots of signals to housing associations in the amendments about what we in this House might not want them to sell, they have something much stronger than a signal from the Government: they have an absolute right not to sell anything.

If one looks through the amendments, which seek to exclude grants from certain types of property, and one then looks at the voluntary agreement the Government have gone into with the housing associations, one sees that specific reference is made to categories in many of the amendments. For example,

“properties in rural locations as defined by Section 17 of the Housing Act 1996”,

are listed in the agreement between the Government and the national federation as circumstances where discretion may be exercised not to sell. Likewise, supported housing—housing adapted specifically for people with physical disabilities—is listed. Almshouses are also in the list as properties which are not expected to be sold. So, in a sense, it is a question of whether we trust the housing associations, which are right at the sharp end of the fight against homelessness and all the other challenges, to use the discretion sensibly, or whether we try to fetter their discretion in a series of amendments which run the risk, as the noble Lord, Lord Best, has mentioned, of reclassifying housing associations as public bodies. There would have been a huge risk of that if we had gone down the statutory road, but even fettering the discretion by way of these amendments runs the risk of the ONS in turn reclassifying housing associations as public bodies.

I notice that the noble Lord, Lord Beecham—

Photo of Lord Beecham Lord Beecham Shadow Spokesperson (Housing), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Justice)

The noble Lord perhaps anticipates my intervention. If it is seen fit to include some categories, which the noble Lord has referred to, as ones that should not be sold, why not others?

Photo of Lord Young of Cookham Lord Young of Cookham Conservative

Because the housing associations have total discretion to include any category they wish, but there are specific categories many of which mirror the exemptions for local authorities. If one goes through it, one sees that it is a very sensible list of exclusions. Some of the amendments go far too far; for example, one amendment would exclude from the right to buy properties where there is a TMO, a tenant management organisation. I am a huge fan of tenant management organisations—they are a real success, both in the local authority and in the housing association world—but to exclude from the right to buy tenants living in properties run by a TMO is an amendment too far.

Likewise, another amendment seeks to exclude from grants properties covered by Section 106, even where the local authority agrees to waive the restrictive covenant. It would be a major exclusion from the policy if all Section 106 properties were to be excluded from a grant from the Government, as it would deny the legitimate expectations that many housing associations have. Can my noble friend the Minister shed some light on where we are on Section 106?

On the portable discount, the noble Lord, Lord Kerslake, said that it would be more expensive if it was open-ended. The cash discount that the tenant received would be exactly the same whether they bought a property from a housing association or whether they bought it on the open market. It is no more expensive than what is already proposed, so I would challenge that view. If the noble Lord is referring to the overall cost to the scheme, he will see that that is already potentially capped by the voluntary agreement according to the resources available.

Photo of Lord Kerslake Lord Kerslake Crossbench 6:15 pm, 8th March 2016

The point I was making was that the wider the choice of opportunities to buy you give tenants of housing associations, the more likely it is they take up the offer of a portable discount, and the cost will therefore be higher. We will return to how this is financed, but I have a real problem—as I will say later—about a policy that effectively controls the spend by having to say no to people whom you previously promised you might say yes to.

Photo of Lord Young of Cookham Lord Young of Cookham Conservative

Whichever route one goes down, whether the discount is available in the open market or restricted to housing association properties, it comes out of a pot of money which is going to be restricted in any event, so I am not sure that the noble Lord’s point is entirely valid.

The noble Lord, Lord Beecham, started his remarks with a prediction that this voluntary agreement would not survive a change of Administration.

Photo of Lord Young of Cookham Lord Young of Cookham Conservative

I remember similar predictions being made back in 1979, when we introduced the right to buy for local authority tenants. It was fiercely opposed by the Labour Party; we were told that it would not survive. Some 35 years later, it is still there, after 13 years of a Labour Government. So I predict that the voluntary agreement will survive beyond the lifetime of this Government.

At the end of the day, the key point is this: it is not a question of trusting the Government; it is a question of trusting the housing associations. They have a total discretion not to sell. There are many people in your Lordships’ House who have run housing associations. I have every confidence that they will use sensibly the discretion given to them, in the long-term interest of tenants. Some housing association members will be slightly alarmed by the tone of some of this debate: that somehow, housing associations will not use that discretion sensibly and in the long-term interests of those in housing need.

Photo of The Duke of Somerset The Duke of Somerset Crossbench

My Lords, I support the general thrust of all this group of amendments, but in particular Amendment 56 in the name of the noble Baroness, Lady Royall. With this part of the Bill, the Government are in effect further transferring housing assistance from the rented sector to the owned, so any examination of it should consider whether housing associations will be in a better or worse position once the Bill is enacted.

We should remember that the housing associations have a social mission that is enabled by the philanthropic actions of many providers. In the past 30 years, 1.8 million properties have been bought through the right-to-buy scheme, and the number of council houses has thus reduced from 5.1 million to 1.7 million. This has happened both through the right-to-buy scheme and through the transfer of stock to housing associations. Historically, losses through the right to buy have not been adequately replaced in either quantity or location. It is estimated that 40% of such properties are now in the private rented sector. It should be noted that housing benefit awards here are on average £1,000 per annum higher than they are in the social rented sector, so this is hardly getting people to own their own houses.

Amendment 56 would protect rural areas from the adverse effects of the right to buy. It is needed because the Bill is not properly rural-proofed. There is an ongoing need for a balanced mixture of tenures; that is, not replacing rented homes for people on average incomes with homes to buy for the better-off. Such a right would gradually destroy the rural exception sites, in both their conception and purpose. We know that they have delivered successfully around 7,500 rented or shared ownerships up to the present day. However, if this right is granted, it is vital that houses sold are replaced on the one-for-one basis that we have been hearing about and in the local parish or area, as I think the Government intend. If the replacement is not nearby, the area’s stock of affordable housing will diminish or disappear. At present, only 8% of these are classified as affordable in the countryside, so we must not reduce that any further.

Delivery of this intention will be difficult, especially in the same area. I see, incidentally, that London is specifically excluded from the requirement. Difficulties are quite easy to see—planning permission, landowner acquiescence, the greater expense of building in rural areas, building capacity, even the revenue from the sale of council properties may well be insufficient. Those are just some of the difficulties.

At Second Reading, the Minister indicated that she expected that housing associations would replace locally. Has she negotiated with the stakeholders concerned— the local authorities, the communities or landowners’ representatives—to enable this to happen? The portable discounts to be enabled by housing associations where they opt out of selling will suffer from the same disadvantages. These clauses will exacerbate the shortage of affordable properties and social cohesion in rural areas and I therefore support the amendment.

Photo of Lord Stoneham of Droxford Lord Stoneham of Droxford Liberal Democrat

My Lords, I would quite like to take up the challenge to the noble Viscount, Lord Younger, as someone who has been involved in housing associations for the past 12 years and chaired three different associations. I assume that the one that I currently chair, Housing & Care 21 is, fortunately, excluded from the right-to-buy provisions—I hope that the Minister will confirm that—because it is involved in retirement housing.

Personally, I am depressed by this whole debate on the right to buy. I cannot believe that a Conservative Government can produce such a complicated and bureaucratic proposal, particularly when we come on to discuss how it will be funded. Frankly, I fear that they have a manifesto commitment around their neck which ideally they would like to get out of but have failed to do so.

In the housing association organisation, I was tempted to let the Government get on with their own dirty work in implementing this legislation, but we have a voluntary deal and I respect that. My own association voted against it. But the mistake that the Government have made is that they have ignored the pioneering work that housing associations have been doing over the past 10 years to extend shared ownership. Indeed, they have got involved in private sales. Now the Government are undermining all that by bringing in this right-to-buy legislation. But we have already had the more general debate, so I will not go into that.

My own priority—and it should be all of ours—is to make sure that we are building more homes, and I have deep doubts about whether this will end up doing that at the end of the day. But we have a voluntary scheme. The only problem with that, which is why I support the amendments to which I have added my name in this group, is that we do not have sufficient oversight of what will go on, especially when there are particular problems. That is why it is important that we have some exclusions achieved through these amendments. I mentioned retirement housing, but supported housing is also excluded. There are already exclusions.

Rural housing, as this debate has shown, is a particular problem. We know that it is a problem because the stock is attractive. Anyone who has the opportunity of a discount will break the earth to get the advantage of it in a rural area because you would have a very good asset. Even if someone cannot afford it, they will make get the help of friends and family or whatever to get that discount. There will be immense pressure on housing associations to sell the stock.

I want to say a word about how housing associations are run in this country. I personally think that the structure of housing associations has been allowed to grow like Topsy. I am glad to say that quite a lot of the housing associations that I have been involved in have a link with their localities, but a lot of the bigger ones no longer do. We have to look at how the bigger housing associations will behave. I accept that they will generally be honourable, but the problem is that when there is the possibility of disposing of a little rural stock that does not really count for very much in your association, which would get rid of a management problem and is normally quite valuable stock, I am not sure that housing associations will resist the temptation to quietly dispose of those units. It may well be that they are the only source of money grant for building new stock in areas where they can make greater surplus. I worry about that.

That is why we have to understand that the successful housing associations are increasingly bigger and will be remote from some of these rural areas. They will not be sensitive to individual rural areas and they could become the agents of government because they simply want to get more grant. We have to be particularly sensitive about that, which is why our role in this House is important. We cannot just leave it to the voluntary scheme. I support Amendments 57B and 57D because the grant must be used to reinvest in the parish or neighbouring parish to where the house is being sold, if that is unfortunately happening. We must recognise that there has to be some restraint in respect of this housing.

Finally, I want to say a few words about Amendment 57C and community land trusts. I have spoken in earlier debates on this subject. If we do not make some exceptions for the smaller community land trusts, which have often achieved what they have from small, exceptional sites, often having been given the land, we will dry up the source of these exceptional sites. Landowners will simply not give up that land if they think that someone else will make money for themselves out of it. That has to be recognised. For those reasons, the Government must give close consideration to these amendments, which I support.

Photo of Lord Berkeley Lord Berkeley Labour

My Lords, I have listened very carefully to all the arguments concerning the possible disposal of some houses in rural areas owned by these community trusts. In Cornwall, where I live, I see big concerns about where essential workers will live, as the noble Lord, Lord Taylor, mentioned earlier. I also go to the Isles of Scilly a lot and that is what I want to mention. I put down Amendments 56B and 66CA to cover that, although I think the problem is probably covered by the other amendments.

The Isles of Scilly are 25 miles away from the coast and 2,500 people live there. The transport services, as I have frequently mentioned in this House, are pretty awful. You cannot commute there if you want to be a bus driver or anything. There is some affordable housing, but if that is sold, where will people live? Building new houses on those islands, which are very beautiful, is a problem. Demand for housing for essential workers is high, but the provision is virtually zero. If anyone does build a house, it is usually for a holiday let or because they have lots of money and they want to go there occasionally and leave it empty for the rest of the year, which happens so much in other parts of the country, including Cornwall.

If there is a strong argument for exceptions in the Bill for rural areas, there is an even stronger argument for the Isles of Scilly. It should not be allowed at all. I hope that the Minister will take that into consideration when she comes to respond. There may be other ways of doing this, but if there is no housing for essential workers in places such as the Isles of Scilly, where you cannot commute from the mainland to drive your bus or dustcart or work for the council, the community will die. This is a very serious issue.

Photo of Lord Porter of Spalding Lord Porter of Spalding Conservative 6:30 pm, 8th March 2016

My Lords, perhaps the Committee will indulge me for a few minutes. I benefited from the right to buy in the 1980s, so unusually I have to disagree with the noble Lord, Lord Best, because I think that that was one of the mistakes this House has made in the past 30-odd years. The number of people who could have had access to home ownership was reduced, and as a country that is something we should be ashamed of. Why should the tenants of a registered social landlord have been precluded from an offer that had been made to the tenants of a council? There can be no justification for people living in two identical houses in the same street and in exactly the same personal circumstances where one has got the right to buy and the other has not. If we had wanted to fight the battle on right to buy, that should have been done as a point of principle, full stop, not according to who the landlord was. Tonight’s debate is really a pretty poor show for the 1.3 million people who will be expecting the Government to deliver on their commitment to give them the right to buy.

There are issues with the right to buy that I strongly disagree with, as well as ones that noble Lords on the other side would not want me to disagree with on the basis that it should not have been a voluntary deal. I do not think that RSLs should have been able to do a voluntary deal; they should have been compelled to do the same deal as councils. Given that it is a voluntary deal, all of the amendments that noble Lords are talking about this evening are a waste of time because we have to trust our RSL friends—there are a number of them in this Chamber—to deliver what we expect them to deliver. If we put it on the face of the Bill, we will scupper the voluntary deal and the Government will have to make it a mandatory one. RSLs will then be treated the same as councils.

From my point of view that is a good thing because I do not see why my members should have to pay for the failure of RSLs to deliver the policy properly—which this is. If RSLs were forced to do what councils have done, we would get more homes and home owners and it would cost us less money. We all know that the only difference between a home owner and a home renter is access to capital. Why does it matter to us if a house is sold in five, 10 or however many years after it has been bought? The house does not disappear; it is still there and someone is living in it. If a person has managed to get capital out of it, they have not disappeared with that capital; they have bought another property somewhere else that someone else was paid to build, so it has created more jobs.

I do not understand what the fetish is around expecting someone to exercise the right to buy and then die in the same house. I was 24 when I bought my registered social landlord house. My father is 96. Do we really think that it would have been a good thing for the country if I and my family had lived in the same property for 72 years? Where would the benefit of that have been for anybody? The capital I put back into the system was freed up so that another home could be built and future generations were able to live somewhere. As my life moved on into better circumstances I was able to move out of that home with my family to a better area where my children’s life chances increased no end. Who lost out on that? Nobody. What we will do by restricting access to the right to buy is prevent other generations getting the same thing.

With all respect—I know that noble Lords have good reasons for doing this—the exceptions needed to be built in at the start to reduce the cost to councils. Now that we have a voluntary scheme, councils are going to end up having to pay for it anyway, and that is what is wrong with this. I think that the money should come from central taxation, and that central taxation should be taken, probably, from the hidden profits that RSLs generate. They do generate them but they will not admit to it. Their business model could be reshaped and that would get us out of this, in particular on things like borrowing—£800 million a year too much on their borrowing requirements. That should be restructured and the money put into the pot before any councils are forced to pass over money. I will talk about this later when we reach the amendments dealing with the sale of high-value assets. Again, I do not disagree the principle of selling them but I do disagree with the money being taken away from councils to be given to inefficient RSLs.

Photo of Lord Tope Lord Tope Liberal Democrat

My Lords, we have been going for nearly two hours so I will resist the temptation to reply to the noble Lord, Lord Porter—but it does take a bit of willpower to resist. Forty years as a London borough councillor does not obviously qualify me to speak in a debate that has been largely about rural housing, but I have added my name to Amendments 56A and 57C in the name of my noble friend Lady Bakewell about community land trusts. I did that because much of the debate has been about the role of CLTs in rural areas, but of course they are present in urban areas as well. Indeed, the London part on Sunday’s “Politics” show devoted considerable time to a community land trust in the East End of London which is doing a very good job of enabling people in the area to acquire properties that are genuinely affordable at the level of income they have. In London that is a rare achievement and certainly one that is worth taking note of. As CLTs burgeon at a rapid rate, let us hope they also burgeon in London and other urban areas. That is why I support the amendments.

I rise at what I hope is towards the end of the debate to remind the Minister of the point made by my noble friend some time ago about community land trusts. They have a discretion not to sell CLT homes, but having spoken at their conference a couple of weeks ago and in fact the day after it was announced in the other place, I know that they still feel rather vulnerable about something which is simply a voluntary agreement. They fear for their longer-term future as regards homes that have been provided on a long-term lease to a registered provider because their needs may change. I hope that the Minister can address this point and try to give some further reassurance to CLTs because I do not think we want to see them going down this road.

Finally, I will simply point out that Amendments 56A and 57C are two separate amendments rather than part of a whole. If the Minister can find the time, I hope that she will address them as separate points, although I do not envy her the task of replying to a debate that has now lasted almost two hours.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Shadow Spokesperson (Work and Pensions)

My Lords, perhaps I may add just marginally to the Minister’s burden in that regard. I want to pick up on some of the rationale that has been advanced for the voluntary deal, which does not seem to me to be fair. We are calling it a voluntary deal but of course it is underpinned by a mandatory portable discount—so how voluntary is that? For once in my life I must take exception to what the noble Lord, Lord Best, said. He pointed out that this is different from the 1980s because housing associations are getting paid the full value for the property, but in the next sentence he said that this has nothing to do with housing associations because they have not lobbied in any way for councils to pick up the tab.

I accept that there is no formal link, but when housing associations made their judgments, they must have known full well that the tab was going to be picked up by local authorities. It was already a manifesto commitment, and indeed the briefing note sent to us by the Minister stated that this measure—the high-value local authority housing provision—was announced as part of the Conservative Party manifesto where it stated that local authorities would be required to,

“manage their housing assets more efficiently, with the most expensive properties sold off and replaced as they fall vacant”,

in order to help fund the extension of right to buy to housing associations. It was clear that that was the intent and therefore, with respect, the housing associations must have known that the hit was going to fall on local authorities.

I accept that it was a difficult judgment and that they were between a rock and a hard place and trying to carve the best way through. But we ought to be straight on the rationale for this. By that voluntary association, the result is that local authorities will have to sell off more high-value housing than they otherwise would, because that is how housing associations will be kept whole.

Photo of Lord Best Lord Best Chair, Communications and Digital Committee

Perhaps the noble Lord will give way on that point. I think it is fair to say that the National Housing Federation also made clear its public opposition to the way in which these discounts were to be funded. There may be common cause here on the way in which they are to be funded—including with the noble Lord, Lord Porter.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

My Lords, if the noble Lord, Lord Best, will forgive me, I am not sure that that is correct. The chief executive of the National Housing Federation said:

“How this policy is paid for is a matter for the government, not for the National Housing Federation”.

That is known as the washing of hands defence.

Photo of Baroness Grender Baroness Grender Liberal Democrat

My Lords, I will be extremely brief. I am trying to raise, by way of my probing Amendment 60A, the issue of exactly what happens when communities wish to object. In a way, it goes to the heart of some of the arguments that my noble friend Lord Taylor of Goss Moor talked about. In particular, if a piece of land has been given up in a small village and it has been assigned, in the view of the village, into perpetuity as a property, and that property is then sold under the right-to-buy scheme, what exactly can the local community do? Is there some kind of redress? Can they make an objection? This is merely a probing amendment; I support many of the other amendments.

I will ask the Minister a couple of questions, rather than add to the many arguments that have already been made on rural housing in particular. If, at the moment, only 8% of stock in rural areas is affordable housing, as opposed to 19% in urban areas, does she foresee measures in the Bill or elsewhere increasing that percentage stock? At the moment, according to the rural housing group, the only thing that is likely to happen is that that 8%, which is such a small percentage of affordable housing in rural areas, will contract. What is the answer to that?

My second question at the end of this lengthy debate is: if 90% of housing associations do not opt in to this—we have already heard from the noble Lord, Lord Porter, and we are getting a flavour of what the possible punishment might be—what percentage and proportion of housing associations delivering this policy, given that it is voluntary, will tip the Government into believing that there needs to be legislation to deliver their manifesto commitment? I tabled my amendment mostly because, as a former trustee of Wandle Housing Association, where we spent a lot of time trying to get tenant participation and engagement, I wonder about tenants’ engagement and whether they will be able to express a view, whether in favour or against, on right to buy in their housing association.

Finally, I attach myself to the point that the noble Lord, Lord Beecham, raised right at the beginning, which is one that I raised very late on Thursday. I completely understand why it was missed. It is about mortgage lenders not wanting to attach themselves to the product of starter homes, about the danger of market distortion, as they see it, and about their reservations in this area.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

My Lords, I will speak to this group, which includes the clause stand part debate. Last Thursday the noble Lord, Lord Young of Cookham, said that no one was opposed to council house RTB at the time. I was, for one simple reason: we were not allowed to retain the proceeds of sale to replace the stock. As a result we lost 10,000 houses, waiting lists have grown, and families are in unsuitable flats because our family houses have gone. I am not opposed to owner-occupation or home ownership in the slightest. We helped to rehab 12,000 mostly unfit Victorian terraced houses, rather than clear them, precisely to help young couples to be able to buy. Beyond that we built for sale, but that was a policy that damaged the possibility of people who would never buy entering decent homes.

What has happened since? Camden estimates that 40% of those right-to-buy council houses have become buy to let. In some authorities, according to last night’s “Dispatches” on Channel 4, it is now over 50%. As you walk around estates, as I am sure your Lordships do, you see the overflowing bins, peeling paint, unkempt gardens and tatty bits of curtain strung across bedroom windows. There you find either struggling, transient private tenants at double the rent and double the housing benefit bill—which we all pay for—or students. Existing communities have become more transient and more unsettled.

Overall, the IFS has noted, the proportion of dwellings in the social sector has fallen from 31% to just 18% of the country’s homes and now we are doing it all over again: housing associations have entered into a voluntary deal to sell—and replace, this time around—their stock. The deal works for them because they receive the property’s full value, since the huge discounts of £80,000 to £100,000 are funded not by housing associations themselves, or by the Chancellor, who has imposed this policy, but, as the noble Lord, Lord Porter, said, by the forced sale of high-value, vacant council houses with the levy to back it up in lieu.

As both a former local authority chair and a former housing association chair, I find this deal deplorable. I do not doubt for a moment that the national federation wishes that the policy would go away and that it feels that it has made the least bad of two bad choices, but, having given its members just a few days to consider the offer—one housing association chair complained to me that they were bounced—it has colluded in it. Poorer council tenants who will never buy will effectively either fund sales or levy for wealthier housing association buyers to have a gift of up to £80,000 or £100,000. I understand that local authorities were bypassed. In my view, they were hung out to dry.

In the press release of 7 October 2015, the housing association trade body claimed:

“This is a great offer for housing association tenants”.

That is true. It went on that it was,

“a great offer for the country”.

That is not true. As the Camden Association of Street Properties said:

“We don’t see that local authorities should be forced to sell … their void properties to fund sales to housing association tenants”,

who are not their responsibility. It went on to say that,

“such sales are to the detriment of local authority … waiting lists for homeless persons”,

and persons in desperate need. In other words, if the Government want this policy, they should pay for it. They are not. They are requiring local authorities to pay for it instead. Up to £12 billion of public money that could—should, in my view—be spent on building more socially rented homes may be transferred into private hands to alter the tenure label over the door. Every councillor that I know, whatever their politics, is privately appalled at the deal. As one said to me, housing associations have sold them out. All this happened without proper parliamentary and public scrutiny—again shocking. It is a huge transfer of public assets and public money in a so-called private voluntary deal.

Housing associations are understandably and rightly bitter about the 1% cut in their rents, but local authorities also face those 1% cuts, although few of us mention their plight. They have also had 40% cuts over the last few years and are expected to fund these huge housing association discounts. Housing associations claim—the noble Lord, Lord Best, spelled it out powerfully tonight—that this will protect their independence, but I warn him that a voluntary deal with no public law protection can be revisited whenever government chooses.

Housing associations faced a dilemma imposed on them by government. I fully recognise that but, if they truly cared about social housing more generally and generously, they should have worked with local government to find a different path forward, and not have said, as the chief executive I quoted just now did:

“How this proposal is paid for is a matter for the government, not for the National Housing Federation”.

That is all right then. There were, and are, alternatives, such as the right-to-acquire discounts, which housing associations themselves could have funded, backed, as the IFS, Shelter, the noble Lord, Lord Kerslake, and Boris Johnson have suggested, by mortgage guarantees and equity loans—a sort of shared ownership of housing association tenants with government on very attractive terms. I think that we would all have supported that; I certainly would have. Instead, the trade body did a private deal, leaving poorer social tenants—council tenants—to pay for it.

Photo of Lord Taylor of Goss Moor Lord Taylor of Goss Moor Liberal Democrat 6:45 pm, 8th March 2016

I want to be absolutely clear on this point: the National Housing Federation has never supported the requirement on local authorities to sell their stock to fund this. The offer that was on the table prior to the agreement was that there would be a statutory obligation on housing associations to sell and no statutory obligation on government to put in place the funding of the discount. The change was that there was no statutory obligation on housing associations to sell, but there was a statutory obligation on government to fund any discount. That was the change that was negotiated and that change protected the position of housing associations and altered in no respect the government requirement on local authorities to fund it, because that was in place in either case.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

The noble Lord has made precisely my point: the housing associations have looked after themselves very well at a cost to local authorities. They knew, as my noble friend Lord McKenzie said at the time, that the bill would be picked up by their partners in social housing, local authorities.

As I said, the trade body did its private deal. It looked after itself at great cost, in my view, in money, policy, fairness and trust. Five years down the line, we know what will happen, do we not? Two social homes will be lost to fund one better-off tenant’s huge discount. They cannot all be replaced; the sums do not begin to add up. And the abuses? As we have seen already, RTB properties will be recycled into buy to let. Many will grab their discounts and sell, like local authority tenants, into RTB. Others will be pensioners, living in spacious homes unaffected by the bedroom tax.

A housing manager told me a couple of months ago that one of his elderly tenants had reluctantly applied to buy. Why? “Because my daughter-in-law has said I won’t see the kids unless I do”. The vultures are hovering for her death, when they will receive a massive windfall gain, inherited, unearned and undeserved. The rogue wide boys will move in with malign versions of equity release —I could construct for you now three schemes that would do it—or illegal deferred resales. “Dispatches” last night showed that when council RTB discounts rose, such fraud went up by 400%. Would-be second-home owners will make irresistible offers, wiping out irreplaceable rural homes.

It is no use the Minister saying—she may not do this, but she said it about starter homes—that some abuse is inevitable. The Government should have built it out of their proposals. Instead, because the financial returns on abuse are so high, the Government have guaranteed it. The cost of that abuse, on top of the cost of the discounts and the cost of the entire scheme, will be funded not by taxpayers—not by us—not by the Government, who are imposing it, and not by housing associations, which will benefit from it, but by council tenants who are among the poorest in the land. Frankly, I am rather ashamed of it.

Photo of Lord Shipley Lord Shipley Liberal Democrat

My Lords, I do not envy the Minister in having to reply to this debate, in one sense, but it has been extremely helpful in identifying all the issues. I hope she will be able to take those away and come back with some amended proposals on Report.

It may help if we remind ourselves what Clause 62 is about. It enables the Secretary of State to make grants to private registered providers to cover the cost of right-to-buy discounts for housing association properties. Obviously, there are implications of so doing for other parts of the Bill. As we have been reminded, it brings housing association properties into line with local authority homes and it is, unlike that one, a voluntary scheme.

I think that it is fair to do this to housing association tenants. It is fair to them to take this step, as long as there are a number of very important safeguards in place. The first is that there should be one-for-one replacement in the same area. That is not in the Bill, although there is a statutory commitment for London to replace at two for one. I hope that the Minister will look very carefully at the principle of putting one-for-one replacement into the Bill.

Photo of Lord Shipley Lord Shipley Liberal Democrat

The noble Lord takes the words out of my mouth, because my second safeguard is that there should be like-for-like replacement in the same area. That involves a similar type and requires the same level of affordability and the same tenure. There should be a requirement to have like-for-like replacement in the same area unless the local authority concludes that there is no need for like-for-like replacement, given its knowledge that there is greater demand for bigger or smaller homes, for example.

We have heard a number of warnings about the impact of council house sales on the buy-to-let market. As the noble Baroness, Lady Hollis of Heigham, made clear, 40% of council home sales have gone to buy to let. I hope that the Minister will be exceedingly careful about this. There are opportunities on other amendments to talk further about that.

There are two other things that the Minister needs to bear very carefully in mind. The first is that councils should not end up paying tithes to central government for high-value empty properties that are not empty—in other words, notional taxation. The second is that councils should not have to pay tithes to central government for properties which may be high value but which are needed for rent.

We shall look at that issue at greater detail on Amendment 66E, but the point is that we need a very clear definition of what the Government think a high-value property is. I had assumed, until quite recently, that high value was a market value in absolute terms, but I understand that government thinking, in terms of writing the regulations, is that there will be a definition of high-value for one-bedroom properties, for two-bedroom properties, for three bedrooms and for four bedrooms and more. We have to understand exactly what the Government’s exact thinking is on the definition of high value.

I remind the Minister of a point I made when we had our Question for Short Debate a little while ago. I feel very strongly about the need to protect the rights of larger families to rent larger council homes. By their very nature, larger properties tend to be higher-value properties. I hope that we will not end up in a position in which houses with larger bedrooms, needed by larger families, are sold off into owner-occupation when there is demand for them. Larger homes—and homes in other categories which have to be considered—will have to be protected as rentable stock.

So there are a number of questions for the Minister. I agree with the noble Lord, Lord Porter, about the need not to sell off council homes—again, we are into Amendment 66E at this point—because I think that local authorities ought to have the right to decide whether a property should be sold off. Most properties, surely, are not surplus to a council’s requirement. The prospect of high-value council homes, which may be essential in a local area, being sold off, with the result that a potential tenant who needs to rent that property will be denied the opportunity to do so, I regard as a scandalous potential outcome of this Bill.

We have heard a lot about the impact on communities, on those on low incomes and in particular on rural areas and the need for rural exceptions. We have heard about community land trusts and the need for exclusions as a whole. Further evidence has been given to us about the potential market distortion that starter homes may bring about. I hope that the Minister will be able to reply to this huge number of points. If she cannot do so in responding to this group of amendments, I hope that we will have clarity on all these issues before Report.

Photo of Baroness Williams of Trafford Baroness Williams of Trafford The Parliamentary Under-Secretary of State for Communities and Local Government 7:00 pm, 8th March 2016

My Lords, this has been an extensive debate and I hope that I can answer all the questions asked by noble Lords. However, if noble Lords will indulge me, the high-value aspect will come up in a later group of amendments. It is important to note that noble Lords’ contributions on that will very much inform our considerations which are now under way.

My noble friend Lady Redfern made the point very eloquently that since right to buy was introduced in 1992, 2 million people have exercised it to become home owners. As I have said before, 86% of people aspire to own their own home, not to make a quick buck but because they have worked hard and they aspire to ownership, like probably almost all noble Lords in this House. Like noble Lords, when they own their own homes, their desire to do with their homes what they please should be respected.

My noble friends Lord Horam and Lord Young and the noble Lord, Lord Kerslake, made the very pertinent point that housing associations and local authorities best know their communities’ needs in both rural and urban areas, and that they should be trusted. I hope there is no implication in this Chamber that in some way we do not trust housing associations. We do, and we have done for a very long time.

The noble Baroness, Lady Hollis, will forgive the fact that I did not see the television programme last night because I was replying to a debate in this Chamber held on the eve of International Women’s Day. I shall watch that programme on catch-up TV at some point.

My noble friend Lord Porter asked why housing association tenants should not have the same rights as council house tenants have previously enjoyed. He is absolutely right. We are trying to put right that inequity. As he says, you could have one person living next door to another, with one having entirely different rights from the other in terms of ownership. In terms of the interest—

Photo of Baroness Williams of Trafford Baroness Williams of Trafford The Parliamentary Under-Secretary of State for Communities and Local Government

If the noble Baroness does not mind, I will not give way. I would like to make progress and perhaps she would like to ask any questions at the end, if I have not covered her point.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

This is a large group and we shall have trouble tracking all the questions that noble Lords want to ask as the Minister goes on from point to point.

Photo of Baroness Williams of Trafford Baroness Williams of Trafford The Parliamentary Under-Secretary of State for Communities and Local Government

That is why I want to make progress. If the noble Baroness will pick me up on her question at the end, I will be very happy to answer it, if I can.

Twenty-one thousand housing association tenants have asked to be kept up to date on right to buy. That is an enormous number of tenants so far. A noble Lord asked about housing associations which enter the voluntary agreement. I recall that the noble Lord, Lord Best, picked me up on that issue. They hold 93% of the stock. Another noble Lord—I think it was the noble Lord, Lord Shipley—asked about the one-for-one being done on a like-for-like basis. It has never been on a like-for-like basis, and that is not something we wish to impose on, or agree with, housing associations.

Extending the right to buy to housing association tenants is an absolute key priority for this Government, with many residents looking forward to us making real their dreams of home ownership. As I say, 86% of people aspire to this. Clause 62 allows the Secretary of State—I emphasise that—to make payments of grant to private registered providers in respect of right-to-buy discounts. This is to ensure that the Government have the ability to compensate housing associations for the discounts to their tenants who buy their home under the terms of the voluntary agreement. Without it, there is no voluntary agreement. As my noble friend Lord Young and the noble Lord, Lord Taylor, said, this part of the Bill enables the Government to honour their side of the agreement.

I thank noble Lords for their comments on their amendments. I fully understand their desire to protect certain types of property and properties in rural areas. These amendments propose a number of de facto exclusions from the policy, and some restrictions on how the proceeds from sales can be used.

I turn to the points raised about exemptions. I remind noble Lords that it has already been confirmed in the other place that almshouses are exempt because the tenancies available in those properties are not eligible for the current right to buy and are excluded from the voluntary agreement. In giving other examples of where housing associations may exercise discretion over sales, I hope these may cover a number of the questions asked by noble Lords. For example, it would include properties in rural locations, as defined by Section 17 of the Housing Act 1996. This would generally mean properties in national parks, areas of outstanding natural beauty and places that have been designated as rural by the Government—the noble Baroness, Lady Royall, asked about this—that is, places where fewer than 3,000 inhabitants reside per hectare. This reflects the exclusions in the right to acquire. Another example is supported housing. This is generally housing designed with special features for people with physical disabilities. Also included are homes for people with special needs and those who require intensive housing support, so that would encompass a lot of housing for older people. The provision also includes homes for people with mental disorder where social services and other special facilities are provided or a home that is particularly suitable for elderly people, as I have said, and is let to a person of 60 and over. Also included are properties provided through charitable or public benefit resources or bequeathed for charitable or public benefit purposes and in the possession of the housing association before it became registered under the Housing Act 1974; so that would cover some of the Peabody stock. Certain specialist providers of homes of historic interest that have special significance to the community are included, such as almshouses, as I mentioned, as are other categories that apply to the existing right to buy and properties where the landlord is a co-operative housing association. In addition, properties are included where the landlord does not have sufficient legal interest to be able to grant a lease exceeding 21 years for a house or 50 years for a flat; where tied accommodation is occupied because the tenant is employed by a social landlord; where properties are held in a community land trust; and where there are clear restrictive covenants—we have spoken about this previously—in existing resident contracts around the protection of rural homes.

My noble friend Lord Young also asked about Section 106 properties being exempt from the voluntary right to buy. We are currently engaging with the sector on the implementation of the voluntary right to buy, including properties provided under Section 106 agreements, and we will announce more details in due course.

Non-government Amendment 55, in the names of the noble Lords, Lord Kennedy of Southwark and Lord Beecham, seeks to exclude the payment of discount on certain types of property so that housing associations would not sell them—in effect, creating on the face of the Bill exemptions for such properties from the voluntary right to buy. I understand noble Lords’ concern about specialised housing and housing in rural communities. However, at the same time, we should not be ruling out the possibility of home ownership for tenants who live in these properties, if individual circumstances allow. It seems wholly unequal to prevent elderly or disabled tenants from having the opportunity to share in the benefits that home ownership brings. It might be, for example, that a property has been adapted specifically for a tenant and selling it to that tenant and freeing the capital to build a new unit for the next person in need is the best outcome.

The important point is that we cannot know all the individual circumstances that could arise, and to deny wholesale the life chances and opportunity which home ownership brings to older or disabled tenants “just in case” seems to me to be the wrong approach. That is why it is clear in the agreement that we have negotiated with the sector that it is housing associations which will have the discretion over whether or not to sell these properties. As my noble friend Lady Redfern said, they can take a view on the individual circumstances of the property and the tenant in the context of local housing supply and make reasonable and appropriate decisions in terms of what is best for their tenants and the communities they support.

The noble Duke, the Duke of Somerset, talked about local replacement, which I mentioned at Second Reading. Many housing associations will want to replace locally, because they often have links to the local communities that they serve, but we are not going to insist upon it. There is just an expectation that they will want to do so. The noble Lord, Lord Beecham, asked about lenders not lending on starter homes. I do not want to comment on that speculation, but we want to ensure that anyone who works hard does turn their dream into reality. We want to listen to a range of lenders who are expressing a range of views. As I mentioned earlier, we will be consulting shortly.

The noble Baroness, Lady Royall, talked about the needs of rural communities. Over 85,000 affordable homes have been provided in rural local authorities in England between 2010 and 2015, but we know that more are needed and we are committed to delivering 277,000 affordable homes over this Parliament in both rural and urban areas. The 2015 to 2018 affordable homes prospectus made it clear that the HCA,

“in instances where a particular scheme, for example in a rural location, involves higher costs than the average for the bidder or area … whenever possible, will seek to take account of genuine comparators”.

I turn to Amendment 56, in the names of the noble Baronesses, Lady Royall of Blaisdon and Lady Bakewell of Hardington Mandeville, and the right reverend Prelate the Bishop of St Albans. Similar arguments apply in relation to rural tenants about what would be the best level at which the decision to sell, or not, should be taken. I recognise the importance of ensuring that rural communities are protected, but the best way of doing that is not by preserving them exactly as they are now, but by supporting living, working and sustainable rural communities with tenants having real choices about where and how they live. The noble Lord, Lord Taylor, touched on the importance of neighbourhood planning and getting buy-in from local communities on the types of tenure that they wish to see. We have not talked much about neighbourhood plans today, so I thought I would bring out that important aspect. Acceptance for housebuilding has more than doubled in the last few years. Neighbourhood and local plans have added to the feeling of ownership in communities.

As a couple of noble Lords have pointed out, housing associations will, through the voluntary agreement, have the freedom not to sell rural properties that are important to communities but, as my noble friend Lady Redfern said, they would still be able to offer the tenant an alternative through a portable discount. However, they can only do so if they are compensated for the discount, which this amendment would remove. The amendment is not only unnecessary, because landlords will have discretion, but actually harms the choice and opportunity for people living in rural areas. The decision on whether to sell a property should rest with the individual housing association and should not be imposed through legislation. As the noble Lord eloquently pointed out, this would be lost by the imposition of legislation. We want local areas to decide their local priorities. The noble Baroness, Lady Bakewell, made a particular point about farmers. They are a very good example of where involvement in local plans actually leads to a far better outcome for communities and tenants.

Photo of Lord Taylor of Goss Moor Lord Taylor of Goss Moor Liberal Democrat 7:15 pm, 8th March 2016

Will the Minister reflect further with her colleagues on the contradiction in what she has just said? She spoke about neighbourhood plans and local communities setting the tenure, but the housing associations would make a decision on the sale without any reference back to the community. The engagement between the housing association and the community is important in that circumstance.

Photo of Baroness Williams of Trafford Baroness Williams of Trafford The Parliamentary Under-Secretary of State for Communities and Local Government

My Lords, maybe I did not articulate it properly. The engagement between housing associations and councils with neighbourhood and local plans adds to the mix of a happy community or one that feels imposed upon. Local housing associations are very good at knowing what their communities want and what future tenures will look like.

The noble Lord, Lord Best, asked me about the Government intending to reverse the ONS classification decision. The deregulatory measures in the Bill are designed to address the reclassification of housing associations by the ONS. The Government would like the ONS to review its assessment, in due course, in the light of the effect of these measures, but it is independent and we cannot tell it what to say.

Amendment 56A, from the noble Lord, Lord Tope, and the noble Baroness, Lady Bakewell of Hardington Mandeville, would put an exemption in the Bill, but housing associations already have the discretion not to sell under the terms of the voluntary agreement—in the case, properties owned by community land trusts. This Government very much support community-led housing and we recognise the significant role that community land trusts can play in delivering locally led, innovative housing development, an issue we touched on at Second Reading. I fully appreciate that many noble Lords think that as well, but I find these amendments slightly odd. Surely, the way to protect community land trusts is to give them the freedom to manage their affairs in the way they think best for the community, rather than creating centrally driven regulations that will control the way they operate.

Under the voluntary agreement, community land trusts will be able to offer tenants access to affordable home ownership through a right-to-buy discount, the cost of which would be paid by government. This frees up capital which the trusts can reinvest, should they wish, as part of their significant contribution to the development and management of new affordable homes. I stress again: if they do not want to sell individual properties they do not have to, as my noble friend Lord Young said.

These amendments would take away the freedom of community land trusts to realise capital to reinvest, with full compensation from government for the shortfall, and the freedom to decide which properties could be sold. As with Amendment 57C, I do not believe that this would protect community land trusts. Rather, it would fetter their discretion and inhibit innovation and investment.

I thank the noble Lords, Lord Kennedy of Southwark and Lord Beecham, for their Amendment 59B on tenant management organisations and community-led housing schemes. The Government very much support community-led housing and recognise the important role that TMOs play in helping tenants to take an active part in the management of their home. The proposed new clause in Amendment 59B would mean that housing associations could not implement the voluntary right-to-buy agreement where TMOs have been set up and registered with the HCA. It would also prevent such organisations accepting payments made by the Secretary of State in respect of right-to-buy discounts. To be absolutely clear, tenant management organisations are not registered providers; they are management organisations which are subsidiaries of a registered provider. They are not, and cannot be, registered with the HCA, because they cannot own stock and are therefore not landlords. No grant funding to cover the cost of the discount will be made to such organisations under the voluntary right to buy.

My concern is that these amendments would, in effect, create a loophole in the implementation of the voluntary right to buy, whereby the setting up of a TMO would mean the voluntary right to buy could not operate. That may be what is intended but, if so, it will hinder the Government in delivering their manifesto commitment. Our aim is to ensure that social tenants can access available home ownership opportunities regardless of their landlord. It would be wholly unfair to tenants who want to take the opportunity to buy a home of their own to be prevented from doing so merely by the existence of a TMO.

Amendment 56B in the name of the noble Lord, Lord Berkeley, would exclude housing on the Isles of Scilly. I have been to the Isles of Scilly, very beautiful place that it is, and I understand the concerns about the loss of social housing on a small group of islands. But I have been clear in our discussion over similar concerns in rural areas that housing associations will have the discretion not to sell. They will be able to make this decision based on their knowledge and understanding of the needs of the local community. We want equality of opportunity for social tenants; it should not be denied to them just because they live on the Isles of Scilly.

Amendments 57A, 57B and 57D would require receipts from the proceeds of sales to be reinvested in the same area as the property being sold. We believe that these decisions are best taken by housing associations in light of local conditions and need. By seeking to constrain their discretion from Whitehall, we are limiting their ability to manage their assets to deliver their business and their charitable objectives.

Amendment 60A in the name of the noble Baroness, Lady Grender, would introduce a community right of appeal where there was local opposition to a sale under the voluntary right to buy. I cannot accept this amendment; housing associations know the needs of their local community and we believe that they will act in their best interest. As set out in the voluntary agreement, they will have discretion over whether to sell a property.

I thank all noble Lords who have taken part in this debate. I know that the noble Baroness, Lady Hollis, wants to come in, but I hope that with these assurances, the noble Lord will feel able to withdraw the amendment.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

It would perhaps have been more appropriate if the Minister could have taken the query at the time she was answering questions, as she did with the noble Lord, Lord Taylor. None the less, the point that was being established by the noble Lord, Lord Porter, my noble friend Lord McKenzie and I was that irrespective of one’s views about right to buy—I can absolutely understand the argument that if local authority tenants have the right to buy, it should apply to housing association tenants also—at the core of the fairness problem, on which the Minister has said not one word, is who pays. Clearly, housing associations will be able to replace their stock because they will get full recompense for the discounts. That is fine for housing associations, but although the Minister has said several times that the Government are making the discount off the grant, it is not the Government who are funding it. It is being funded by local authorities and their poorer tenants. Will the Minister explain why it is fair that local authorities should be required to pay for the discounts of a tenure that is not their own?

Photo of Baroness Williams of Trafford Baroness Williams of Trafford The Parliamentary Under-Secretary of State for Communities and Local Government

My Lords, I did not cover high-value assets and the noble Baroness’s point because it has been an extremely long debate with lots of questions. Those points will come up in future groups of amendments.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

But they were raised tonight. I think we have a right to hear what the Minister says so that when we address those subsequent groups, we can take her answer into account.

Photo of Baroness Williams of Trafford Baroness Williams of Trafford The Parliamentary Under-Secretary of State for Communities and Local Government

I repeat that we will have full opportunity to discuss those points in future groups of amendments. I am trying to accommodate the House in moving towards the dinner break business. This has been an extremely long debate; I do not in any way wish to divest myself of my responsibilities for answering these points, but I ask that we address them in their groups. I am very happy to answer the noble Baroness’s questions.

Photo of Lord Beecham Lord Beecham Shadow Spokesperson (Housing), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Justice)

In that same spirit, perhaps the Minister will confirm that we will have the information on starter homes before Report.

It is interesting to look at what the impact assessment says about the right to buy for the housing association sector. It says:

“Primary legislation is also required to monitor how these opportunities are being adopted so potential homeowners can hold their housing association to account, if necessary”.

That is an interesting perspective on the degree to which the Government trust their partners in the housing association sector.

More important, however, is the next paragraph, which purports to outline the impact of intervention:

“The Government expects the clauses within the Bill to facilitate housing associations offering home ownership opportunities to their tenants. Without the legislation, the Secretary of State, or the Greater London Authority would not be able to compensate a housing association for the cost of the discount … The Government will issue a prospectus setting out more detail of the scheme in due course”.

There is not a word about the impact of the Bill on the number of homes that might be transferred by housing associations, the amount of money that will be received by the associations or, indeed, where it comes from. That is not an impact assessment; it is an announcement about the objectives of the policy. I shall return to this theme, I am afraid, in later amendments. I do not blame the Minister for this, but it is a pretty poor effort.

The Minister rightly referred to people’s aspiration to own their own home, and it is true that a very high proportion of people have that aspiration. But if that aspiration is to be fulfilled, it should not be at the expense of those who cannot afford to buy their home and who need to rent. We know what has happened to property sold under the previous policy of the right to buy council housing. As my noble friend has said, 40% of those houses are now not owned by aspiring owner-occupiers; they are owned by aspiring buy-to-let landlords who let out the property at much higher rents and at greater cost to the public purse than would otherwise have been the case because of the way in which housing benefit works. It is not, therefore, a simple case of catering to that need, as if there were no potential adverse consequences.

The Minister also referred to the opportunity for older and disabled tenants to buy their properties. However, these properties are very often purpose-designed and, as she said, fitted out for a particular purpose. There is nothing to ensure that after the original purchase, those properties will remain available for older people and people with disabilities. They could simply disappear and the people who would have had the benefit of those facilities may not get them.

The noble Lords, Lord Best and Lord Horam, talked about the risks of reclassifying these properties as part of the public sector, the implication being that this would have devastating consequences because it would somehow increase public indebtedness and the like. But the money is not going into thin air, it is going into assets. The assets will remain on the balance sheet. This is a phantom criticism, it seems to me, of the objections to the way in which the Government have proceeded.

We entirely support all the other amendments moved by the noble Lords, Lord Best and Lord Kerslake. I am disappointed that the noble Lord does not see the merit in Amendment 55, but I think that the arm of the housing association sector is going to be twisted. Indeed, the rather minatory words that I quoted from the impact assessment contain that implication—that pressure will be put on those housing associations. The noble Lord, Lord Porter, my successor—I was the first chairman of the LGA and the noble Lord is the current chairman; quite for how long remains to be seen but I suspect it may not end as quickly as I would like—was critical of aspects of what some of us have been suggesting but nevertheless made the very strong point that local authorities should not be expected to pay for this. I entirely endorse what he said in that respect.

Other issues have been raised. I do not propose to take much more time in winding up, but I would just like to refer to the noble Baroness, Lady Redfern, who is no longer in her place. She congratulated the Government on the basis that the Bill would get the country building. There is absolutely no evidence for that. There is no requirement even for replacement building, for example. There is nothing, certainly in what we are discussing today, which will encourage building, let alone building in areas where it is most needed, including the rural areas about which we have heard a great deal. The case for this arrangement has been far from adequately made in terms of the future impact on the housing needs of people who cannot afford to buy, who are having to pay extortionate private rents. Given that concern has been raised—I think by the noble Baroness, Lady Redfern, herself—about the unfortunate position of people who cannot afford properties, the reality is that there will be more of those people in rented accommodation than will be helped by this move.

I still take the view that while this is currently a voluntary deal, if ultimately the Government are not satisfied with the numbers—and of course we do not know whether they have a target number because there is nothing in the impact assessment to say what that might be—they will have recourse to legislation. I would be very surprised if that was not the case. The noble Lord, Lord Young, possibly slightly misunderstood me. My fear is that a second Conservative Government —or third Conservative Government, in effect; their former allies have dissociated themselves these days—would be driven to pushing further and requiring the same provision for housing association properties as they imposed 30 years ago on local authorities, with, in many cases, very adverse results. Having said all that, I beg leave to withdraw the amendment.

Amendment 55 withdrawn.

Amendments 56 to 56B not moved.

House resumed. Committee to begin again not before 8.34 pm.