Housing and Planning Bill — Committee (5th Day) (Continued)

– in the House of Lords at 3:02 pm on 10th March 2016.

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Amendment 63

Moved by Lord Beecham

63: Clause 67, page 29, line 33, at end insert—

“( ) The total payment required from all affected local authorities in any financial year shall not exceed the total grant paid in that year to private registered providers in respect of right to buy discounts.”

Photo of Lord Beecham Lord Beecham Shadow Spokesperson (Housing), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Justice) 3:17 pm, 10th March 2016

My Lords, I begin my speech in support of Amendment 63, in my name and that of my noble friend Lord Kennedy, and the other amendments in this group by referring to what passes for the impact assessment of the Bill. Under the rubric of “Problem under consideration”, it states that the provisions of the Bill,

“require councils to make a payment to the Secretary of State based on their high value … housing”, which is expected to become vacant during the financial year. It does not say how “high value” is to be defined or calculated, which is expressly to be determined—surprise, surprise—by secondary legislation. Nor does it define what would be deemed to constitute “an expectation” and when that is supposed to crystallise. It goes on to state that,

“a formula will be used to calculate the payment each stock owning local authority is … to pay”, for this will be required of local authorities whether or not the property is sold. As we have heard, the money will go to Her Majesty’s Government for onward transmission to housing associations to finance the right to buy. No formula is proffered in the impact assessment. Graciously, it states that local authorities will have to consider selling their high-value housing when it becomes vacant but will have “some flexibility” to decide which properties are sold. This generous concession is supposed to dampen the impact of the effective nationalisation and then privatisation of the housing in question. It does not indicate how much flexibility will be allowed.

The Government do, by way of an amazing act of largesse, say that a portion—unspecified—of receipts will be used to build more homes that reflect housing need. Can the Minister tell us how much flexibility will be allowed and in what circumstances? How and when will the Government determine the size of the portion of receipts to be used for building more homes? Will the Government prescribe the cost of such homes, their location or their tenure? If built as new council homes, will they be subject in turn to the right to buy?

The impact assessment asserts that by managing their stock more efficiently, something with which the Bill does not, as such, purport to deal,

“local authorities will release value tied up in such properties and this can be used to fund more homes which reflect the housing need”.

This bald statement does not deal with the destination of the proceeds, which is the Government, nor does it exclude the possibility of the proceeds being used for purposes other than funding homes. Indeed, since the Government would be using their levy on councils in respect of high-value homes to fund right to buy, it is hard to see how the proceeds could be used in any substantial amount for that purpose.

The summary of benefits and costs in the assessment states that:

“The determination process will provide … certainty for local authorities about the level and flow of receipts to be generated”.

Can the Minister provide the House with an example of how the process will work? Do the Government propose to deal with it in regulations? If so—once again, I have to ask—will we see the draft regulations before Report?

The summary in paragraph 4.2.8 goes on to assert:

“Data will be used to inform the setting of the high value threshold and the assumptions underlying the calculations in the determination”.

What data? Whence derived? When made public? Will there be discussions with individual councils about the threshold and any mechanism for appeal? Paragraph 4.2.10 acknowledges:

“Local authorities are likely to incur some costs associated with the sale of vacant property”— a statement of the blindly obvious—but councils will no doubt be deeply relieved to note that:

“Consideration will be given to the deductions that should be made from the payment to the Secretary of State to reflect transaction costs associated with the sale of vacant properties”.

Have the Government made any estimates of such costs? Will this process involve secondary legislation to clarify the matter?

Paragraph 4.2.11 declares:

“A portion of the receipts will be used to provide more housing, reflecting housing need”.

What sort of housing? Housing for first-time buyers? Housing for rent? If for rent, what levels of rent? Housing in the authority area or perhaps beyond it? Above all, what sized portion? It further states that,

“the Secretary of State and a local authority may enter into an agreement to reduce the amount the authority has to pay so that new housing can be provided”.

Provided by whom? Does the Minister envisage, for example, an annual agreement based on an estimated number of sales at an estimated price? What would be the minimum number and minimum expected yield to make such an arrangement feasible? In similar vein, how feasible is it to require in London, as the same paragraph does, that,

“at least two new affordable homes are provided for each vacant high value home that is expected to be sold in the relevant year”?

That question has been raised more than once in debates thus far. Does not that wording suggest that councils are expected to make provision on the basis of an expectation rather than an actual sale? That sounds rather like a potential leap in the dark given the obvious uncertainty about numbers, price and timing, both in respect of sales and the proposed new building. How many sales and consequent replacements does the Minister believe would be a workable minimum to secure best value in terms of those replacements?

In five and a half years as a Member of this House, I have seen some poor impact assessments, but I do not recall any as utterly useless as this. I do not blame the Minister for a moment for that—she is probably suffering from the effects of an inadequate impact assessment as much as any of us. There is no assessment of the number of properties liable to be affected, no assessment of the possible amounts to be realised, no assessment of the number, type and costs of replacements and no indication of how the scheme might work in metropolitan areas where the housing market crosses local authority boundaries.

Shelter has done some calculations which the DCLG either has not done, which would be grossly negligent, or has done but apparently has failed to publish, which would be tantamount to concealing important evidence. These show for authorities an estimate of the number of houses that might fall into the high-value category. The Shelter study showed that in Newcastle, which in the words of a council officer will be badly hit, 1,611 council homes fall into the Government’s previously released high-value threshold. This will equate to 82 forced sales a year—in fact, the council believes that the Shelter figures are an underestimate. Moreover, even if a council were to transfer its stock to an external housing provider, it could still be issued with an annual charge based on the Secretary of State’s estimate of what would have been the annual turnover of high-value stock. This is yet another example of the Government giving the lie to their claims to be localist. As the Conservative-led Local Government Association has pointed out:

“Councils already consider the best use for their assets and any new duty to sell stock must be balanced against local housing need. Local authorities should retain all receipts from the sale of … high value homes and from council Right to Buy in order to invest locally in building new homes crucial to reducing waiting lists and welfare spending. The Bill should be amended to give councils maximum freedom to manage their own housing stock and to locally retain”— the LGA’s split infinitive, not mine—

“capital receipts for reinvestment in new and existing housing, as a minimum retaining sufficient receipt to replace every home sold”.

This has been the gist of two or three speeches from the current chair of the association, the noble Lord, Lord Porter.

The LGA does not support the proposals to levy payments on the estimated value of higher-value properties, asserting rightly that the Government could decide,

“how much it would like to ‘tax’ each council with housing stock”, and no doubt define what constitutes high value for the relevant area.

However, in addition to all these difficulties about principle, process and finance, there are more fundamental concerns. What steps, if any, will the Government take to avoid high-value homes joining the buy-to-let sector? What consideration have they given to the need for larger accommodation for large families or households with a disabled member requiring extra space, such as is currently the subject of litigation in respect of the bedroom tax? There is a case before the courts involving a third room in which necessary equipment has to be provided for a disabled member of the household. Would a household such as that potentially be subject to the treatment of high-value properties? Generally speaking, the larger the accommodation, the higher the value will be. In Newcastle, we have only 83 council properties with five bedrooms, 28 applicants with a housing need for them and a turnover of around only five a year. Will the charge be levied on those irrespective of the impact on available housing for those larger families, even on the relatively small numbers which we have to deal with? There will also be areas where bungalows will in high demand for similar reasons—very often occupied by elderly or disabled people.

Our amendments in this and subsequent groups deal with a wide range of issues arising from the Government’s simplistic and un-thought-through policies designed, in my submission, as electoral bait. Amendment 63 is aimed at the national position and would require the total payment from councils in any financial year to be limited to the total grant to housing associations for right to buy. That very provision underlines one of the most basic flaws in the whole concept: right to buy of itself creates no new homes. To the extent that the exercise of the right raises money, it will do so at the expense of the provision of council housing with no guarantee of local replacement and, inevitably, the eventual transition of a large percentage of properties to buy to let.

Amendment 64 would give a local authority rather than the Secretary of State the right to define what constitutes “high value”, while Amendment 65 would limit the number of high-value properties subject to the provisions of the Bill to 10% of the total local authority stock in a given area, thereby effectively capping the impact of the scheme in localities.

Importantly, Amendment 66 defines “high value”—something which the Government have failed to get round to doing—by excluding properties for which the cost of building a replacement with the same number of bedrooms in the same local authority area is greater than their value. Finally in this group is Clause 67 stand part.

This concept—borne of, at best, ill-conceived populism and, at worst, electoral opportunism—is about buying votes, not about building houses. It is shoddy, ill thought-out and ill-drafted legislation. We are asked by the Government to approve it in the absence of evidence of how it would work and what its impact would be. I urge the Minister to acknowledge its deficiencies and take it back to the ministerial drawing board or to whatever oxymoron of a right-wing think tank thought it up. This is a time not for Policy Exchange but for a change of policy. I beg to move.

Photo of Lord Lansley Lord Lansley Conservative 3:30 pm, 10th March 2016

My Lords, I intervene briefly on this group of amendments. I have listened with care and interest to the debate on the previous group and was hoping to contribute to that, but I think it is perfectly appropriate to do so now.

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

Actually, the Companionallows that. Because we are in Committee, noble Lords can speak on any aspect at any time, if that is any help.

Photo of Lord Lansley Lord Lansley Conservative

I am learning the advantages of being in your Lordships’ House as opposed to another place. This is clearly one of them.

I am prompted not least by the introduction to the debate of the noble Lord, Lord Beecham. I can well understand his point of view about the absence of detail that we hope to see in regulations. I share the collective view across the House that we would like to see those regulations in order to understand how the architecture of the Bill will be shaped before we come to the decisions that we need to make on Report. But the absence of those regulations and that architecture afford an opportunity for the noble Lord to ask a lot of questions. Indeed, the amendments, in so far as they probe these issues, simply relate to a sub-set of the issues that potentially need to be covered in the regulations.

My personal view is that none of the amendments in this group would help us in any way because we need to see the whole shape of the regulations in order to understand this clause. From the Government’s point of view, there is considerable advantage in the flexibility provided by regulation in this area, rather than having too much rigidity in the system. I say that because I am prompted by what the noble Lord said: that this was about electoral opportunism rather than building houses. Actually, this is electorally popular. I have no doubt about that. The right to buy was popular in its time and is popular now, and the right to buy for housing association tenants will prove popular. However, the issue is about building houses.

Photo of Lord Campbell-Savours Lord Campbell-Savours Labour

There are repeated references to right to buy. There is no right to buy because housing associations can refuse to sell. There is no right to buy at all.

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

The noble Lord said that the right to buy was popular in its time. He is right that it was popular at the moment it was introduced and probably for a short while thereafter. But now, if you go to the areas that I know in Luton, where all the estates have been pretty much sold off, mothers and fathers are worried about their children and grandchildren being able to access decent accommodation. That gives a different view as to how popular or right that policy was.

Photo of Lord Lansley Lord Lansley Conservative

In a way. I certainly do not propose to engage in a semantic debate about what the policy is described as. We know what it is and it will rightly be regarded by housing association tenants as the creation of a right to buy. It may be circumscribed in certain ways, not least by housing associations themselves under a voluntary agreement. But everyone will know what it is, and that is what they will be looking for.

On the latter point, I must say to noble Lords that I do not think I have to judge whether the policy was popular: it was. People voted for it and, frankly, at the last general election they voted for right to buy again. I do not think we need to have that debate. Indeed, that was not my purpose in speaking. I was addressing the issue that, actually, my noble friend Lord Horam made perfectly clear in a previous intervention. He was absolutely right. As I said at Second Reading, this is about building more houses. If we are to solve all the problems we are debating, we will solve them more readily if we are able to increase the number of houses we build. Then, we will not be trying to parcel out who lives in which home and under what tenure—as appears sometimes to be the purpose of these debates—rather than giving more people more opportunities to have whatever home they want under whatever tenure they want. The more homes we build, the more likely we are to be able to satisfy more of those ambitions.

Completely contrary to what the noble Lord just said, this is about building more homes. The local authority may sell houses, but those houses do not cease to be occupied. They will go into the market. That value, realised through the right-to-buy discount, will enable people to own the homes they are occupying. The housing association will take the market value and will, as a consequence, be increasingly equipped to invest in further new housing in the future. There is that benefit.

At the same time, the Government have an opportunity, and this is where the flexibility in the architecture of the Bill comes in. The Government will have flexibility in certain circumstances to say, “No, we can actually do more by way of building more homes where we most need those homes to be built if we reach an agreement with a local authority to build more homes, through which we reduce the deduction—the payment it has to make”. That is why the single example of Greater London in the structure of the Bill is indicative. Frankly, one for one would not in itself be sufficient to justify substantial deductions on the payment.

In so far as there is a given amount that is required to be paid over to housing associations that arises from the discounts, such payments might therefore have to be met by the Government out of general taxation. I see nothing in the Bill that requires the two sums to be exactly the same. That flexibility allows the Government to enter into agreements with local authorities. There is a clear incentive for local authorities to come forward with proposals that would allow them to build more homes than one could otherwise anticipate being built as a consequence of simply transferring that money through to the right-to-buy discount. The consequence, one way or another—through the housing association route, or the local housing authority arriving at an agreement to build more homes—is that more homes should be built. That is devoutly to be wished for.

What will help us to explore the issues arising out of the discussions in Committee is to know more about Clause 72. What do these agreements with local authorities look like? For my own part, it is important to be able to see a practical example. I declare an interest as an unremunerated chair of the Cambridgeshire Development Forum. We want to see houses being built. We need more affordable homes. In my time as Member of Parliament for South Cambridgeshire, I saw the housing waiting list in my constituency more than double. We have a fast-growing area. We have rising land prices and property prices. We have a lot of demand for key worker housing and affordable homes. In that sense, we are very much like the most pressed and needy areas of London. My noble friend talked about the changing geography of London and that is absolutely right. There are places outside London that exhibit characteristics very like some of the most stressed parts of London.

In encouraging the process of fleshing out between now and Report, I say to my noble friend that it is not just about fleshing out the regulations; it is about engaging in conversations with local authorities. I would be happy if my noble friend would allow such a conversation to take place between her department, South Cambridgeshire District Council and Cambridge City Council and for me along with colleagues to be part of that. We should discuss the potential for these deductions and what they can deliver. The Government are right to believe that they should have the flexibility to give local authorities leeway regarding the assumptions that would lead to payments into the right-to-buy discount if they are building more houses and showing the additionality of being able to do so.

For that reason, there has to be flexibility in the architecture of the Bill regarding, on the one hand, the ambition to build more houses through local authority agreements that directly correspond financially to a flexibility in how much money is asked of individual local housing authorities; and to what extent that money corresponds with the money provided in right-to-buy discounts.

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

Why not leave the decision to local authorities within whose boundaries these high-value properties are situated? How can it be justified to levy on those local authorities a payment when the property is not yet vacant?

Photo of Lord Lansley Lord Lansley Conservative

I am grateful for that because I had not realised it until I listened to the Bill being discussed earlier today. The answer is that, insofar as the local authority seeks to achieve not just replacement new homes for the dwellings that are sold but to do more, the consequence in financial terms has to be borne by the Government, so the Government are a partner in this proposal. It does not automatically follow, as one of the amendments in this group implies, that the amount of money that is derived from local authorities through the payments that are required under Clause 67 has to correspond with the amount of money that is provided to housing associations under the right-to-buy discount. If there is a difference, and in particular if there is a shortfall, it is down to the Government to cover it. Frankly, I think that the Government, through agreements reached with local authorities, should have the flexibility to create such a shortfall and to fund it differently.

Photo of Lord Campbell-Savours Lord Campbell-Savours Labour

The noble Lord, Lord Lansley, referred to the need to build more homes. There is a way of building more homes that is much easier than all these provisions in the Bill, and that is simply to reduce the price of land. Certainly outside London, it is the cost of land that is driving up the cost of housing and causing the problems we are having to deal with today. Only a few weeks ago I read some statistics about land prices in the Home Counties. An acre of agricultural land can be bought for around £12,000, but with the stroke of a pen—if I may simplify the process—it can be worth between £2 million and £4 million. That is why people cannot afford to buy houses in the United Kingdom but they can afford them abroad. We are simply paying too much for the land that we use.

I wish to support the thrust of these amendments, in particular Amendment 65, tabled by my two noble friends on the Front Bench. As I understand it, they would restrict the amount of property treated as high value, which may have the effect of reducing the levy and thereby the pressure on a local authority to sell stock to fund housing association right-to-buy discount purchases. My case is simple: councils need to defend their public sector housing stock and I shall argue why that stock should be defended against speculative buying.

Just to clarify the position, the Bill states:

“The Secretary of State must by regulations define ‘high value’ for the purposes of this Chapter”, to which Amendment 65 would add,

“and this definition may not apply to more than 10% of the total authority properties in the local housing authority area”.

These debates have been dominated by some very experienced people, and I do not profess to be one of them. Many leaders of local authorities have taken part, as well as leaders in the housing association movement, so the quality of the debate has been very high. Unfortunately, my experience of dealing with a local authority ended 40 years ago, so obviously I have a layman’s and observer’s knowledge of these matters. My comments are based on some anecdotes and conversations I have had with local authority councillors and leaders who are directly involved in this area. Many of the questions I will put are being asked by the public, particularly where they harbour great concerns about the Bill’s provisions.

The day before yesterday I had an interesting conversation with a local authority leader. His case was simple. The sale of council property in London is out of control, with no official monitoring, and it is determined by the Government’s desire to raise revenue from the housing stock so as to avoid public expenditure. It is, in effect, a tax on local authorities. He went on to say that the sale of high-value property would be primarily in the London area, funding countrywide, and that outside of the London area the majority of high-value stock would be confined initially to the national parks, the more well-heeled towns of the Home Counties and a few areas in Yorkshire and Cheshire. But ultimately the Government will lower the high-value threshold so as to maximise the levy and fund their estimated target yield of £4.5 billion a year. He further argues that a high proportion of the council property being purchased in London is by overseas investors using UK residents as the vehicles for buying into the London property market for the purpose of investment. UK residents—tenants—are not the principal purchasers as they require high-value mortgages that they can ill afford and indeed cannot get.

What is the evidence for that? I examined council property prices in Westminster—that is to say, subsequent sales after the right to buy has been exercised. I chose Churchill Gardens in Pimlico because it reflects prices right across London, in an area from Dulwich to Hendon and from Ealing to Hackney. I went on Zoopla, which Members will be aware of, for valuation information. Churchill Gardens—Members will know that it is the series of blocks of flats on the other side of Dolphin Square on the Embankment—was built between 1946 and 1962. There are 1,600 homes there in 32 blocks. It is a development of blocks of flats interspersed with maisonettes. It has the benefit of a district heat and power plant. Much of it is classic deck- access property. It is classic London local authority property. Much of it has been in the conservation area since 1990. It is managed by CityWest Homes on behalf of Westminster City Council. Two-bedroom flats on Zoopla, as of the other day, now cost between £560,000 and £580,000. One-bedroom flats are not much less. These are flats that were sold in 1997-98—I traced them back—for between £24,750 and £25,000. This is a huge increase in the price of local authority property.

Some 50% of the 1,600 properties in Churchill Gardens have been sold off, depriving London of precious housing stock. Where have they gone and who bought them? Those who bought them originally are pocketing the capital gain and selling at the prices I referred to a week ago—it seems like a month ago. They are now joined by Westminster City Council, which, under the current right to buy and after the £103,900 discount, can value the same property at £450,000. Indeed, yesterday I found a three-bedroom property on the Churchill Gardens Estate on Rightmove, being sold by Hamptons International at just more than £600,000. A mortgage in the region of £400,000 to £450,000 requires a buyer to take out a very substantial mortgage of more than £2,000 a month, or more than £24,000 to £26,000 a year, at just more than 3% interest. That is after tax—hardly the income of a council tenant.

So who is buying? It is far too often overseas money. I quote an article from the Daily Mail online, which is not normally a source of information, but it is an interesting one on this particular occasion. It reads:

“One in five people who bought their council house in upmarket Westminster were living on housing benefit … One in five people who bought their council home in one of Britain’s wealthiest areas was receiving housing benefit when they applied, it has emerged”.

These are people who are supposed to be buying property for £450,000. It continues:

“The revelation centres on the London borough of Westminster, and comes after a Government watchdog warned fraudulent purchases under the Right to Buy scheme have increased 400 per cent in two years”.

This is a public scandal. It continues:

“One fear is that hard-up tenants are being ‘gifted’ cash by private firms to buy their homes at a cut-price rate. After buying a property, the company can then sell them on to private landlords for a profit, who will let them”, at a market rate. It continues:

“In Westminster, 22 per cent of Right to Buy sales were to people in receipt of housing benefit when they applied, dropping to 11 per cent upon completion”.

That is a very interesting statistic. The article continues:

“It begs the question of how council tenants who qualify for housing benefit could suddenly afford to buy properties outright in one of the most expensive parts of the country”.

I hope that it is dawning on Members of the House exactly what I am driving at. Where is the money coming from for these housing association discounts? It is coming not from the people that it is supposed to, but from investors.

The article continues:

“A report also found that 31 per cent of former council homes are now owned by private landlords and can be let for more than £800 a week”—

I do not know about that figure—

“in the capital’s second-most expensive borough.

Councillors have warned of a ‘property bonanza’—and said many tenants claim the money was a gift from overseas, making it near impossible to trace”.

This is a racket. It continues:

“Last summer, it emerged that a property company had leafleted 60,000 council house tenants offering six-figure rewards for working with them to buy and then sell their home.

Nicholas Carlino, a director of London Investment Property Group, told an undercover Sunday Times reporter that he was making so much money snapping up homes that had been undervalued by the council and selling them on that he would ‘never have to work again’. The scheme was entirely legal.

Councillor Lindsey Hall, anti-fraud tsar for Tory-run Westminster, told BBC London’s Inside Out programme: ‘I passionately believe Right to Buy needs to stay, but it needs to be very tightly managed and not fuelling a property bonanza for individuals swanning around estates in grand Mercedes and BMWs’”.

There is something wrong with the Bill if this is what is going to happen in the marketplace.

I shall quote from the journal West End Extra, talking about Churchill Gardens:

“Residential properties are being let out as holiday homes on a near industrial scale changing the historic make-up of central London neighbourhoods, City Hall has been warned. Councillors have been asked to investigate the growing trend for landlords to give up long-stay tenants in favour of taking bookings from tourists through websites such as Airbnb, which can prove more financially lucrative. Residents in Pimlico this week spoke out about how the increasing number of lets to holidaymakers was changing their area, with people on the Churchill Gardens Estate complaining that a settled community was being replaced by an endless stream of people with suitcases coming and going. Some say they no longer know who their neighbours are.

Labour councillor Murad Gassanly raised the issue at last week’s full council meeting after residents complained to him about ‘noisy parties’ being held at properties and said former council flats were now being set up as rooms ‘numbered like a hotel’. He added: ‘One woman told me she knocked on someone’s door and noticed all the rooms were numbered and there was tourist advertising in there. I looked on Airbnb and there are more than 30 properties on there on the Churchill Gardens Estate at any one time. Long-term residents of the estate say it does undermine the sense of community and does create a transient atmosphere on the estate’.

Conservative Cllr Heather Acton said: ‘We were very disappointed with the government decision to deregulate and enable short letting for a 90-day period of a calendar year’”.

I understand that Westminster City Council is advising people about the dangers of all this. Its website says:

“Sometimes companies or individuals offer tenants money if the tenant agrees to a deal where the company ends up owning the property. If you enter into this type of agreement: Before you buy your property, you will have to repay the discount as soon as you buy it”.

Of course, there are ways around this. It goes on:

“Please think very carefully before using one of these companies or individuals. Ask yourself ‘what is in it for them?’. They may be suggesting that you do something which benefits them, not you. Do not sign anything”.

I do not really know how we can now block what is happening in the Bill. I think the position is desperate. We are going to find huge swathes of London property being sold to people overseas—that is where it will end up—being rented out as tourist accommodation or at very high rentals. London will lose its housing stock and meanwhile the money that is gathered in will be used, not just in London, to fund housing association discounts in various parts of the United Kingdom.

I shall end up by quoting Councillor Acton, who will be known to Members on the Government Benches, talking about Airbub, the site for tourists. I understand that she is a prominent councillor in Westminster.

“On Airbnb there are 3,000 properties across Westminster and 2,000 of those are whole properties, not just a room. And 80 per cent of those are let 100 per cent of the time. They are not people going on holiday, they are people investing in a flat to short let it all the time, and the rent they get is four times the normal annual rent, if not more. It has become a business. There was a one-bedroom flat in Covent Garden which is advertised on Airbnb as sleeping seven”.

We have to find a way of preserving the housing stock in London. I say to Ministers, my noble friend has tabled an amendment which may not exactly meet the objective I have set in this debate, but we have to find something. I believe that the whole Bill is based on a huge error of judgment, certainly as far as London is concerned. As I said the other day, I have great sympathy with the right to buy and I believe that it has worked in parts of the country, but in London it is a disaster and something needs to be done to bring it to an end.

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) 3:45 pm, 10th March 2016

I remember that when I was a young councillor in Southwark in the 1980s I got this exposed in the South London Press. These firms were going around council estates offering people all sorts of inducements to buy their council house in order to, quite legally, get part of their discount. What my noble friend has discovered going on is disgraceful, but unfortunately there have been problems with this right from the start.

Photo of Lord Tope Lord Tope Liberal Democrat

My Lords, the noble Lord, Lord Campbell-Savours, is referring to a situation that the noble Baroness, Lady Hanham, and I fought very hard over during the passage of the Deregulation Act. We fought very hard to resist the change to the requirement in London to get planning consent, for exactly the reasons he describes. I think the company to which the noble Lord referred a number of times is actually Airbnb. We should record the name correctly in case there is an Airbub somewhere. Airbnb is probably the biggest company—but not the only one by any means—in a rapidly growing industry in inner London, and is causing the considerable problems that he described. If these provisions go through, the situation can only get even worse. We had a lot of very strong representations from community associations and residents’ associations, particularly around central London, who said that they no longer had any idea who their neighbours were for exactly the reasons the noble Lord gave, as those people were changing literally on a daily basis because the properties were let out to tourists and visitors on an industrial scale.

Photo of Baroness Williams of Trafford Baroness Williams of Trafford The Parliamentary Under-Secretary of State for Communities and Local Government 4:00 pm, 10th March 2016

My Lords, I thank noble Lords who have spoken in the debate and the noble Lords, Lord Kennedy and Lord Beecham, for their amendments. I welcome the suggestions on how we could limit the payments that are required, and their consideration of the potential impacts that the policy could have on local authorities. As I said before lunch, I also welcome their arguments on alternative ways of defining high value for the purposes of the Bill.

I understand the criticism of the impact assessment made by the noble Lord, Lord Beecham, but it was intended as an outline, not as a detailed value-for-money assessment. Alongside the impact assessment accompanying the Bill, we have worked in partnership with the Better Regulation Executive to produce regulatory impact assessments for all measures, including all reforming regulation on business or civil society. This is in line with the Government’s Better Regulation Framework Manual and these assessments are subject to independent scrutiny by the statutory Regulatory Policy Committee.

The regulatory impact assessments were not appropriate for the extension of right to buy and HVA measures. The extension of the right to buy to housing associations is voluntary, not regulatory, and the sale of local authority HVAs affects only the public sector. Of course, we are fully aware that we need to go through all the detailed steps of option appraisal and value-for-money analysis. We agree that this is necessary to ensure that Ministers’ decisions are informed by a full value-for-money analysis. That is why we have done very extensive and—as the NAO acknowledges at paragraph 3.17 of its report—internal analysis. We have clear processes to require this internally.

The work we have done includes policy costings in line with OBR/HMT guidance, an economic assessment of right-to-buy extension, which underpinned a bid in the SR for the pilot scheme, ongoing analysis of the costings, the impact of the sale of HVAs and the commissioning of new data to support this, analysis of financial flows and an inequalities impact assessment. We will publish further detail later this year. In the case of right to buy, this will be jointly with the HA sector, as the details of the voluntary agreement are developed, including though the pilots. In the case of HVAs, this will be alongside secondary legislation following Royal Assent. I reiterate that noble Lords’ contributions will inform these considerations, as will the thoughts from the other place and our engagement with local authorities and the other stakeholders.

Before I address the amendments in detail, I shall provide a general response to, and defence of, these measures, and in particular Clause 67. This chapter on the sale of vacant, high-value local authority housing is one important contributor to the Government’s aim of increasing home ownership and housing supply. The Government are taking the lead in managing public assets, selling where it is right to do so, and local authorities should do the same. We talked about this at length this morning. We want local authorities to sell their high-value vacant housing so that the value locked up in those properties can be released. This value will be used to fund the right-to-buy discounts for housing association tenants and the delivery of additional homes.

I know that there are a number of concerns about the policy.

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

What is the proportion between the right-to-buy discount and the provision of new homes?

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

Well, we are all fairly frustrated about this, I think it is fair to say. I have to keep telling noble Lords that I am not ready to give the details. But as your Lordships know, I will do so as soon as I can.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

I am sorry. We have been hammering away about SIs and all the rows we have had on this, but will we have this information before the Bill completes its passage through this House?

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

We have spent a long time on starter homes, where we are not going to get the detail until after Royal Assent because the Government have only just started the consultation process and that will inform the regs, so outside bodies—discussion groups—will inform the regs, not this House. Now we are being told the same thing about all the detail on right to buy and the apportionment of how much money will go into replacing local authority housing and how much will go into housing association discounts.

We cannot make legislation on this basis, where all the detail is in the ether, awaiting consultations that should have started last September but which the Government have got round to only in the past few weeks—too late to inform discussions, but the Government are unwilling to delay parliamentary scrutiny until we have that information. Then, as and when we get the statutory instruments, we will not be able to amend them as we should if we feel we need to. This is a travesty of House of Lords scrutiny.

Photo of Lord Shipley Lord Shipley Liberal Democrat

I agree with the noble Baroness, Lady Hollis of Heigham. It is a travesty of the House’s processes. I think I am right in saying that we have just heard for the first time that we will get further information only after Royal Assent. Prior to that, we have had a different form of words from the Minister, to the effect of “best endeavours”, “as soon as possible”, “hopefully by Report, maybe not everything”, “consultations are being undertaken”, and so on. Now we are talking about getting the information only after Royal Assent. The Minister owes a duty to the House to explain in detail—now—why, on the fifth day of Committee, we are told that we cannot have the information that we need to undertake a proper examination of the Bill until after the Bill has proceeded and has secured Royal Assent. It is a travesty, as the noble Baroness, Lady Hollis of Heigham, said.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

Perhaps I might add one further point. I do not know whether the noble Lord, Lord Young, would agree with my description, but certainly when I was taking Bills through, including the Bills I was responsible for within the department, I had to go to something called “LegCo”—the legislative sub-committee of the Cabinet—where 40 Bills were queuing up for, say, 25 slots in the programme. I would not have been allowed to bring a Bill before this House if I did not know the timetable for the regs and what the import of those regs was, so that I could take the Bill reasonably and appropriately through the stages of this House and my colleagues could do the same down the other end.

Who is failing here? Is it the fact that the Government are so anxious, having won an election, to proceed with legislation when it is not ready? In a previous Government, the Minister would not have been allowed to bring this Bill to either House, and now we are in a position where we cannot scrutinise it as a result of bad management and the failure, in my view, of LegCo, Bill teams and all the rest to do proper scrutiny.

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 endorse the comments of my noble friend Lady Hollis and the noble Lord, Lord Shipley, about the inadequate position we find ourselves in. I know that the Minister is frustrated as well but it would be useful if she could tell the House what discussions are going on in the department. This is absolutely ridiculous now. I am no expert in procedure but this is definitely a Bill that should be paused. It is ridiculous. To be told that we will get stuff months and months in the future is just not good enough.

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

I thank the noble Lord, Lord Kennedy, and hope I might be able to perhaps provide some comfort to noble Lords. The secondary legislation will be subject, obviously, to parliamentary scrutiny. We want to set it out as soon as possible but we also want to ensure that it is correct and informed by accurate data. I cannot provide exact timescales for secondary legislation at this stage but I will do my best to provide further information on this on Report. I know that that is not perfect, but I hope noble Lords will accept what I say at this point. I will do my best.

Photo of Lord Campbell-Savours Lord Campbell-Savours Labour

Would it be appropriate for the Minister to ask the Leader of the House to make a Statement to us next week on exactly where we are? We cannot handle legislation in this way. If the Minister is obviously not in a position to deal with it, it should be taken up in the Cabinet by the Leader of the House.

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

My Lords, I am not sure about the Leader making a Statement. I am certainly making a statement as to my intent. I know that noble Lords are not happy, but I will bring forward what I can when I can. As I say, I will elect to have details ready on this by Report.

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

I apologise, and I know that the Minister is as frustrated as the rest of us, but I just remind her that at Second Reading I specifically asked whether she could provide us with a tentative timetable for when various bits of secondary legislation would be made available to Members of your Lordships’ House. The Minister gave me an assurance at that time that she would do her best to try and provide that. The department must have a timescale. They have a team of people working on these different issues and the members of those different groups must have some indication of where they are and when things are likely to be available. Could she at least try to do what she said she would do at Second Reading, and make that available to Members of your Lordships’ House?

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

I did say that—the noble Lord is absolutely right—and I will. One of the important things to be aware of at this stage, as I said at the beginning of today’s debates, is that much of what is being debated in your Lordships’ House will inform a lot of the thinking on how the regulations are shaped. In that sense, noble Lords are helping to inform government thinking on this.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

My Lords, nobody, genuinely, is criticising the Minister. I would not want to be in her position at all and, frankly, I would not have been allowed to be in her position. What we have is the brazenness, if you like, of a manifesto commitment being used to wing a Bill through both Houses without adequate information. I know the Minister is absolutely doing her best, but with all respect she cannot answer the questions being put. We understood when we were doing the Cities and Local Government Devolution Bill that that was a framework Bill because it was bottom-up and everything was going to be tailored in response to what local authorities themselves wanted. We accepted that then, but there is no justification at all for the same process to be applied to this Bill. Frankly, it should not be happening, and it did not happen in previous times. The Cabinet should not have permitted the Bill to go forward until it was ready. It is not ready.

Photo of Lord True Lord True Conservative

My Lords, we just heard a speech from my noble friend Lord Lansley, who is not in his place. I think it is generally accepted across the House, given how many times we have heard my noble friend on the Front Bench address the House with extreme courtesy on this point, that it is quite clear that my noble friend wants to give the maximum amount of information to the House. We should not protest too much. During the 13 years I sat in the usual channels in opposition, the noble Baroness may not have been allowed to bring forward bits of legislation where the House would have chuntered, quite rightly, that it wanted to have more information before Report or whatever, but a large number of her colleagues were certainly allowed to. However, two wrongs do not make a right, so let us not target my noble friend on this point.

Noble Lords:

We are not.

Photo of Lord True Lord True Conservative

I am very glad to hear that. Perhaps that can be the end of these repeated exchanges with my noble friend.

I do not know what is possible and what is not, and it is certainly important that we know more before Report, but a number of noble Lords speaking in these debates have been asking for more complication. Some of these amendments before us add more qualifications. My noble friend has a point when she says that things are being raised in this Committee that need to be thought about. I think I heard her say that at some point she will try to bring forward—maybe before the Recess or maybe after, but I hope well before Report—some idea of the timetable for what we may get to know and what we may not. That would be helpful and I hope my noble friend can give us some assurance. I lead a local authority and my residents pay—

Photo of Lord True Lord True Conservative

I shall give way in a minute. We would all like to have the information, but perhaps that would be the best way forward.

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

I share the noble Lord’s view that this is not an attack on the Minister, who has been clear that she is doing her very best to provide the information. However, I do not share the noble Lord’s view that we should wait for a period before the Minister brings forward the information she has promised.

The timetable of work that is being done is available today. The department will have that information. I hope the Minister will be willing to say that, by the next meeting of your Lordships’ Committee on the Bill, we will have the information on where we are at each stage.

Given where we now are, I also hope the Minister will further reflect on the view that has been expressed by many people, including the Delegated Powers Committee, that many of the bits of secondary legislation that will come before us, which it is currently proposed to deal with under the negative procedure, should now be moved, by a government amendment, to the affirmative procedure.

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

My Lords, will the Minister report to the Government that this House very much regrets the impossible position in which she has been placed by the Government, has every confidence in her good intentions but regrets that she has been unable to fulfil them because the issue is entirely out of her control, and has confidence in her but has no confidence thus far in the way the Government are proceeding?

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

I thank noble Lords for their words, particularly my noble friend, given that I have not been here for 11 of the past 13 years. This is a very complex Bill and how to proceed with or without some of the secondary legislation that goes with it is quite new territory for me. As the Bill is so necessarily complicated, I imagine that with it will go an awful lot of secondary legislation. I will definitely commit—I have already promised and I do not intend to break my promises—to the noble Lord, Lord Foster of Bath, that that timetable will be with noble Lords in the next week or so. That is on the record now: the timetable of secondary legislation will be with noble Lords in the next week or so.

In defence of myself, in a sense, and certainly of officials, I make a plea to noble Lords to avail themselves of some of the technical briefings that are going on as the Bill proceeds. They are incredibly useful for getting some of the detail. I know most noble Lords here have attended the briefings, but please continue to do so.

Photo of Lord Shipley Lord Shipley Liberal Democrat

My Lords, perhaps the Minister could tell me when the next set will be. I thought the technical briefings had come to an end. I attended at least three and, I have to say, they were profoundly unuseful for the very reason that we are aware of across your Lordships’ House: virtually no question we ask can be answered because nobody who is an official knows the answer to it.

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

My Lords, I have asked for additional briefings to be provided over the next week or so, until we come to the Recess, and I will be attending them. They might help me; I certainly hope they will help noble Lords. It is very helpful for me to be there and to understand what sort of issues noble Lords are bringing up. I totally accept that I committed to giving that timeline, and it will be with noble Lords in the next week or so.

I have met each political group within your Lordships’ House; I hope that noble Lords have found that helpful. Some points that noble Lords bring up in debate definitely inform government thinking, because this House has more local government leaders and representatives in it—and experts on the Cross Benches—than the other place. Therefore, this House will be very helpful in informing the Government.

Photo of Baroness Blackstone Baroness Blackstone Labour

My Lords, I am sorry to interrupt the Minister, but I just wanted to make a brief point. Useful as ministerial briefings are—they are very valuable and are given much more than they used to be when I was a Minister—they are not a substitute for having the regulations in draft form, which we really need to examine the Bill properly in Committee. I hope that she will accept that point and pass it on. It is not a matter of criticising officials—it is not the role of parliamentarians to criticise officials—but I am very critical of LegCo, or whatever the Cabinet committee is now called, which agreed to put the Bill into both Houses without doing the necessary work beforehand.

Perhaps the Minister can also respond to the question of the noble Lord, Lord Foster, about the affirmative procedure; she has not given an answer to that. It is vital in this particular case.

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

I will be responding formally to the DPRRC’s report, and specifically to that point, very soon indeed. I think that I said that to the noble Lord either earlier today or at our previous sitting.

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

Earlier today, the Minister assured me that I might be a little bit cheered by what she was going to say later. I confess that I am a little bit cheered, but I want her to say yes, they will be affirmative.

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

The days blur into one a bit, my Lords, when we think about the days we have spent debating.

I wanted to respond to the question of the noble Lord, Lord Beecham, about the appeal mechanism. The process for setting the payments is set out clearly in the Bill. The determination under Clause 67 will set out the formula and the payments, and the Government are required to consult before making a determination. Once the draft determination has been prepared, local authorities will be given the opportunity to check the figures and raise any queries with the Government. I know that that is not essentially an appeal process, but there is a toing and froing of views before the actual determination is made.

I turn to Amendment 63. I should make it clear that the policy has two aims: first, to fund the extension of the right to buy two housing association tenants; and, secondly, to build much-needed new homes. I reassure the noble Lords, Lord Kennedy of Southwark and Lord Beecham, that we have no intention of using the funding for any other purpose.

The second aim, the funding of new homes, is the reason why I do not want to restrict the payment that local authorities make to the Government simply to the same amount as the right-to-buy discounts for housing association tenants, as Amendment 63 would do. There may be times when local authorities do not want or are unable to deliver new homes, and I do not want to compel them to build more homes if they do not have the plans or processes in place to do so. As my noble friend Lord Lansley said, I want the flexibility in those circumstances for the Government to use that portion of the receipts to deliver new homes through other channels. Therefore, it will need to be paid to the Government. Flexibility will be essential to ensuring that the new homes needed are built.

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

Just to clarify, does that mean building new homes potentially in a different locality from that in which the money has been raised?

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

My Lords, it could be, but the overall thing is that we will be adding to the stock of homes in this country.

Turning to Amendment 64, the changes proposed would be a significant task for local authorities, for which they would need considerable guidance. The biggest difficulty would be how to ensure that any methodology used across the 165 stock-holding local housing authorities was applied fairly, consistently and transparently. We have collected data from all stock-holding local authorities to enable a consistent methodology to be applied to determining the high-value threshold. That does not mean that we would set one high-value threshold for the whole country. Noble Lords have probed this on several occasions today, and I want to confirm again that we have the flexibility in the legislation to define it in different ways for different areas, as we know that house prices vary vastly across the country. However, it would mean using the same data and the same principles to apply a consistent approach to setting the definition of high value. The amendment would effectively transfer the onus of defining “high value” from—

Photo of Lord Stunell Lord Stunell Liberal Democrat

I thank the Minister for giving way: she has had a difficult day. She has just given us some welcome news, which is that the high-value thresholds could be differentiated in different areas. Can she confirm that that would be down to a local authority scale—a local housing authority scale—or would it go to even a lower scale than that, say to a parish level in a rural area?

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

My Lords, I would anticipate that it would be at a local authority level, although I acknowledge that, in some local authorities, such as Trafford and Stockport, there are variations within them.

At the heart of this policy is the provision of more homes, and that is why I cannot accept Amendment 65. If we can use the value locked up in this housing to provide more places for people to live, we should be doing so, without trying to put limits on what proportion of the existing housing stock can contribute to it.

Photo of Lord Campbell-Savours Lord Campbell-Savours Labour

The Minister referred to a local authority level. Will there be some local authorities that will be designated as not having any high-value stock at all?

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

My Lords, that might well be the case, depending on how it looks when all of the data are analysed, but I will not anticipate what the data will show. Theoretically, it could be the case.

If we can use the value locked up in the housing to find more places for people to live, then we should be doing so; 10% seems to be an arbitrary figure and it is not clear at what point in time this 10% would be calculated. We believe that we should base our decisions on evidence. That is why we have undertaken a large data-gathering exercise to determine the value of each council home and intend to use that information to set the definition. That is a fairer approach.

Finally, the changes proposed by Amendment 66 would provide that housing cannot be high value if its sale value is less than the cost of providing another home of the same number of bedrooms in the same local area. That is why, theoretically, the answer could be yes. We do not want to tie local authorities to an expectation that new housing should mirror that which has been sold, which this amendment would do. This may not be what is needed in the area, and we believe there should be flexibility to ensure that new housing is delivered that meets need. However, we want local authorities to sell their higher-value vacant housing, so that part of the receipt can be used to fund the building of much-needed additional homes that better meet housing need.

We recognise that there would be a perversity about requiring a house to be sold that would not generate sufficient receipts to cover the specified costs and deductions, the element for funding additional homes and the receipt to government to support the voluntary right to buy for housing association tenants. We will be looking at the data we have collected carefully to ensure that that is not the case. I hope that this provides some surety to noble Lords and provides some explanation of why we cannot accept this amendment.

The noble Lord, Lord Beecham, talked about numbers of bedrooms, but I went through that in this group and the previous group, and I hope that I have explained. The noble Lord, Lord Campbell-Savours, told a horror story about what has happened and may happen. It is important that we find ways to circumvent some of the problems he outlined that might occur and that we are alert to the ways that some people might be trying to gain from right-to-buy sales under the existing scheme and the voluntary scheme. We have an important job to guard against abuse.

Photo of Lord Campbell-Savours Lord Campbell-Savours Labour 4:30 pm, 10th March 2016

I shall suggest another scenario. Let us take my former constituency area of Workington. The council is Allerdale. Three-quarters of Allerdale is fairly poor, but it includes the town of Keswick where there are some very high-value council properties which never change hands. People do not give up a house in the national park readily. Yet, as I understand the arrangement, that authority will be levied on the basis of homes within the national park which are almost never sold. Is that fair?

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

I have just agreed, in a sense, with the noble Lord that we want to guard against some of the problems that he outlines.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

I think we are pleased that the Minister shares our concern, as we would expect her to do, about the widespread abuses, some of which apply to RTB on council housing, and which will certainly, if we do not check them, apply to RTB on housing association sales. Given the local government experience, which is not normally found in her civil servants, supportive though they may be, would she consider setting up a working party, possibly with the LGA or whatever, including some housing practitioners, fraud experts, lawyers and the rest, to see how she can build fraud out of this system before it is too late? I completely trust her, of course, about how she sets this up and who she talks to, but we share a common agenda here, and if any good is to come from this policy—I worry about it—it will be dwarfed, some of us fear, by the abuses and the screaming headlines she is going to find in the press a year or two down the line as some of these abuses come to light. I do not ask her to make a commitment now, but will she take away the proposal so that she can come back to us, perhaps on the next day in Committee, and say that she is going to set up such a working party with appropriate people—the LGA would obviously be the first point of call, and lawyers, as well, some of whom have acted for the wide boys in the past, as I know—to see how she can build out fraud in a more effective way than at the moment we believe may happen?

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

My Lords, I will certainly undertake to engage with the different sectors because they are at the heart of where potential abuse lies. I am very happy to meet with noble Lords in that context because the Government certainly want to guard against abuse in this way. I thank the noble Baroness for making that suggestion because it makes everybody’s life easier if there is confidence in the policy. She might not like the policy, as she says, but if there is confidence in the policy working better, then I will do that and I will invite her to it. My noble friend Lord Lansley is not in his place, but he talked about wanting to work with the Government about agreements. We have been engaging with local authorities, including South Cambridgeshire District Council and Cambridge City Council, and we will as we continue to go forward.

The noble Lord, Lord Campbell-Savours, made a very good point about preventing properties being sold to foreign buyers. It is absolutely right that we should avoid residential properties being bought up and sitting empty as an investment, as they sometimes do in London. Some of them are empty but, whether or not they are, the point is that we want housing for people on low incomes here to be able to avail themselves of.

I mentioned the point about stamp duty the other day and the noble Lord, Lord McKenzie, immediately picked it apart. In April 2017 we will be introducing capital gains tax for owners based overseas. We have also halved the time that a property can sit empty before capital gains tax is due. I thank noble Lords for their very constructive comments, and ask the noble Lord, Lord Beecham, to withdraw the 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)

Before the Minister sits down, I think I heard her say that the money collected from councils would be used only for housing—I think she said that with regard to the levy. I looked at Clause 73, which says that where there is an overpayment it is kept by the Government and will be used to offset for future years. It also talks about Section 11 of the Local Government Act 2003, which talks about capital receipts being used to meet capital expenditure but also “debts or other liabilities”. We are going to come to this later anyway, but I think that what she said and what this technically does might be quite different.

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

I will look at it again. I am assuming that the debts and liabilities are housing loans.

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

There is one further point that has been troubling me. Given the hour, I was going to leave it, but I shall just raise it now. It is to do with Clause 68(3) and the provision that we discussed before lunch, and for a while after it, about treating as still owned by a housing authority property that has been sold. Is it the intent that those provisions last in perpetuity? If a local authority has been hit by a levy in respect of properties, it would have no opportunity of selling if that is what it chose to do.

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

I think the answer is yes. If it had kept its stock, it would be levied, as the noble Lord points out. If, after the Bill goes through, it decided to transfer stock, it would still be levied. That is my understanding of it.

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

Does that mean it would have no control over whether it could realise any of those high-value properties if they were included in the transfer?

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

My Lords, as ever, it has been an interesting debate—necessarily, I am afraid, longer than any of us would have liked but there is a huge amount of detail and a great many concerns about the Bill.

I thank all Members for their contributions, particularly my noble friend Lord Campbell-Savours, who regaled us with some very worrying details of life in Westminster. However, I caution him sometimes to take Zoopla’s valuations with a grain of salt; for a short period my own house in Newcastle, a pleasant four-bedroomed semi, was valued by Zoopla at £5.96 million, which would have made it by a considerable margin the most expensive house in the city. When I pointed out that this was possibly slightly overdone, Zoopla corrected it, and I have been going round ever since saying that I have just lost something over £5 million on the value of my house. So one has to look carefully at some of the figures. However, I dare say that the rest of my noble friend’s figures were robust.

The Minister has again earned the thanks of the House for the way in which she is endeavouring to deal with an almost impossible task. If anybody deserves some promotion and recognition among Ministers who serve in this House, she qualifies, and I expect my 10% of any increased salary for acting as her agent when that matter arises. However, I take issue with some of the conclusions that she has come to and indeed some of the replies that she made. She talks about selling the properties where it is right to do so. The question is: who determines where it is right to do so? The answer is not the local authority, which has knowledge of the local community, but, effectively, the Government. That is a ridiculously formulated conclusion because it does not put what should essentially be a local decision in the hands of anybody accountable to the local community but gives it to some machinery established by central government.

The Minister was unable—presumably because the information is not there—to give any indication about the balance of how the levy money would be spent between facilitating housing association right to buy and new build. This may be part of the information still being compiled in some office somewhere in the city, but it is crucial that we know what the intended balance should be between those two distinct options for the use of the money which will be derived either from sales, which is in the view of many of us bad enough, or even worse, from the Government anticipating sales long before perhaps they have occurred and requiring payment from the local authority. Given the position of local authorities, it is difficult to see how that levy could be funded. Perhaps subsequently we might have an indication from the Minister or the Government in general as to how they envisage authorities being able to fund such payments in advance of a sale.

The Minister was critical of Amendment 66, which deals with replacing such expensive housing. I cited the position in Newcastle, which I suspect will be similar in many other authorities, where a small proportion of properties in council ownership are large properties because of the need for five bedrooms, perhaps because the family is large or because there are special needs in relation to providing for disabled people—perhaps a carer needs to be on the premises, and so on. If all of these have to be sold as they come on the market, in Newcastle’s case, as I have indicated, we have roughly 28 applications a year for these properties and a turnover of only five a year. So on average it will take five and a half years now to accommodate applicants for accommodation of that kind. If the properties have to be sold—and only a handful become vacant every year: five a year—there is virtually no chance of that demand being met. I do not know whether anybody has given any thought to that difficulty. I suspect that roughly similar proportions would be found in many other authorities.

I invite the Minister to ask her officers, or whoever advises the Government on these matters, to look very specifically at the demand for that kind of large accommodation. Of course, there are other higher-value properties which are not of that size, but I ask that she look at the question of larger properties needed for larger families or for people with particular needs that must be met with that space and at how that would fit into the present proposals. At the very least, perhaps the Minister could look at a possible government amendment to deal with what would be a very real situation. The numbers are not large but the period is long for people with a need which might not otherwise be met. Having said that, I beg leave to withdraw the amendment.

Amendment 63 withdrawn.

Amendments 64 to 66A not moved.

Clause 67 agreed.

Amendment 66B

Moved by Lord Kerslake

66B: After Clause 67, insert the following new Clause—

“Additional homes

(1) The Secretary of State must make a determination for the local housing authority to replace every property sold as a result of section 67.

(2) A determination should provide for local housing authorities to replace any properties sold with housing of the same tenure, as far as is practical.

(3) A determination must allow local housing authorities sufficient borrowing capacity and flexibility to provide replacement housing.”

Photo of Lord Kerslake Lord Kerslake Crossbench 4:45 pm, 10th March 2016

My Lords, I shall speak also to Amendments 68B and 68C, which are in this group and are connected to my amendment. I declare my interest as chair of Peabody and president of the Local Government Association.

Just before I come to the specifics of my amendment, I want to pick up three things that have come out in the debate—two of them from the noble Lord, Lord Lansley. The first is the title of the scheme that we are taking forward, and I do not think that this is a question of semantics. It is described as “right to buy” but in these circumstances it will in fact be not a right to buy but an opportunity to buy subject to the discretion of the housing association. It would be helpful to know how the Minister intends to deal with that point if we are to avoid there being an awful lot of disappointed people.

Secondly, I absolutely endorse the view that there is a need for more houses. This is the most important issue that we are addressing here, and it is also important to say that we need more houses of all types and tenures. That is because, no matter how fast we build—my London Housing Commission report, which was published earlier in the week, suggested that we needed to double the rate of supply in London—and even if we build for 10 years on that basis, it is clear that it will not be possible to get to a point where every property is affordable for an ordinary Londoner. It therefore follows that you have to look at policy in a more fine-grain way. We need both more houses and more affordable rented houses. If we do not produce both, we will exclude a large number of people. This goes to the heart of the debate that we are having at the moment.

Lastly on this issue, it is very important that we do not have any sense that these properties are surplus. I made that point this morning and I emphasise it because we have come back to this debate again. When I first went to Sheffield as chief executive in 1997, there were parts of the city where you could literally walk into a local authority property. But they have all gone. Almost every part of the country is now light years away from that world. In most areas there is now a desperate shortage, particularly of properties that are likely to end up being sold off as and when they become vacant. We must not lose sight of the heartache that it will cause people who are in desperate need. Examples that I know of involve families with five children in one bedroom who will see properties that they might have occupied being sold off. We must not lose sight of this point.

I come back to my amendment. Before lunch, the Minister said that my previous amendment lacked a requirement for one-for-one replacement. Well, here it is. This set of amendments would put in the Bill the following. First, they would make clear on the face of the Bill the requirement for one-for-one replacement outside London. Secondly, they say that, where practical—I absolutely accept that it will be difficult in some places—the intention of, and expectation on, local authorities should be to achieve not just one for one but like for like. That goes back to my previous point: it is not the same to take away a social rented property in one area and replace it with a starter home 20 miles away. They are not the same. So we are saying that, where practical, local authorities should look to achieve like for like as well.

The third thing that we say—this absolutely goes to the heart of deliverability—is that, if we are in a world where the Government will not wholly grant-fund the replacement process for local authorities, they will give local authorities the ability to borrow in order to do this. It cannot be borrowing within an existing cap, because that funding will almost certainly have been allocated for the renovation and improvement of existing properties and for existing new-build housing programmes. If this is genuinely to be additional funding, local authorities need additional borrowing capacity. It would be helpful if the Minister could say that not only has more money been put in but, if local authorities do not get the full funding, they can have absolute confidence that they will be able to get the equivalent amount of borrowing that they need, in addition to the borrowing capability that they already have. That would go a long way to addressing the issues.

The last point here is that where there is a case for moving around the expectations across a combined authority, exactly as has been said by a number of noble Lords, there should be flexibility within a combined authority area to focus resources in the places where the need is greatest. That is the effect of the amendment.

I say “outside London” because in the Bill there is a requirement for authorities in Greater London to replace not just one for one but two for one. It is a very stark requirement that says those authorities “must ensure” that the number of new affordable houses is at least two for one. For me, it is therefore inexplicable that we would not say the same thing for authorities outside London. I appreciate that demand in London is very high—that was absolutely the subject of my report. But demand is also high outside London as well. Yes, there is an issue of demand in London—there is also the issue of the mayoral election in May, which is worth noting—but that alone does not justify the completely different positioning of housing outside London from housing inside London. Will the Minister explain why we would have a situation where the Bill has a two-for-one requirement for London but nothing for the rest of the country? That is inexplicable to me, and I would be grateful for an explanation.

Photo of Lord Horam Lord Horam Conservative

Is not that surely because of the sheer difference between different parts of the country? The noble Lord, Lord Campbell-Savours, was going on about that at some length in previous debates. Things are very different in, say, Cumbria, Lincolnshire, Cambridgeshire and Oxfordshire. On the other hand, we know that London is a special problem with uniquely high prices. Surely the Government are right, therefore, to maintain the possibility of a different approach in different parts of the country.

Photo of Lord Kerslake Lord Kerslake Crossbench

I am grateful to the noble Lord for his intervention. However, if the Government were really worried about allowing flexibility for individual difference, we might not be debating this top-down policy at all.

Let me deal with the point that the noble Lord raised. The commitment from the Government is to achieve one for one; it does not say one for one in one part of the country and not one for one in another part of the country. It is reasonable to say that, within the boundaries of a local authority, there will be areas of high demand for new, affordable housing that the local authority will want to meet. I do not think we would be comfortable with a situation where some parts of the country made no effort to replace one for one and were given a retention of funding without that requirement while, in other areas, we did expect it. In my view, it would go against the stated intent of the Government to achieve one for one. One for one in a particular neighbourhood may not be exactly right but one for one in a local authority, or indeed in a combined authority, would absolutely be a reasonable expectation of this policy. Indeed, as I said, that is the stated government intent here.

I will conclude by making a number of points. Putting it in the Bill should overcome whatever doubts there are about the intent. I have raised some concerns about how possible it is to achieve this in the current financial regime. The Minister has quoted statistics, which I have some concerns about, as she knows, to show that it is already being achieved. If it is, there should be no difficulty in putting it in the Bill. If we are already confident that it can happen, putting it in the Bill should not create any difficulties at all.

A huge number of people are anxious about this issue and a huge number doubt the Government’s true intent in relation to affordable rented properties, or indeed affordable properties at all. Putting it in the Bill would put beyond doubt the Government’s intent. It would make it clear that they are serious about the policy of one for one. Contrariwise, if it is not in the Bill, people will draw their own conclusions. These are reasonable amendments that would do what the Government say they want to anyway and, crucially, provide the necessary funding for local authorities.

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

Does the noble Lord think that it would be desirable to include in any such arrangement a period within which that replacement has to be made, or does he think that it should be left open? It strikes me that some moderate period would be sensible. In respect of newly built property, does he think there should be at least a limited exclusion of a further right to buy if it has been provided for rent?

Photo of Lord Kerslake Lord Kerslake Crossbench

My Lords, those are two important details that we could reasonably look at in the Bill or, had we the regulations in front of us, reasonably consider in regulations. The important point to make is that the absence of the regulations is compounding complexity on complexity. This is our difficulty here. We have a stated intent of government, but nothing in front of us that tells us how that intent will be delivered. Yes, there is an issue of timescale—we currently have three years; that may or may not be the right timescale for an expanded programme and should be consulted on with local authorities—but one thing that in my understanding is an irreducible intent of government is one for one. That is why it should be on the face of the Bill. I beg to move.

Photo of Lord Campbell-Savours Lord Campbell-Savours Labour

My Lords, I think the noble Lord said that it would be acceptable to replace within the local authority area. What happens if part of that area is in very high-demand area, such as a national park, with the rest of the local authority area in a low-demand area, as happens in parts of the Lake District—for example, Carlisle, Kendal, Whitehaven and Workington surrounding the Lake District, with the Lake District split up among the various authorities? If we simply replace the property that is lost in a high-demand area with property in a low-demand area, we do not fulfil the local demand requirements.

Photo of Lord Kerslake Lord Kerslake Crossbench

My Lords, my amendment goes as far as I think it is possible to go within the bounds of the legislation. If there were a way of constructing it, there would be an intent to replace in the same area. We will have that conversation in debate on the rural amendments, so the noble Lord’s point will perhaps come through then.

There is a trade-off here. I acknowledge the point about how much one can specify in the Bill and how much one has to leave to local authorities to lead on and understand where they have high-demand issues. However, if we do not have even one for one in the Bill, we are a long way back from where we need to be.

Photo of Lord Campbell-Savours Lord Campbell-Savours Labour

When Ministers look at these matters, it is important that they have in mind that, if they provide for that level of movement of replacement provision within a local authority area, they might not be serving the needs of the local population. We may have to deal with that in whatever regulatory arrangements are brought in—the ones, of course, which we cannot consider for amendment in the House.

Photo of Lord Stunell Lord Stunell Liberal Democrat 5:00 pm, 10th March 2016

My Lords, I support the amendment proposed by the noble Lord, Lord Kerslake, which I have also signed. I was pleased to hear the Minister say in the earlier debate that she welcomes our scrutiny at this stage because it is informing the consultation outcomes. It is good to know that we are at least consultees in the process that the Government are going through, which is some encouragement to us to give her the benefit of our insights rather than to let things drift past us.

Perhaps the Minister would like to confirm that, with something over 400 local housing authorities and 160 of them making a contribution to the levy, it is inevitable that more than half the money collected by the levy will be spent in areas where the levy is not being paid. There is a geographical redistribution of the money as well as all the other factors that are taking place. That does not make it either better or worse, but it should be transparent that that is happening. Some places will therefore pay into the system and in other places homes will be built and those homes will not be available to the citizens of the paying-in authority. We need to be quite clear that that is the case.

I particularly wanted to pick up the point made by the noble Lord, Lord Kerslake, about making sure that one for one is written in. As a Minister in the coalition Government, I was insistent that that should be the case. Indeed, in another life, the noble Lord and I occasionally crossed swords on my slightly stroppy insistence on the way that that might be incorporated into the then Government’s policy. Seeing it included in the Bill is important.

There might be a word missing in the amendment although it was not missing in the speech of the noble Lord, Lord Kerslake. There should be an “additional” determination for local housing authority finance. A determination is a thing that the Government can say they have done and we do not know whether it has happened or not. That very often happens with new burdens where a new burdens policy says that if a policy imposed by the Government means that local authorities have to spend more money, the Government will recompense local authorities for that. Then, when the next settlement is made, the Government blandly say, “and this includes the money for new burdens” without any price ticket or transparency. I very much support the amendments, but I hope that the spirit of them should be “an additional determination”. It should not be a case of simply saying, “Yes you were going to get £100 million”—they should be so lucky—“and now we have included our new determination and you are going to get £100 million”. That is not providing the finances: it is simply instructing local authorities to reorder their capital expenditure.

I want to say a word or two about subsection (2) of Amendment 66B, which states that it should be,

“housing of the same tenure, as far as is practical”.

This comes to the basis of what the geographical location of “as is practical” will be. If one took a completely national view of the best way of getting the most houses for the least money or the least trouble, all the high-value houses in the City of London and Westminster would be sold and with the money generated a lot of houses would be built in Knowsley and Sunderland, and other places where there is no housing demand but lots of houses can be built for a comparatively small amount of money. Land is very much cheaper in those places than in Westminster or the City of London. I want to see,

“as far as is practical”, the same kind of housing. I want the houses to be in the same area. I certainly want them to match the needs that are genuinely there and not built simply to stand empty.

The noble Lord, Lord Kerslake, mentioned another related point—these points all join together—about combined authorities. Stockport is in the combined authority of Greater Manchester, which is pooling its housing targets and housing programme as part of the combined authority. As a matter of fact, the leader of Stockport Council, a Liberal Democrat, is the lead member for housing across Greater Manchester. If we are going to have something that is geographically based, particularly in the case of Greater Manchester, it would be sensible for the Government to make it possible for that combined authority area to be treated as one, taking its own decisions.

My penultimate point is this: who is the preferential creditor, so to speak, when a levy is raised? The first thing that has to happen is that the costs of the transaction have to be paid off, and the Minister has pretty much made that point. But then there is the important question of who the second-tier creditor is here. Is the second-tier creditor the Government’s share going to housing authorities, or is it the local authority’s share to build new homes? This top-up, which is the subject of the amendment before us, is a way of making sure that we do not have to worry about it because the total will equal the amount that is needed to do both those things. However, I have it in mind that the determination is in the hands of the Government, so the question of which tier of debt comes first is rather a crucial one in terms of outcomes. Topping up local authorities so that they can pay the levy is one thing, but topping them up so that they can build houses to replace the ones they have just sold is something else. We need to be sure either that we are guaranteed both or that the Government have stated clearly which one is to be the preferential payment.

My final point is that with 150 local housing authorities, each of which could have separate thresholds of determination—we established that in the previous debate; I welcome that and I think it is right—it does mean that the Government are going to take 150-odd separate decisions about what those levels should be. They may struggle to do that within an objective framework that does not lead to a considerable number of judicial reviews and problems of that sort in the implementation.

These are all points in support of making sure that there is a specific capital set-aside to compensate local authorities so that they can fulfil their obligations under this legislation. Without these amendments, the difficulties I have sketched out will turn from being the kind of thing that Oppositions dream up on a bad day into hard political realities facing the Government. I look forward to the Minister’s response with real interest.

Photo of Baroness Gardner of Parkes Baroness Gardner of Parkes Conservative

My Lords, I seek clarification on this amendment, in particular the phrase “the same tenure”. I thought that tenure meant how a property is occupied, whether it is freehold or leasehold, but the noble Lord, Lord Kerslake, said in his speech that the property should be the same size. I thought that that was rather different from the tenure.

I particularly want to ask about this because I took a little time out of the previous session of our debate on the Bill to go to a meeting of the British Property Federation in the House. A person who spoke at that meeting said that the federation was very much in support of build to rent and that hundreds of millions of pounds were available for that. He seemed to think that this would be a way to deal with the housing problem. These people already have the land, along with hundreds of millions of pounds that they would be putting in. Does the noble Lord think that local authorities could work with a scheme like this? Is it a possibility that should be considered?

Photo of Lord Kerslake Lord Kerslake Crossbench

My Lords, the noble Baroness has raised two important points. What I am seeking to say in my amendment is actually related to tenure—retaining the same tenure. That goes to the point I made that the position in terms of access to social rented properties is different from access to market rent and market sale. As we have touched on in previous debates, if a social rented property is replaced with, let us say, a starter home, the people who can access those two different types of homes are very different in terms of their incomes and situation. Of course, it would be desirable in my view that wherever possible, a property is replaced in the same neighbourhood and is of the same size, but I recognise, in the spirit of some flexibility, that it would be very hard to specify to that level of detail. In the circumstances, it is reasonable to look at whether it is possible, where practical, to achieve the same tenure.

The noble Baroness also raised the question of build to rent. I am a strong supporter of this as a new mechanism of supply. But the whole point about build to rent is that it is market rent, it is not the same as affordable rent. What we need is more houses of all types and tenures. We need more houses for sale, more houses for market rent, more houses for shared ownership, and we need more affordable rented properties. It is not any single one of the above, it is all of them. Market rent is a very powerful mechanism for driving new supply, but it is for a particular income group which is not the same as social rented.

Photo of Lord Carrington of Fulham Lord Carrington of Fulham Conservative

My Lords, the noble Lord, Lord Campbell-Savours, gave an extremely eloquent description of the Churchill Estate in Westminster and the various problems it faces, which are very real. It is possible to look at other estates across central London that have quite similar problems and a trajectory that has led to the same type of housing tenure and ownership. However, many of the problems he described come from the overall shortage of housing supply in London and would be not necessarily eliminated but largely cured if many more houses were provided in London.

That is why the provision of two-for-one replacement in London is so welcome. It is not without its problems. The noble Lord, Lord Kerslake, mentioned that the replacement housing should be in the same local authority or general area. There is a tradition that London boroughs build social housing outside their own areas. I return to the City of London Corporation, which owns social housing spread out over quite a wide area across London. It has traditionally always done so. It is important that the replacement housing should be where the people who will occupy it wish to live. That is a critical deciding factor, and one that can be dealt with only by the local authority. It is not one that we can impose in the Bill, nor one that we should even contemplate imposing.

Photo of Lord Kerslake Lord Kerslake Crossbench

I will make two points. I am not suggesting changing anything in the Bill for London. I support the two-for-one and the collective approach across London. Indeed, I am advocating the same kind of approach for other combined authorities. I entirely agree with the noble Lord’s general point that we should allow choice about the location of housing where there are combined authorities, and, indeed, in London. My point is simply that wherever you locate it, there is an intent in government of one for one, which should be in the Bill.

Photo of Lord Carrington of Fulham Lord Carrington of Fulham Conservative

There should certainly be an intent to replace housing; quite how prescriptive we should get is a different matter. Frankly, I do not think we should get terribly prescriptive about it at all, except possibly in London, where there is such a particular housing crisis that it has caused us to look to alternative means of solving it. It has been intractable for so many years.

There is one problem with the two-for-one proposal: the need for flexibility as to how that is funded. We have talked about raising borrowing powers for local authorities to enable them to fund any shortfall that comes from the retained receipts from sale of their housing, but we also need the flexibility to be able to fund it from other sources. Many London local authorities have other assets—other land they could sell or buildings they could convert. There are lots of ways of handling this, other than just using the resources that come from selling the high-value properties that they are required to sell under the Bill.

I suggest that we and my noble friend the Minister should contemplate allowing a great deal of flexibility as to how the two-for-one provision will be achieved, because its financing could be done in any number of ways. We need the creativity of the local authorities to be brought to bear to solve a problem that is in urgent need of resolution.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour 5:15 pm, 10th March 2016

My Lords, I am still worried about the effect of redistribution, given that the levy will not apply to all local authorities evenly. We established on the last Committee day that we are getting redistribution from poorer council tenants to more prosperous housing association tenants. We are also getting, as we learned today, redistribution from local authorities with retained stock to those local authorities which do not have to pay a levy because they sloughed off their stock to set up housing associations in the past. That also means, in practice, that we are getting redistribution from city authorities to rural councils. Some of those may be in beautiful, high-demand areas. An awful lot of them are not; they are just rural district councils in Norfolk and other parts of the country.

At no point have we had any reference to waiting lists, or the degree of local need, or the anxiety of young people to move, largely to city areas where there are jobs, which is key when, particularly in rural areas, there is no public transport to get you there if you live outside.

So how will the priority order work? Let us say that my city, Norwich, is required to sell one, two or three high-value houses at £300,000—if we have such; I am not sure that we do. Let us say that we come up to about £1 million. Okay. The local housing associations within the city have 10 people wanting, on average, £50,000 discounts. That is £500,000 gone. Then the other local authorities in Norfolk, which are stock-transfer associations, have built-up demand for a further 50 people, for £2.5 million-worth of discounts. So the sale of five or 10 local authority homes in my city will be funding 10 or 12 discounts, in my city, for housing associations and possibly a further 50 outside my city but in the bounds of Norfolk, by virtue of the way this is going to work.

As that means that the money from high-value sales in Norwich has been spent three times over, where exactly is the money going to come from for the local authority to replace its lost stock? Where exactly is the money going to come from for my local authority to tackle the derelict land around British Rail stations, or old gas sites, or old industrial, chemically polluted sites? These may need a lot of investment if, quite rightly, they are to be brought back into use. Will the Minister tell us how this is actually going to work? Because I do not understand it.

I recognise a pattern of redistribution which, as far as I can see, takes no account of housing waiting lists, no account of pent-up housing need and will just circulate money around in different ways. Either the levy will have to be in addition to sales, so that my local authority will be hit twice over, with both the forced sales of high-value properties and a levy in addition, or the local housing associations in my city and beyond, the housing association tenancies in Norfolk as a whole, will just have to queue, or be rationed, or have to wait, in order to buy a housing association home. At the end of the day, none of those houses in Norwich will be replaced.

I cannot even begin to see how these figures are going to add up. It is completely impossible unless the Government come in with funding. The Government want this policy so the Government should fund it.

Photo of Lord Lansley Lord Lansley Conservative

My Lords, in response to the noble Baroness, it seems to me that there is precisely a place where housing need can be taken into account in this process. It is under Clause 72, where Ministers enter an agreement with a local housing authority for a reduction in the payment that would otherwise be payable under the determination. That will specifically include, no doubt, an assessment of housing need and the extent to which that housing need can be met by the provision of replacement housing by the local housing authority under the agreement.

Amendment 66B in particular suffers from objections of both principle and practice—in principle because it seeks to introduce inflexibility when clearly the structure is designed to give local authorities and government the opportunity to arrive at flexible agreements related precisely to issues such as the level of payment that would otherwise be payable and the extent to which that can be reduced, recognising local housing need, and, indeed, the shape of that need in terms of tenure.

A second objection in principle, which I imagine is well understood by the noble Lord, Lord Kerslake, is that the amendment would introduce the idea of local housing authorities being given a statutory right to sufficient borrowing capacity and flexibility to provide replacement housing, which is entirely outwith the process that the Bill otherwise contemplates of establishing a payment to the Secretary of State which can be rebated under the agreement. At no point does this structure contemplate creating a statutory right to a borrowing capacity, which I am sure the Treasury would find difficult to provide.

It seems to me that the proposed new clause in Amendment 66B is wrong because it seeks to create, under the terminology of a determination, something which is not contemplated in a determination at all. A determination is about a payment to the Secretary of State. The issue of replacement housing falls under Clause 72 and is about an agreement between the Government and a local housing authority which is funded by a reduction in the payment.

As it happens, the noble Lord, Lord Kerslake, and others seek, with Amendment 68B—but not with the same detail as in Amendment 66B—to introduce some of the same purposes into Clause 72. If you wish to do that, that is the logical place to do it. I object to it on grounds of inflexibility but if you wish to include it in the Bill, that is where you would do it. However, I say to my noble friend the Minister that there is an amendment in this group which, on the face of it, has merit—Amendment 68C—since it provides that exactly the same principle which is applied to the relationship between the Greater London Authority and local housing authorities in London should be applied in the same way to combined authorities and local housing authorities in other places across the country. It would certainly be sensible to look at that with a view to determining whether it is a suitable amendment.

Photo of Lord Kerslake Lord Kerslake Crossbench

Perhaps I may come in very briefly. I wish to make three points. First, in any process you need a balance between prescription and flexibility. If the intent is to achieve one for one, that should be the nature of the agreements that are formed with local authorities. When the statutory instruments are published, that provision may well be included. If the Minister says, “I guarantee that one for one will be in the statutory instrument”, we may not need this amendment. But in the absence of such a guarantee, there is no mechanism for knowing with confidence that the Government’s intent is that one for one can be delivered.

Secondly, in relation to capital borrowing, in everything other than housing, local authorities have the ability to borrow prudentially. As was said this morning, they could borrow to build three swimming pools. The one area where they are capped is housing. Therefore, if you do not fully fund the replacement, you have to have an ability to lift the cap to find the necessary capital borrowing. That is the reason why that provision is included in the amendment.

Photo of Lord Lansley Lord Lansley Conservative

I do not dispute that that is the reason it is in the amendment; I just think that it is wrong. We are not in the business of giving additional borrowing powers to local authorities but of releasing value from high-value assets and determining to what extent that is used to fund the discounts for housing association tenants buying their homes—or, on the other hand, to provide for replacement housing. The first point is very straightforward: if one wants to do this, Amendment 66B would include it in the wrong place; it is too inflexible and would introduce too many rigid criteria.

When the Government begin to create agreements with local housing authorities for replacement properties, I think that many of us would share the wish that, in the right places, where agreements are entered into—which will, of course, not be everywhere—those agreements should look for at least one for one; otherwise, why is the local authority being given that reduction in its payment if it is not in recognition that there is a greater need for housing there than for that money to be made available to housing associations through purchase of the properties by their tenants? It seems to me that the theory is: do you take this into Clause 72 and do you make it a minimum requirement of a one-for-one replacement? That is an issue to look at. I certainly do not think you need a new clause to do it.

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

My Lords, there is not much more I can add to the contributions that have already been made. I support those comments and I oppose the Question that Clause 72 stand part of the Bill.

I agree with the comments the noble Lord, Lord Kerslake, made at the beginning of his speech about the danger of raising the expectations of housing association tenants that they have the right to buy, which they will think has been enshrined in law—and it has not. This is a voluntary agreement in which housing associations may have very good reasons for excluding certain properties. Similar legislation was brought in to allow parental choice over school places.

Parents believed that they had choice but they did not. What they had was the right to express a preference about the school they wanted for their child, and that is a very different thing. Great care is needed with the wording on this issue.

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, all the amendments in this group and the clause stand part notice are ones that either I or my noble friend Lord Beecham have signed up to on behalf of the Opposition. I do not intend to speak for very long as I think the case for the amendments has been made very forcefully by other noble Lords in the debate.

As I said before, the theme running through the Bill is one of undermining council housing, be that in other sections of the Bill or the parts we are looking at today. I am sure the Minister will not agree with me and will suggest that this is all about people realising the dream of owning their own home. I contend that these amendments actually help the Government in that aim.

In particular, I agree with the point made by the noble Lord, Lord Kerslake, about people not being able to walk into social housing as they were able to many years ago. When I was a councillor in Southwark in the 1980s, we had a hard-to-let list. No such thing exists any more. The noble Lord, Lord Stunell, was right to point out that with 160 authorities contributing to the levy, there is a redistribution of money, and homes will be built in areas that have made no contribution and people from the areas that have made a contribution will not benefit from better housing. The noble Lord, Lord Carrington of Fulham, was right when he spoke about the housing crisis in London. As we heard in earlier debates, the city works because of the mix of people and tenures—wealthy people and people on modest incomes living side by side. That is how the city works and the problem with the Bill is that it could very well undermine that.

I hope that the Minister specifically responds to the point my noble friend Lady Hollis made about where the money is going to come from to replace the house when it has been sold. The sums do not add up. Where is all this going to come from? I accept the point made by the noble Lord, Lord Lansley, about how he thinks we can square the circle but, again, without wanting to reopen the regulations debate, that is part of the problem—we do not have any regulations here.

Amendment 66B empowers to the Secretary of State to require the local authority to replace every property sold with a property of the same type. It is much better for a family to be able to rent a social home; for one, it will have a more reasonable rent. They could then save for a deposit to buy their own home or exercise their right to buy. Amendments 68B and 68C seek to put in the Bill different provisions, which are all very valid, ensuring that homes sold under the right to buy are replaced.

I will leave my remarks there and may come back with further points when the Minister responds.

Photo of Baroness Williams of Trafford Baroness Williams of Trafford The Parliamentary Under-Secretary of State for Communities and Local Government 5:30 pm, 10th March 2016

My Lords, I thank all noble Lords who have taken part in the debate. In responding to Amendment 66B, I assure noble Lords that we are committed to using a portion of receipts from the sale of vacant council housing to fund the delivery of more homes. We have chosen a way that will not require all local authorities to deliver that housing, as we know that in some cases they do not want to be responsible for it. Instead, authorities can choose to enter into an agreement with the Secretary of State to retain part of the payment in order to use it to deliver more homes. This is the same process as currently happens with the sale of properties under right to buy.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

I want to ask the Minister this as I genuinely do not know what the answer is. If the local authority wishes to retain some share of the proceeds, but the demand for discounts, even within its own city area, surpasses the amount that it wishes to retain to replace its stock, how will the decision be made?

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

My Lords, in that sort of situation, I would imagine that the local authority has a number of options available to it, including the use of capital reserves, or indeed borrowing if it wished to. Alternatively, of course, private sector developers could build housing. A number of options are open to councils in bringing forward more houses within the local authority area, including the retention of a portion of the receipts in order to deliver new homes.

Photo of Lord Shipley Lord Shipley Liberal Democrat

A moment ago, the Minister talked about vacant homes, and I really would like to be clear whether the Minister is talking about vacant homes or surplus homes. Is there a clear definition that we can have on the record of what a vacant home is and what a surplus home is?

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

My Lords, when I talked about vacant as opposed to surplus, we were talking about assets that were surplus in terms of government but vacant in terms of local authority homes. Vacant, in my mind, means empty, but there will be more detail later defining at what point a property becomes empty.

Photo of Lord Shipley Lord Shipley Liberal Democrat

If a vacant home is a home which is empty, for how long does it have to be empty and can a local authority say that that empty home is actually required but just happens temporarily to be empty?

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

That is precisely the point I am making. We will be defining what empty—that is, vacant—means in due course in the dreaded regulations.

The Government will be able to ensure that under these agreements local authorities will, as I have said, use the receipts efficiently to deliver as many new homes as possible. Where they have an agreement, we want local authorities to have discretion about how the new housing can meet the needs of their local community, rather than being constrained in primary legislation to replacing the housing they sell with homes of the same tenure. Just to help my noble friend Lady Gardner of Parkes, tenure refers to the type of housing, such as shared ownership. I know people use the word differently in different contexts.

I have just received an answer to the vacant homes point. A home is vacant when a tenancy granted by the local authority has come to an end, as defined in Clause 77.

Photo of Lord Shipley Lord Shipley Liberal Democrat

So it is clear that a vacant home simply means that a tenancy has been given up and that, as a consequence, there is a vacancy. However, it may never be empty, because a tenant might move out and another tenant might move in the very same day. In that case, of course, it may well be that that vacant home is not a surplus home.

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

When I used the term surplus, I meant surplus assets that government might seek to dispose of, and I gave the example of King’s Cross. For local authorities, vacant referred very much to housing.

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

Could the Minister help me with a definition? Does succession to a tenancy create a vacancy along the way? On the death of a tenant, if someone succeeds to that tenancy, does that cause a break that would bring these issues into play?

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

It would depend on the context of the succession. If the successor was a spouse, there would not be a vacancy because that spouse would be immediately, automatically entitled to take on a future lifetime tenancy. If, for example, a child wanted to take over a tenancy, it would probably be short term. The only automatic right is with a spouse.

Photo of Baroness Blackstone Baroness Blackstone Labour

May I also seek clarification? What if a tenancy comes to an end and there is a long waiting list of potential tenants with very urgent housing needs, of the sort described by the noble Lord, Lord Carrington—very large families, homeless people, people living in totally inadequate private rented housing with large numbers of small children? Is the Minister saying those groups are to be ignored, in spite of their acute housing need; that in an authority where there is not enough social housing to go round, the local authority is to be forced to sell that high-value property, which is possibly quite big and therefore suitable for some of these families with acute housing need?

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

My Lords, the vacant high-value asset may not necessarily be a big property; it could be a small property, but the point is that it is of high value and vacant. The sale of these high-value vacant properties will add to the number of homes for a variety of reasons for people all over the country.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

Does that mean that housing need in a particular local authority will be discarded to fund discounts?

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

My Lords, no, it does not mean that for housing in a particular local authority because housing need is determined in a number of different ways. We are talking simply about the selling of high-value assets to provide new homes, which are in high demand, in a national context.

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

Is this not in danger of running in conflict with another government policy—the bedroom tax? If part of the rationale is to encourage people in larger houses to downsize and give up the tenancy to do so, the local authority is then faced with having to sell the high-value property. How does that work?

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

On the spare room subsidy, if someone is in a property that has more bedrooms than they need to occupy, my understanding of the mechanism is that a suitable property would then be found for them. The noble Lord is asking whether the property that has been vacated would then fall into the definition of a high-value asset. The honest answer is that I do not know but the probable answer is not necessarily at all—probably not—because we are talking about high-value assets across a number of bedrooms. So I do not think it would but I will take that away, think about it and get back to the noble Lord.

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

My Lords, this comes up under Amendment 68A, which we are coming to. If you have moved out, it is a transfer. We will be debating that a little later.

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

I thank the noble Lord for that.

Where we have an agreement, we want local authorities to have discretion over how the new housing can meet the needs of their local communities, rather than being constrained in primary legislation to replacing the housing they sell with homes of the same tenure. We come back to the term “flexibility”. We think it is also important that local authorities are innovative and flexible in their approach to delivering more housing, so there are opportunities for them to contribute their land, make use of their HRA headroom or cross-subsidise from the development of market homes, which I mentioned to the noble Baroness.

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

I am just going to make a bit of progress if that is okay by the noble Baroness. Perhaps she can come back to me at the end. Is it really urgent on the point that I have just made?

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour

It is simply that the people on that waiting list want that which is being sold, which is a socially rented house. They do not want to buy—they cannot afford to—they do not necessarily want to go into a different tenure of house and they do not want to work with a developer; they want what the local authority is being forced to sell with no guarantee of a replacement.

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

My Lords, I have just been over that. I want to get to the point about the borrowing headroom.

The noble Baroness also asked how a local authority with limited stock that wants to provide more for local residents does so. I mentioned in debate on the previous group that we have made available a significant amount of additional borrowing headroom, and the allocated extra borrowing will support about 3,000 new affordable homes in 2015-16 and 2016-17. Local authorities’ ability to borrow will continue to be constrained by whether borrowing is prudential, obviously, and within borrowing limits. Consideration of the former will primarily concern the affordability of the borrowing, which should not be affected by this policy.

The Government are committed to making a deduction from payments in respect of the debt supported by those properties that are taken into account in a determination. This should provide some assistance for local authorities to borrow within their existing caps, as well as utilising other options available to them to finance the building of new homes.

Amendment 68B would ensure that any agreement with a local authority outside London would require the delivery of at least one new affordable home for each property taken into account under the authority’s determination. We want the flexibility to enter into agreements that will result in as many new homes nationally as possible, but it would be better to be able to have an agreement that resulted in slightly less than one for one in some cases, rather than have no new homes built at all. Therefore, we would not want to constrain through primary legislation the flexibility to make this choice. The amendment would limit the Secretary of State’s ability to support agreements in cases that would deliver less than one new home for each one sold, removing the chance for some local authorities to have agreements to retain receipts and lead on the delivery of new housing, and devaluing the key flexibility in the legislation that receipts can be used to fund new housing or things that facilitate its provision.

The need for services and infrastructure to support new developments has been raised in your Lordships’ House, the other place and by local authorities themselves. I understand the sentiments with which the noble Lord, Lord Best, tabled Amendment 68C. If we had specified a target for the delivery of additional homes in primary legislation, we would want to consider carefully how combined authorities could help to deliver that target. However, we do not think that a target is the right approach for local authorities outside London. Instead, the provisions enable the Secretary of State to enter into an agreement with local authorities regarding the additional homes. Local authorities will have the flexibility to work collaboratively with each other, with combined authorities—as they already are doing—or with other housing providers to deliver the agreement. The key thing is that delivery should be a local decision and that the Government will be able to hold them accountable for this delivery.

Finally, I address opposition to Clause 72. Building new homes is at the heart of these proposals. We want as much flexibility as possible in what new housing will be provided and where, in order to ensure that as many new homes can be built as possible. We believe that this will be best delivered through agreements rather than putting restrictions and exemptions in the Bill.

Clause 72 enables the Secretary of State to make an agreement with a local authority to reduce the amount that it is required to pay under the determination. The local authority will use this amount to provide more housing. To avoid accusations of good money being thrown after bad, we would consider councils’ past performance and plans for delivery in deciding whether they should be able to retain some receipt. For example, if a local authority wanted to lead on a programme to build new homes using funds from the sale of vacant high-value housing, it could seek an agreement with the Secretary of State to reduce the amount that it had to pay. If that agreement was signed, the local authority would use that retained amount to fund the provision of new housing, in accordance with any terms and conditions set out in the agreement.

Although there is a national need for more houses, we also know that there are particular housing pressures in London, as many noble Lords have pointed out. When the Secretary of State has an agreement with a local housing authority in London, it must require the delivery of at least two new affordable homes for each high-value dwelling. It is important to stress that every home built using receipts from the sale of the vacant high-value housing is an additional home. We have been clear that funding of the building of new homes is one of the two key uses for these receipts, along with funding right-to-buy discounts for housing association tenants. The voluntary right to buy will further increase housing supply, as the housing association will use the sales receipt to fund the provision of another home.

Turning to some specific questions, the noble Lord, Lord Kerslake, asked why there was a special provision for the funding of two new homes for every one that was expected to be sold in London. It is because of the specific needs of London. London has such an acute housing need that it is estimated that about 49,000 to 62,000 additional homes are required every year. Net housing completions stand at 23,986 for 2013-14, and these represent 80% of the 29,830 target in the 2011 local plan. The Secretary of State and the Minister for Housing are continuing to engage with the GLA and the local councils on how two new homes will be delivered for each one that is expected to be sold in London.

The noble Lord, Lord Kerslake, also talked about the local authorities’ borrowing capacity and limitations. The 165 HRA authorities in 2014 had an in-year net surplus of £464 million. They accumulated general HRA reserves of almost £2.5 billion and a borrowing headroom approaching £3.4 billion. While we will continue to consider the impact on local authorities, we have no further plans to raise the borrowing caps.

The noble Lord, Lord Stunell, asked again about the geographical level at which high value would be set. The Bill provides some flexibility on the detail of the legislation, which is important as we continue to collect data and engage with local authorities on the best way to set the high-value threshold. Although I said that I believed that local authority level is an option, and that we have collected the data to this level, the decision has not yet been made. I probably made that clear already in my previous comments. Again, this debate will inform how we take this forward.

I hope that I have covered all questions that noble Lords wanted answering and that our clear commitment to using receipts to fund the delivery of more housing provides reassurance to noble Lords. Clearly, noble Lords may ask me any further questions if they wish, but, on that note, I ask the noble Lord to withdraw his amendment.

Photo of Lord Kerslake Lord Kerslake Crossbench 5:45 pm, 10th March 2016

My Lords, I am grateful to the Minister for her response and to noble Lords in this Chamber for their contribution to this debate.

I will present the position simply. In relation to London, the Government have recognised a housing need and have a stated intent to achieve two for one. That is, therefore, specified in the Bill. In relation to the country as a whole, the Government have also recognised that there is a housing need and stated their intent to have one-for-one replacement. That is not in the Bill, and we have, as we sit here today, no way of knowing the mechanism by which that will be delivered. The amendment here seeks to put this point about the Government’s intent beyond doubt. It puts no more prescription on local authorities outside London than the Government are seeking to put on local authorities inside London, so this is an important aim.

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

I apologise for interrupting the noble Lord, but does he agree that the one-for-one replacement is in the voluntary agreements?

Photo of Lord Kerslake Lord Kerslake Crossbench

There are, of course, two one-for-one policies here. There is one-for-one replacement in housing associations, which is one thing that we will need to focus on, but it is in a voluntary agreement. I am now talking about the one-for-one policy in relation to high-value sales—or higher-value sales, as I like to call them—which is in the Bill and statutory. That is what I have focused on in my amendment, not the housing association part.

The central point is that we see the need in London, and I would be the first to acknowledge the London need. Indeed, that was the subject of the London Housing Commission, whose report I published this week. There is also a big issue of need across the country. Some parts of the country do not match London but have very severe problems. For example, we have heard today that Bristol has huge housing need. The purpose of my amendment is to give the same degree of confidence about the national policy that we are clearly achieving in relation to the London policy. That does not seem an unreasonable thing to seek. It does not give the absolute confidence, which some noble Lords have sought, that you will get the same property in the same neighbourhood at the same time. Indeed, that is part and parcel of the flexibility to which other noble Lords have rightly referred. However, if there is complete flexibility, there is no confidence about the delivery of the policy, and that is where there must be some statement of intent. I do not care where this assurance is given within the Bill. I think I have put it in the right place, but the noble Lord, Lord Lansley, might have a different view. The key point is that we do not have the assurance.

I shall finish on two points. First, there are surplus resources in local authority HRAs to deliver maintenance and investment, but they have plans to use that funding. The question is how we deliver the plans that they already have and secure the delivery of this new policy that will put an additional demand on their borrowing requirements. It is perfectly possible and consistent with other government policies to say that if we are putting in additional demand, we will give the wherewithal to enable the delivery of that demand, hence the proposal in relation to capital. Secondly, in the amendment I very clearly sought to say that, in terms of tenure type, it should be the same where that is practical. We have not dictated that it has to be the same tenure type because clearly practical issues will come up in individual authorities.

This set of amendments addresses a central issue that concerns people about the practical delivery of one for one and puts the Government’s intent beyond doubt within the Bill. That said, in the normal fashion, I beg leave to withdraw the amendment.

Amendment 66B withdrawn.

Clause 68: Housing to be taken into account

Amendment 66C

Moved by Lord Beecham

66C: Clause 68, page 30, line 16, after “Account),” insert—

“( ) it is not managed by an existing tenant management organisation, as defined by the Housing (Right to Manage) (England) Regulations 2012, and managing 1,500 or fewer local authority tenancies,”

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

My Lords, the Bill’s provisions in relation to higher-value council properties and pay to stay—I beg your pardon; I think I may have the wrong group. Let me just check.

I am sorry, I got slightly confused after so many hours in the Chamber. I dare say I am not alone in that. I was right to start where I began.

The Bill’s provisions in relation to higher-value council properties and pay to stay, which we are dealing with later, but not today, are predicated on a myth; namely, that council housing is subsidised by the taxpayer. In reality, housing revenue accounts have to balance their books, matching their expenditure to their income, and we have heard that the Government are deliberately reducing that income by their imposed cuts on rent levels for the entire social housing sector—councils and housing associations alike. As I have said, this single action will cost the sector billions over time. In Newcastle’s case alone, it will cost £593 million that otherwise would have gone into maintaining or improving the existing stock and investing in new homes. Similar effects will be felt at different levels by housing associations.

The ostensible reason for selling high-value homes is that this will release money with which to build new ones—but, as we have heard, in reality most of it will go to the Treasury, ostensibly to facilitate right-to-buy housing association properties. This is not likely to lead to new building, let alone to new building in the locality whence the sales proceeds derive. I refer again by way of example to the situation that this will create in Newcastle. I suppose I ought to remind the Committee, if it needs reminding, of my interests as a councillor in Newcastle and generally in local government. Newcastle has some 26,000 council houses, 1,651 of which would fall under the Government’s definition of “high value”, according to Shelter—I particularly like the “1” in that figure—although I understand that the city council believes that the number could be greater.

On the Shelter figure, some 82 higher-value homes a year could be the subject of forced sales in the event of their becoming vacant, or deemed sales if they do not, which would generate a very substantial payment—on this sort of figure, something like £1.2 billion, if one took a median figure of a two-bed house at around £155,000. There are proposals for different levels of assumed value in London and elsewhere, and the Shelter list indicates a range in Newcastle for two-bedroomed houses of £125,000-£155,000 and, for larger houses, a figure of £250,000. Clearly, very substantial sums could be raised by the sales of these 82 homes—or, as I say, a likely larger number, obviously yielding a larger amount.

This group of amendments identifies a series of house types that will be exempt from this levy. Amendment 66, in my name and that of my noble friend Lord Kennedy, would exempt housing management managed by existing tenant management organisations, to which we have had some reference already in Committee—the very kind of organisation that one might have thought would be attractive to the Government and indeed to the Policy Exchange think tank that spawned the concept.

Amendment 68 would require regulations to provide that housing forming part of a housing regeneration scheme, or consisting of specialist housing or recently improved housing, should be excluded. It defines housing regeneration schemes and describes specialised housing as designed or intended for occupation by the elderly, people needing care or support with mental health problems or learning disabilities, or other features designed to make it suitable for use by disabled people. These are clearly priority areas that should be protected. Equally, the amendments propose that where properties have recently been improved or substantial repairs have been being carried out in the previous two years, where again, clearly, the local housing revenue account will have contributed substantially to the current state of the property, they should also be exempt.

The amendment chimes well with the views of Nottingham City Homes tenants, about whom we have heard from the noble Baroness, Lady Bakewell, who clearly has written to a number of members of the Committee. The chairman is a tenant of 40 years’ standing, who asserts in her letter:

“Our properties have been adapted for tenants with disabilities. If they are sold then other homes will have to be adapted too, at extra cost”.

Clearly that will be a burden on the local authority housing revenue account, and the benefit will accrue to the Government or those who buy the home if it is sold on the market. She makes a telling point:

“There will no longer be any affordable council housing in certain neighbourhoods—council housing will be marked out as something that is only in poorer areas”.

That trend is already under way. The street in which I live, in my non-£5.9 million house, is a nice street in a residential area of Newcastle, at the bottom of which there used to be a block of council flats. All those council flats have long since been given over to other tenures.

I subscribe to Amendments 67B and 67C, in the name of the noble Lord, Lord Kerslake, and to Amendment 68A, in the names of the noble Lords, Lord Best, Lord Kerslake, Lord Stoneham, and in my name, which respectively refer to the exclusion of properties that have been built since 2008, are tied to a regeneration scheme, used as supported housing, exempt from local authority right to buy, or vacant due to restoration or tenant transfer. Underlying these amendments and many others that we have discussed is a fundamental issue; namely, the centralist approach of the Bill on what ought to be matters for local decision, affecting as they do local communities and the aspirations of local people, whether existing tenants or would-be tenants, as well as those who wish—perfectly properly—to own their own home.

The imposition of a universal prescription for all circumstances of this kind is of a kind that would make Stalin blush. The notion that the Government not only tolerate the activities of Mr Putin, which they seem to do, but are reverting to the practice of one of his less amiable predecessors is quite astonishing. I beg to move.

Photo of Lord Shipley Lord Shipley Liberal Democrat 6:00 pm, 10th March 2016

My Lords, I have put my name to Amendment 66E, which relates to the point made a moment ago by the noble Baroness, Lady Blackstone, about demand and whether a local housing authority would be required to sell off a high-value home, which perhaps has a large number of bedrooms, even though that property could be in demand for rent. It also goes back to the discussion we had about the meanings of the words “vacant”, “empty” and “surplus” in the previous group, so I do not seek to go over that ground again.

I will emphasise two points, the first of which is that the noble Lord, Lord Kerslake—again, in a previous group—clarified something which we all know: there is no surplus of council and local authority housing in this country. Maybe there was a few years ago but today there is not. So it is very important that we understand what the impact of selling vacant high-value properties will be on those who are on social housing waiting lists—and, as we know, 1.6 million people are on those lists. This amendment simply says that the local housing authority should deem that there is no demand for that high-value property for rent. That is it, and it is a perfectly legitimate test to apply. If there is a waiting list in that area for that property, there should be no compulsion on a local authority to sell it.

Photo of Lord Kerslake Lord Kerslake Crossbench

My Lords, I will speak to Amendments 67B and 67C, which are in my name. Both amendments relate to the exclusion of certain types of property from the forced sale programme, which would therefore be suitably amended with regard to the formula for the so-called levy.

The first category identified in Amendment 67B seeks to exclude properties that any reasonable authority or person would regard as sensible not to be included in a forced sale policy. I will not go through all of them but will give a few examples. The local authority would seek to achieve the maximum flexibility possible in the progression of a regeneration scheme. To be forced to sell off certain properties that are critical to the delivery of the regeneration would be a perverse outcome indeed. The exemption of properties that are themselves exempt from the right-to-buy policy would also seem absolutely logical, and this comes back to the formula that we might see. Again, the regulations may do this—but we have no regulations to fall back on.

A third area is vacancy, which we have spoken about. Under the bald definition of “vacancy” that we have had hitherto, if a property becomes vacant, it will be put up for sale. For the purposes of the Bill, it will be essential that it is regarded as being considered for sale, albeit that it is covered by a formula rather than an individual requirement. If, however, existing tenants wished to move into that property because they had already been identified as being in need, the property would be excluded. That sits alongside the amendment in the name of the noble Lord, Lord Best, which covers much the same point. At the very least, the amendment would cover high-value properties where there is clearly an existing tenant in another property in the authority who might move into it on a transfer basis.

I hope that noble Lords will see that the intention behind Amendment 67B is sensibly to exclude properties that any rational assessment would judge to be not appropriate to form part of a forced sale policy. I hope that the Minister will explain why any of these properties should be in contention for being expected to be sold or for being taken into account in the formula. I would be grateful for the Minister’s response on that point, given the nature of the properties involved.

My second amendment in this group, Amendment 67C, relates to the issue that we discussed this morning. If a local authority is fortunate enough to be in the position of the authority of the noble Lord, Lord True, who spoke earlier, and has transferred its stock, it will not be subject to the levy. If, on the other hand, for very good reason it decides at a subsequent date to transfer its stock, it will continue to be subject to the levy. As we heard from the Minister, this will be a levy in perpetuity and there will be no situation in which the authority can escape it. This will happen despite the fact that the authority transfers the stock to another organisation and therefore has no direct role in relation to the efficiency or otherwise of the management of that stock. That seems perverse, and it will be extremely difficult for the Government to deliver without some form of challenge. One local authority, through a sheer accident of timing, will be subject to a levy when another authority which takes very similar action is not subject to it. That seems perverse.

Photo of Lord Stunell Lord Stunell Liberal Democrat

Is this not actually a back-door way of abolishing stock transfers? There will be no more in the future.

Photo of Lord Kerslake Lord Kerslake Crossbench

The noble Lord makes a very strong point. The stock transfer mechanism has been available to local authorities of all political persuasions as a means of improving the quality of the stock for, and therefore the well-being of, their tenants. It has been a very powerful model for improvement. Indeed, there are plenty of examples of transfers. They are not always appropriate but, where they have gone well, they have resulted in significantly improved stock. The question here is: why would a local authority continue to progress such a transfer when it would carry on paying a substantial levy with no means of financing it? Therefore, the noble Lord makes a very good point.

Local authorities are now in quite challenging circumstances in relation to managing their stock. A number of smaller authorities are asking whether they can sustain the management of their stock, given such things as the rent reductions and the impact those have on the viability of their stock. I know this for certain because I have been in conversation with a number of them. For some local authorities, the logical answer is to deliver a stock transfer. So, not only does it prevent the opportunity of transfer because of the positive benefit to a local authority; it also inhibits the transfer where local authorities have very significant issues that they need to address and that can only really readily be dealt with through a transfer process.

I should emphasise that I am not suggesting local authorities should or must transfer their stock—that must be their decision. What I am saying is that it is a perverse position that those authorities that choose to do that in a year’s time will be subject to a levy that those who chose to do it a year ago will not. I cannot believe that it is fair or reasonable for that to stay in the Bill. Therefore, I move that it be taken out.

Photo of Baroness Grender Baroness Grender Liberal Democrat

My Lords, I rise to speak to Amendments 67, 68E and 69 in particular, but am generally supportive of all other amendments in this group. Other noble Lords have talked about how concerned they are that this part of the Bill will reduce the number of low-rent social homes in places where they are needed most. I am a governor of an inner-city school where over 50% of children are on pupil premium, but in an area where market rents are at a premium and house prices have continued to rise, even during the 2008 recession. I want to use that small community as an example of some of the challenges posed by this particular part of the Bill and to raise the questions that I have. I will then go on to explain my amendments.

How will key workers be able to live near a place such as I have described on reasonable rents? How will government objectives on the need for cohesive communities be met? We need a mix of tenure in every block and every street. I was particularly struck by what the noble Lords who spoke about that earlier had to say, especially the noble Lord, Lord Carrington of Fulham. What about children in the most challenged families who need a stable home near a school like the one I have described, in a very expensive part of inner-city London, so that they can have the stability they need to help them overcome all the other challenges in their lives? The school must stick with them throughout their childhood. For that reason, I support many of the amendments in this group and have extreme concerns about the sale of these high-value asset houses. I make those general comments as this is the first time I have spoken in the debate.

The amendments tabled by me and my noble friend Lady Bakewell of Hardington Mandeville are about newbuilds for local authorities and an exemption of those from sales. Without an amendment of this nature, the threatened forthcoming sell-off puts at risk existing building programmes. I will focus on that because councils are pausing, rather than build an asset, because they believe that they may lose the value of that asset almost as soon as it is built.

Shelter estimates that almost 113,000 council homes are likely to be above the value threshold, of which 78,778 will be lost from the most affected local authorities, of which half are in inner-city London. As other noble Lords have said, we are basing this on Shelter figures because, at the moment, that is our best grasp of figures in this area pending more detail from the Government. The top 20 councils that are most impacted currently have plans to build 20,390 homes. However, even the threat of this legislation means that they are pausing in building these homes. For example, Islington Council has said that the policy could end its newbuild programme. I would be interested to hear how the Minister believes councils can even borrow at the moment to build, given that lenders can have no confidence in future revenue from that property if, as soon as it is built, it is in jeopardy of being sold. Indeed, existing council building programmes are often partly financed from the revenue projected from the sale of a small number of high-value council homes, with one fundamental difference, which has been much debated already: the councils get to keep the money.

Of those 20 most affected councils—and this is so important to these Benches and other noble Lords who have expressed opposition to this part of the Bill—159,014 people are on the waiting lists, 22,371 of whom are children, who right here, right now and even as we speak are living in temporary accommodation. As we focus on those children, can we please learn from this Government how they will be helped into permanent housing by the sale of these assets? Shelter believes that this sell-off will reduce overall stock. High-value homes sold are likely to become buy-to-let properties—other Members have spoken at length about the danger of that, so I shall not expand on it. Those families in temporary accommodation are not even back to square one; it is even worse, and this is not solely an inner-city or London problem. This comes on top of the 1% rent reduction. The noble Lord, Lord Lansley, talked about South Cambridgeshire council, his own area, but it recently said in evidence that its housebuilding programme of 1,000 homes had ceased overnight because of its concerns about what is coming down the track in terms of sales of high-value assets. It has built four houses from its programme for the next 20 years, but as I understand it, it has now ceased building entirely. Joseph Rowntree estimates that the recent rent cut has already resulted in 34,000 fewer homes being built. I know that we have been very attached today to commitments in the Conservative manifesto, so I simply remind the Government of that manifesto commitment to 275,000 additional affordable homes by 2020. However, if 34,000 fewer homes are being built because of the rent cut—and some councils, including Conservative councils, are now pausing their housebuilding programmes—even that target, which we would prefer to be larger, is in jeopardy. In Lewes District Council, the Conservative cabinet has mentioned the uncertainty over future plans for council housing as a reason to put on hold its current housebuilding plans. I am concerned that we will look back at this moment and see a drop in the level of council house building while this policy is being debated.

The current trend of reduction in social housing is bad enough, as Joseph Rowntree makes clear, with the figure of one in seven people being so housed today projected to decline to just one in 10 by 2040, but those projections were made before the freezing and pausing of housebuilding that I have described. We would like the sale of those assets to be held back when it comes to new build in order to encourage councils to get on with building social housing.

It is our understanding that, in communication which DCLG has so far had with councils to develop this policy, it has been clear that the department considers new-build homes to be subject to sale under the terms of the Bill as it currently stands. In Committee in the Commons, the Minister ruled out newly built homes that had yet to be occupied as counting as high-value vacancies, but, as far as we are aware, DCLG has not committed to limiting the scope of new-build sales beyond that. Therefore, a new home could potentially be sold off months after it was occupied only for the first time if the tenant moved or died. Although I appreciate that the Minister is working within the constraints of how much material and information have been provided to her through regulations, particularly in this area, it would be great to know what the Government intend. As someone who worked for a year at No.10, I know what will be happening there right now. This place and our complaints about the lack of regulations will feel very remote. Instructions will come through to Ministers, as they always do, “to just get this Bill through and land it, and those pesky Lords are being very annoying in all these questions”. I understand and sympathise with the situation that the Minister is in. Constructive amendments such as this one are meant to be helpful. It gives reassurance to councils that they can carry on with their building programmes and hold on to a valuable asset.

Many of these amendments—we have seen this throughout the day—are like a guessing game. Why are they a guessing game? We all know that it is because we do not know the detail so we cannot debate it. For example, I also have in this group Amendment 68E, which simply says that a property should be allowed to be vacant for six months. That is a complete stab in the dark, because we have nothing else to build on. The Government may say that if a property is vacant for six minutes that means it is a vacant property. I am saying six months. I would love us to be able to debate the detail of that, but we all know where we are with that. If new-build homes are not excluded, the risk that homes will have to be sold shortly after being occupied will be a major disincentive to new council building, hence the amendments that we have tabled in this group. The same applies to homes that have been brought back into use through significant renovation.

I want to return to the small catchment area I described—a school with a high level of pupil premium, in an area of high market rents. Key workers are priced out of the area. Mixed tenure is gone and the mixed community is gone. Children on pupil premiums are priced out of the area altogether. That is not a community that I ever want to live in or want to see in the future, and I do not think this Government should either.

Photo of Lord Best Lord Best Chair, Communications and Digital Committee, Chair, Communications and Digital Committee 6:15 pm, 10th March 2016

My Lords, I support all the amendments in this group, not least those in the name of the noble Baroness, Lady Grender. My name is added to Amendment 68A, but I begin by supporting Amendment 66C about tenant management organisations in the names of the noble Lords, Lord Kennedy of Southwark and Lord Beecham. That amendment relates to the council housing that is managed by tenant management organisations. This is in a quite separate context from the earlier discussions about TMOs, which the noble Lord, Lord Young of Cookham, raised an anxiety about. This time, these managed properties are not in danger of losing a right to buy. Instead, this is just about excluding the tenant management organisation properties from the calculation of the vacant high-value local authority housing levy.

That may seem a rather specialist exclusion from the levy, and indeed tenant management organisations do not count for more than a few per cent of council housing, but these organisations, as the noble Lord, Lord Kennedy, said, merit special attention. They were a product of policy from an earlier Conservative Government who wanted to devolve responsibility to tenants on self-help principles. They have attracted significant input from volunteers giving up endless time to make their council estates better places. Of course, housing co-operatives are excluded from the sales under the vacant properties programme because they are registered as housing associations. However, although tenant management organisations are similar to housing co-operatives, the homes that they manage remain classified as council housing and therefore their property gets caught up in the new levy.

I recognise that local authorities must choose for themselves which vacant properties to sell to pay the levy imposed on them, so a council could opt not to sell TMO stock; but for most councils, the very serious money involved on top of the 12% cut in income in rents over the next four years means that whatever housing goes into the calculation of the levy is very likely to have to be sold as vacancies occur to pay that levy. So this amendment seeks to take them out of the equation altogether.

As a case study, I have had a chance to consider the circumstances of a Southwark-based TMO, the Leatherhead JMB. It has been going for 22 years and over time has turned around an unpopular collection of estates and has created a well-liked and settled community. It has an extraordinarily high level of tenant satisfaction. On a 78% turnout, 92% of tenants expressed their support for the TMO. The London Borough of Southwark, using the Localism Act 2011 introduced by the last Government, has devolved to the TMO financial control of what is in essence a separate housing revenue account. Two government Ministers have visited to celebrate this great example of localism in action. The Leatherhead JMB is currently engaged in building new homes in addition to its very cost-effective management role. It is willing and able to sell a small number of vacant properties selected by them to raise the necessary funds for new build. But, of course, if the properties all went into the calculation of the levy and its parent body, the London Borough of Southwark, then felt compelled to sell all the vacant homes, two-thirds of the funds would go to the Treasury and this would scupper its plans.

What we have here is really a housing co-operative by another name and as such it seems entirely appropriate to treat the TMO as if it were a co-operative and therefore a housing association outside of the levy. Because the tenants themselves have made this a popular place, they have raised its value and therefore its vulnerability when it comes to compulsory sales of high-value council-owned, but not council-managed, properties. This settled community will also be disproportionately affected by the sales of vacant flats, very often to overseas buyers because of its London location close to the river. This particular issue may not have crossed the Minister’s desk, and I would make a special plea for her to call in the papers and have a good look at the special status of tenant management organisations.

Amendment 68A concerns people who want to transfer from one home to another within the social housing stock. My concern is about the calculation of the levy on councils which is gleaned from selling vacant properties. As Shelter points out, “Households need to move within the social stock for a large number of legitimate reasons. They may be under-occupying their current home and want to downsize or be subject to the under-occupancy penalty, the bedroom tax, and need to move. They may be overcrowded in their property and need extra room. They may need to move for work, or to move closer to relatives in their old age”. No one wants to discourage transfers since they ease problems of both under-occupancy and overcrowding.

The question raised by Amendment 68A is this. When working out the amount of the levy that a council must pay, will the DCLG’s calculations exclude those vacancies created by transfers; that is, by people who vacate one council property but move immediately into another council or housing association property? Obviously a mutual exchange between two tenants does not create a vacancy since both of the homes that are vacated are instantly refilled. The process with a transfer is that a property becomes vacant, enabling a transferring tenant to move in and thereby theoretically creating a second vacancy in the home they are leaving. But the person transferring will immediately occupy the other council property, so it cannot be right to count two properties as empty because of a transfer. We know that the DCLG is already well into the consultation process for determining the levy, and I would be grateful for clarification from the Minister that this point has been taken on board. From what she said earlier, I think that the answer may be in the affirmative.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Labour 6:30 pm, 10th March 2016

My Lords, I strongly support Amendment 67B, moved so well by the noble Lord, Lord Kerslake. I want to talk about two aspects of this: proposed new subsection (2)(e), on restoration work, and paragraph (f), on transfers, about which the noble Lord, Lord Best, has just been speaking.

Unlike housing associations, local authorities retain a statutory responsibility for seeking to meet the whole housing need across their authority—whether they do it directly or indirectly, whether they are helping to place homeless people in temporary accommodation in the private rented sector, giving advice, or whatever. That is their responsibility. It belongs to them, and rightly so. Councillors are elected to deliver that legal requirement.

Why am I picking on these two paragraphs? I could have spoken on the others and on supported housing, but that would repeat some of the debates we had earlier on rent reductions for supported housing and how that will affect housing associations. I will just say that if supported housing has to become vacant, we will end up hoping that housing associations can pick up the slack. Many years ago I purpose-built supported housing for people with severe learning disabilities. I think it was probably the first in the country. It was hugely expensive. We had to provide extra sound insulation because of noise, different types of carpeting, insulation, all the fittings and fixtures and so on, smart appliances to reduce the risk of gas leaks, along with all the other things we were advised to provide by the admirable architects from the then DoE, such as John Goldsmith. Those individual units would now fetch quite a lot of money. It was basically a sheltered housing scheme. If they were sold off, no one else would meet the needs of those severely disabled people and their families, for whom they had been purpose built. I certainly do not think that any housing association could have afforded to take that on.

I want to talk about restoration work in particular. My city, like Bristol, Cambridge, Oxford and others, is an historic city. We have a lot of older properties, including some that are medieval, which were due for demolition. The city council moved in. We saved a street of 14th-century weavers’ cottages by one vote. We turned them into homes, which people rented. We maintained the ownership of them to assure proper maintenance. The maintenance on those properties was far too high for any owner-occupier reasonably to afford.

I also remember buying five gothic houses when high Victorian gothic was deeply unfashionable. We could have sold them off. Developers wanted to buy the site, knock them down and build three-storey blocks of flats. Instead, we rehabbed them and worked with a local housing association—indeed, the housing association I went on subsequently to chair. They became a network of houses in which, again, disabled people and their carers could live, courtesy of the housing association. The housing association could not have bought them; we bought them through DOs and CPOs, as an alternative to seeing them sold in the private sector and demolished. That was partly for their streetscape value, at a time when high gothic was not yet popular—but I thought it was “coming up in the lift”—but also to meet a local need that would otherwise not have been met.

During the last 20 to 30 years, my local authority has bought one-off Victorian houses around the city for Carr Gomm, Nacro, St Mungo’s, Edmund’s and so on. They could not afford to buy the property. We rented to them at very modest rents indeed—virtually token rents. At one stage we had some 40 of these properties going directly to housing associations supporting specialist, unpopular groups in the local population, such as anorexic young women—you name it. In addition, we bought houses that would otherwise have been DOed. I rehabbed them to make them available as temporary housing so that people did not have to go into bed and breakfasts.

All that required restoration and sometimes removal from clearance programmes. Sometimes I had to use CPOs. I voided DOs, but as long as you render a house fit at reasonable expense, you are allowed to acquire on improvement grounds. Under the Bill, unless such properties are exempt, such recycling by the local authority of whatever comes their way would not happen. For example, the county council decided that it was going to widen a road. I remember this well. As a result, it bought a lot of properties along Duke Street. It subsequently decided not to do it. Those properties came to the local authorities and we were able to recycle them, for the most part, for special needs that otherwise would not have been met. Unless we protect the capacity of local authorities to use powers that housing associations have never had—legal powers of acquisition, such as CPOs, road widening and so on—and then recycle them into best use, we will strip out the ability of communities to meet needs that, unfortunately, are not always very popular but which it is absolutely right that we as a community should seek to meet.

My second concern here—I am very grateful that the noble Lords, Lord Kerslake and Lord Best, referred to this—is about transfers and exchanges. The Minister has not had very much to do with the bedroom tax, I think. The bedroom tax affected those who were not pensioners and who had one bedroom spare. Unlike the rather more civilised DCLG definition of underoccupation, which is two spare bedrooms, DWP decided to produce a new definition of underoccupation of its own, which hitherto did not exist in English law, of one spare bedroom. Some cases are now going through the courts as to whether, for example, people with severe disabilities are entitled to a bedroom each, and so on.

DWP sought to tackle something like 500,000 families that had, in its view—though this is being tested by the courts—one spare bedroom. If such a family “wished” to stay, it would expect to see something like £14 a week removed from its housing benefit. What do those tenants do? Of those who stayed, something like 65% are now in arrears and local authorities are having to decide how best to help them—whether they have to seek eviction notices and all the rest. What mattered here was that local authorities did not have the stock or the capital resources to build the single-bedroom units that DWP thought it was cost-effective for such tenants to occupy. Why? Because local authorities and housing associations had, for the most part, been building two-bedroom flats because they are the most flexible form of accommodation whatever your need—whether for young families, older people with disabilities, or the frail elderly.

Because we have been unable to build, tenants have been faced with a choice. They have not been able to move within council house stock to a local authority new build, because local authorities have not had the resources to do it. They have not been able to downsize into a local authority property. So what have they done? Either they have stayed put, as I have said, and the arrears have mounted—this is now a really serious problem across local authority housing revenue accounts—or they seek to exchange. They cannot move into the private rented sector, because not only are the resources scarce but the housing benefit bill goes up and they then get caught by the local housing allowance. So their only option is to transfer.

DWP will tell the Minister—perhaps she knows these figures already—that nearly all the movement that has come from downsizing as the result of the pressure of the deeply unfair bedroom tax has come from transfers. Without that, the downsizing could not happen and the tenant would be locked into paying the bedroom tax almost in perpetuity and arrears and possible evictions would grow and grow. What the Minister will do, unless she is prepared to accept the substance of the amendment in the name of the noble Lord, Lord Kerslake, is lock those tenants into that situation. They will not be able to exchange, because that property would then immediately be available for forced sale by the local authority, so they will be locked into making good the reduction in their housing benefit, as a result of the bedroom tax, of £14 a week.

What does the Minister suggest that they do? It is not possible to go into the private rented sector and not possible to downsize into an existing housing association or local authority new build, because they do not exist. Good housing authorities rely on trying to encourage transfers and exchanges between their tenants to make best use of their space. If we say that the moment such a transfer or exchange comes into the purview of local authorities, that property is immediately available for forced sale, what the Minister will do is freeze the sensible use of local authority housing stock. I cannot believe that this is what she wants to do. It makes no sense, but as far as I can see, all the flexibility that she is talking about is actually the flexibility of the Secretary of State, not the flexibility of local authorities, which are being stripped of it, left, right and centre.

Will the Minister please understand the decades of social policy behind some of these exclusions that the amendment in the name of the noble Lord, Lord Kerslake, seeks to put into the Bill? If she does not, and if she does not give those assurances, the ability of local authorities to work with housing associations to provide the homes they need for their special needs, as well as our ability as local authorities to allow our tenants to escape the problems of the bedroom tax, will come to a stop.

Photo of Lord Carrington of Fulham Lord Carrington of Fulham Conservative

My Lords, this afternoon we have heard many examples of potential housing crises and disasters caused by the way that tenants will be treated under this Bill. Most of the examples, of course, depend on the properties in consideration being high-value properties, and therefore available for sale. So a lot of the problems would be resolved if the Secretary of State determined what a high-value property was in negotiation with representatives of local authorities.

Clearly, there will need to be further negotiations in some cases to decide how you tackle particularly difficult cases. Putting all that in the Bill would indicate that we could produce a solution to these problems covering the whole of the country rather than one which reflects local circumstances, local authority by local authority. That is what we need to do, perhaps by means of the regulations which—as has been said many times, not least by my noble friend the Minister—we have not yet seen. We do not know when we will see them, but a resolution of this issue will be down to the good will between the Secretary of State and the local authority negotiators.

Some problems have not been addressed, one of which applies particularly in London. The noble Baroness, Lady Grender, touched on it slightly but I thought rather overegged the issue, if she will excuse my saying so. If a local authority sells a high-value property and uses the proceeds to build two other properties, the two other properties will probably not be high-value properties. Just the arithmetic, apart from anything else, makes that unlikely. However, London house prices are going up at a very high rate, and have done so historically. They are not going up at a high rate at the moment. In fact, in some places they are positively coming down. I am told by my friends in the property world that that trend may well continue for some years. If that is the case, the point I am about to make will not arise for some time. But I think we can expect that in due course the replacement properties that the central London local authorities build will rise in value.

It is conceivable that in a very strong domestic property market, a local authority will build a housing unit—if I can use that ghastly expression—which is currently below the high value but, because of its land value, is still quite a high-value property but not high enough to trigger the sale. But within a very short period of time, which could be as short as 12 months, or possibly two years—who knows?—it could become vacant, and at that time its value could rise just above the threshold. So there is a problem here. I think it applies particularly to London. I suspect that it will be less of a problem elsewhere. But it depends totally on the definition of high value in each area, as I said earlier. The key to making this policy work is to get the definition of high value right area by area and district by district.

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

My Lords, I shall speak briefly to Amendments 67C and 68A. I apologise to the noble Lord, Lord, Lord Kerslake, as I did not mean to pre-empt Amendment 67C with my earlier question. I support the thrust of what the noble Lord said. The measure seems to look through a stock transfer and treat it as though it were still with the local authority. It is pernicious in the extreme.

I can see why the Government may want to do this. It goes back to the point about the possible ending of stock transfer, because one way of thoroughly undermining these provisions is for there to be a series of stock transfers, with the result that the remaining base of those authorities with housing revenue accounts diminishes. But if that is the fear of the Government, there ought to be another way of dealing with it; otherwise, if these provisions pertain in the Bill, it will be necessary to try, presumably by all sorts of contract means should a stock transfer take place, to pass the levy liability on to the RSL and away from the local authority. Whether that is practical or possible in any way, I do not know, but it seems entirely wrong to have this provision and I hope that the Minister will give a very clear explanation as to why it is here and why the Government consider it necessary.

So far as Amendment 68A is concerned, my noble friend Lady Hollis covered the territory extensively. The most effective way for people to avoid the bedroom tax is to downsize into a smaller property—or, I think the DWP said, they should take in a lodger. I am not sure that many have done that. But if there is a risk that by encouraging a tenant to downsize to help their personal circumstances and their benefit position the local authority is opening itself up to another high-value property which could add to the levy, you can see the dilemma that councils are faced with. So this needs to be clear in the Bill.

These things are not a matter of individual local authorities. They may impact local authorities differently. These two issues—the stock transfer and protection from the bedroom tax—run throughout the country. That is why I support the amendments.

Photo of Baroness Williams of Trafford Baroness Williams of Trafford The Parliamentary Under-Secretary of State for Communities and Local Government 6:45 pm, 10th March 2016

My Lords, I thank the noble Lords, Lord Kennedy, Lord Beecham, Lord Best, Lord Kerslake, Lord Shipley and Lord Berkeley—in his absence—and the noble Baronesses, Lady Bakewell and Lady Grender, for their amendments. I welcome this opportunity to discuss their suggestions for possible exclusions from the housing that is to be taken into account in calculating the payments required from local authorities.

The legislation already includes the ability for the Secretary of State to exclude categories of housing from the calculation through regulations. Regulations will provide flexibility to ensure that if circumstances change over time or a need for different exclusions is identified in the future, this can be easily addressed by adding to, amending or removing exclusions in the regulations. We will carefully work through the suggestions that have been put forward, considering the points noble Lords and others have raised, while balancing the need for the policy to support the delivery of right to buy to housing association tenants.

Any exclusions of types of housing that have been suggested today would reduce the amount of money that would be available to increase overall housing supply and to extend home ownership, as the Government committed to in their manifesto. Therefore, we will be considering the data that have been submitted by local authorities, which I referred to earlier, covering the 1.6 million council properties, to identify the potential impact that these possible exclusions would have on the funding available to deliver our priorities.

While no decisions have yet been made, I assure noble Lords that we will be carefully considering the views expressed in your Lordships’ House and the other place and through our engagement with local authorities and other stakeholders when making these decisions. With this in mind, I hope that noble Lords will support our ongoing engagement with local authorities in looking at possible exclusions, and will agree to withdraw or to not move their amendments.

Turning to the detail of the amendments, Amendment 66C, tabled by the noble Lords, Lord Kennedy and Lord Beecham, concerns tenant management organisations. We are collecting data and engaging widely to inform the types of housing that will be excluded from the policy, but homes managed by TMOs that are in scope of this legislation must be owned by councils. We think that councils should not keep hold of their vacant housing, the value of which could be released to fund both the building of additional homes and the extension of right to buy to housing association tenants. Excluding housing managed by TMOs would result in less funding being available for these two aims.

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

Does that not effectively spell the end of tenant management organisations, and are they not a form of dealing with housing which is rooted in communities and self-management?

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

Would the noble Lord explain why he thinks that this would be the end of TMOs?

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

Because if the properties become high-value ones, on becoming vacant they will be sold. The whole concept of a tenant management group—a sort of co-operative, if you will—managing the property will not last.

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

My Lords, if the property were sold, surely the TMO would exist for different types of tenures.

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

I cannot see how that is going to happen. As people move out, the people who move in will be buying the house: they will not be part of a tenant management organisation at all.

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

My Lords, that is not the intention at all, but I am very happy to take that away and have a think about it. I would not want to spell the end of tenant management organisations, because they fulfil a vital role.

It is important to say at this stage that under the formula approach, if a local housing authority has discretion not to sell properties and does not want to sell a particular property—for example, one managed by a TMO—it should choose not to do so, provided that it makes the payment to the Secretary of State. I accept that that does not answer the noble Lord’s point. Perhaps he could just let me think about this—although it may be too late, as I cannot think very well at the moment.

Amendments 67, 67B, 68 and 69 seek to exclude various types of housing when calculating the payments required from local authorities, including newly constructed or renovated homes, homes in regeneration areas, recently improved housing and specialised housing. Amendment 68A, in the name of the noble Lord, Lord Best, would exclude dwellings that become vacant as the result of a transfer to alternative social accommodation from being taken into account. I assure noble Lords that we will look carefully at all these suggestions and consider the points that have been made today, while balancing the need for funding from the sale of high-value vacant homes to support the delivery of right to buy to housing associations.

The noble Lord, Lord Best, is concerned about two social tenants being unable to exchange properties. I can reassure him that the two tenancies do not come to an end, so a vacancy is not created. I therefore confirm that, in these circumstances, mutual exchanges will not fall into the scope of the policy. The legislation allows the Secretary of State to specify other cases where housing would not become vacant for the purposes of the chapter.

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

I am delighted to hear that from the noble Baroness. My amendment was specifically about transfers, where we did not want two vacancies to be scored when clearly there is only one, since the person moving immediately occupies another home. I think that the noble Baroness hinted earlier that transfers would probably be treated in the same way as exchanges.

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

I think that the noble Lord is right—he is more alert at this hour than some of us.

I also hear the reasons behind Amendment 68E, in the name of the noble Baroness, Lady Grender. I am afraid that I cannot accept it, because it would radically change the duty for local authorities to consider selling high-value housing by preventing the duty from arising until a property has been vacant for more than six months. She talked about the policy increasing homelessness, temporary accommodation costs and the housing benefit bill. We have, as I have probably said to her on a couple of occasions now, invested more than £500 million to help local authorities prevent almost 1 million people from becoming homeless. The two-for-one replacement in London will mean that more families can be housed in the capital.

I bring us back again to the intentions outlined in the Government’s manifesto. The argument is similar to that which I spoke to last Tuesday. The legislation is framed to provide local authorities with some flexibility on what housing to sell and how to make payments to the Secretary of State. The duty is an important part of this, to ensure that the payments are focused on high-value housing, both in the calculation by government and the way they are met by local authorities.

I have listened to the noble Lords, Lord Kennedy and Lord Kerslake, and thank them for Amendment 67C, but I cannot accept it. It is right that the Secretary of State should be able to continue to take into account housing stock that has been subject to a transfer when making a determination.

My noble friend Lord Carrington of Fulham asked whether we were trying to stop any stock transfers. Local authorities are still able to transfer their stock to a private registered provider. The legislation does not stop the transfer of stock, but it is important that local authorities do not try to avoid having to sell off their high-value assets by making stock transfers. Where there is a need for more homes, we should be unlocking the value that local authorities hold in vacant high-value housing in order to fund more homes and help people into home ownership. The legislation means that the sale of vacant high-value housing will have to be one area that local authorities consider as part of their negotiation of any transfer, just as it will be one of the considerations of the Secretary of State when deciding whether to grant consent to the transfer.

The noble Lord, Lord Kerslake, and my noble friend Lord Carrington talked about perpetuity and how long the Secretary of State will continue to demand payments. We do not intend to place a restrictive provision on the length of time after a stock transfer when a determination could still be made. This will be considered on a case-by-case basis, recognising that every local area is different.

Photo of Lord Kerslake Lord Kerslake Crossbench

I want to come back to this issue, although I am conscious of the hour. The Minister said that it is right that the Secretary of State should have this power to take transfers into account, but she did not say why it is right. What about the potential consequences that would flow where some very valuable transfers were prevented as a consequence of this provision? It looks like a small technical provision but it is not. It will adversely influence the future well-being of many tenants. I would be grateful for an explanation of why it should be taken into account when the clear intent is transfer with a view to improving the stock and the tenants’ quality of life.

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

It is important for the Secretary of State to make the decision because he can make a judgment on why transfer is taking place.

Photo of Lord Kerslake Lord Kerslake Crossbench

I accept that in the Bill it is a discretion—it says “may”—but we have no sense of knowing in what circumstances the Secretary of State might allow a transfer to go ahead without a levy and in what circumstances he would not. It is not unreasonable to want to know those circumstances. Perhaps the Minister could write to me on that point.

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

I was about to say that, if I may, I will get back to the noble Lord in due course with a bit more detail on circumstances et cetera.

The noble Baroness, Lady Grender, made a very valid point about key workers. The two-for-one replacement goes to the heart of meeting the demand that is so significant in London and will bring into the market a supply of houses that could be used for people on whom we rely every day to get around London and go about our business.

I assure noble Lords that it is not our intention to prevent stock transfers. As I have said, we will consider on a case-by-case basis the implications of this chapter for these transfers.

With that in mind, I ask the noble Lord to withdraw the amendment, but, before I finish, I am looking forward immensely to our debates next week. I just draw your Lordships’ attention to the fact that yesterday, the Government published our response to the consultation on how income thresholds for Chapter 3 of Part 4, the pay-to-stay clauses, should work. The document summarises the consultation responses and sets out the Government’s way forward and, in the spirit of trying to give more information, I hope that it helps noble Lords in our debates next week.

Photo of Lord Beecham Lord Beecham Shadow Spokesperson (Housing), Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Justice) 7:00 pm, 10th March 2016

My Lords, I am glad that the noble Baroness recognises that debates will take place next week. I hope that we will have proper time to complete our deliberations on the Bill and will not be asked to sit until the early hours of the morning, as is apparently being currently threatened. That is not in the interests of good legislation or the House. More particularly, if I may say so, it is not in the interests of the noble Baroness, who has once again single-handedly represented the Government today for about six-and-a-half hours. Those responsible for government business should ensure that she has some support at the Dispatch Box—with respect, not just alongside her—in discharging the responsibility of dealing with this very important, complicated and controversial Bill. We are indebted to her for her patience, good temper and, if not for the substance of her replies, at any rate for her genuine attempts to reply to the variety of comments made across the Chamber. I hope that she has a restful weekend, and that those who are responsible for government business wake up to their duty to see that she continues to be able to have restful periods, not just at weekends, after the extremely arduous performances she has been called on to carry out.

Having said that, I will be relatively brief—for me. I congratulate all noble Lords who have contributed to this particular debate: the noble Baroness, Lady Grender, my noble friend Lady Hollis and, in particular, the noble Lord, Lord Carrington. The noble Lord shed relevant light on an aspect of the problem which affects London, but perhaps also other places. I suspect that places such as Oxford and Cambridge may be in a similar position.

I am particularly indebted to the noble Lord, Lord Best, who has once again proved that the best is not the enemy of the good, but is certainly the enemy of the inadequate, which is the only way that the Bill could be described. I entirely endorse what he and others said about tenant management organisations and the impact of the bedroom tax, which has driven people out of properties which will presumably now go for sale. In my authority and many others, people are waiting to move into such properties. The paradox is that the rationale for the bedroom tax was to facilitate people moving into those properties, but if they go under the right to buy, there will be no requirement for the occupiers to occupy every room. If it is a three-bedroom house, it will no longer be expected to accommodate three people. That makes nonsense of the Government’s whole approach in that respect.

In its briefing, the National Federation of Arm’s-Length Management Organisations reminded me that the Prime Minister, launching his party’s 2015 election manifesto, made it clear that homes bought under right to buy would be replaced on a one-for-one basis in the same area with normal affordable housing. Those were the Prime Minister’s words, which the Bill does not achieve.

Finally, I refer to a particular situation that arose in my own ward and demonstrates the downside of what we have been discussing. In my ward, I was honoured by the naming of a small development of 12 very well-designed bungalows for elderly people; they had walk-in showers and everything fitted for elderly people who might have a disability. They named it Beecham Close, after me. I was very touched on that occasion—some people might think I am fairly touched anyway—and seeing the pleasure that people got in that splendid accommodation was very heartwarming. The notion that those properties, if they become vacant, might then be sold—and they would be sold at a premium, with all the features that I described—not necessarily thereafter to the people for whom they were designed, strikes me as a really sad commentary on the Bill. With that, this Beecham will close. I beg leave to withdraw the amendment.

Amendment 66C withdrawn.

House resumed.