Committee (9th Day)

Part of Housing and Planning Bill – in the House of Lords at 12:30 pm on 23rd March 2016.

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Photo of Lord Best Lord Best Chair, Communications Committee 12:30 pm, 23rd March 2016

My Lords, I support Amendment 102B, in the names of the noble Baronesses, Lady Royall of Blaisdon and Lady Parminter, and the right reverend Prelate the Bishop of St Albans. This amendment aims to ensure a continuing, even if very modest, supply of affordable homes in rural areas.

I chaired the Rural Housing Policy Review, which reported a year ago. We engaged with the full range of rural housing practitioners and our report set out a number of recommendations for easing the severe housing shortages that face the younger generation in rural areas. Top of our list of 12 recommendations was the reversal of the policy announced by the Government at that time aimed at the removal from local authorities of the power to require affordable housing on sites of 10 homes or fewer.

Why did so many of those making representations to our review make this issue their number one priority? The reason is that removing the Section 106 affordable housing requirements on small sites would be likely to reduce annual rural affordable housebuilding by some 50%. It is through this medium of placing a requirement on housebuilders to include affordable homes in their developments that councils have been able to make sure that developments in villages include homes for local families and do not just comprise “executive homes” or housing for commuters, second-home owners, retirees to the country and so on.

Our review heard the arguments for lifting the requirement on housebuilders to provide a percentage of new homes for those on lower incomes. It was said that although affordable homes for rent or shared ownership would be lost, more homes would be built overall. This would happen, it was argued, because it would be easier for developers to get planning consent, the development would be more profitable, and smaller builders—such as those that the noble Baroness, Lady Royall, has mentioned—would be encouraged to return to development, after leaving the field in the wake of the banking crisis.

We did not buy those arguments. Removal of a planning obligation to provide some affordable housing would raise the price of the land and the extra value would go not to the small builder but to the owner of the land. SME builders would still miss out to larger housebuilders, who might well phase their developments with a series of several developments of 10 homes in place of one of, say, 30 homes. We were doubtful whether small and medium-sized builders would be enabled to do any more than they could before and, very significantly, we thought that without the inclusion of homes for local families, housebuilders of whatever size would face much more intense opposition to any development in the village.

The reason why new housing is acceptable to the community around, as demonstrated in the neighbourhood plans that are gaining public support in different parts of the country, is that there is a growing understanding of and sympathy for the housing problems facing younger households who were brought up and/or who work in the village. Take away any obligation to include housing for those less affluent local people and intense opposition—which is likely to mean fewer homes built—seems inevitable.

Our review highlighted the likely loss of new homes overall, as well as the obvious loss of affordable rented accommodation in rural areas which would follow from the Secretary of State deciding to overrule local authorities and remove their power to require affordable homes on smaller sites. After the courts rejected the Government’s previous attempt to make it impossible for councils to require some affordable homes, as explained by the noble Baroness, Lady Royall, the fear is that Clause 143 would present the opportunity for this unfortunate policy to be reinstated. Amendment 102B would insert the necessary protection against this eventuality.

Statistics from Jo Lavis, who advised the Rural Housing Policy Review, make it clear that 55% of new affordable homes in communities with a population of less than 3,000 were on sites of fewer than 10 homes last year. In Shropshire, the figure was 80%; for Hambleton in Yorkshire, it was 89%; and for rural district councils in Derbyshire it was 85%. In some of these cases, the local authority accepts a cash payment—a commuted sum from the builder—in lieu of payment in kind, and this funds rural housing on another site. This technique has raised £2 million in Derbyshire Dales, £1 million in the New Forest National Park and so on. The money cross-subsidises rural housing which would not otherwise be viable, making up for the reductions in social housing grants, which have seen grant rates fall from about £40,000 per house in 2011 to just £22,000 four years later. In a survey of 39 rural local authorities, Jo Lavis discovered that two-thirds of those councils used commuted sums from builders to fund affordable rural housing at no cost to the taxpayer, so current arrangements are working.

A number of us have expressed concern about the Government’s plans for rural exception sites, where planning consent would not normally be available but development is permitted because it comprises affordable homes for local people. Now the plan is for the new starter homes to be built on these special sites, replacing affordable rented or shared ownership homes. We have been concerned that the starter homes will not be within the reach of those with relatively low earnings in rural areas—attention was drawn to this by the noble Lord, Lord Shipley. In any case, starter homes can be sold after five years on the open market to quite different people. At the same time, we have expressed our considerable anxiety that sales of high-value council houses, which would be required to raise the money for discounts to housing association right-to-buy purchasers, will be disproportionately damaging in rural areas because council homes there are particularly valuable.

Amendment 102B is an urgent attempt to prevent a yet further deterioration in the position for those who genuinely need affordable housing in rural communities. It would allow the local authority to continue to obtain a quota of affordable homes on smaller sites, where the council believes that this is needed. It represents a vital protection for rural communities that could otherwise lose over half the supply of affordable housing that they currently insist upon. It is important for government, too, because only with an element of affordable homes for local families will parish councils, neighbourhood forums and local communities at large accept new development in their villages. I strongly support the amendment.