My Lords, I rise to speak to Amendment 119. I am grateful to the noble Lord, Lord Best, the right reverend Prelate the Bishop of St Albans and the noble Baroness, Lady Parminter, for their support. I start with huge thanks to the noble Lord, Lord Best, and the noble Lord, Lord Cameron of Dillington, for the tremendous work that they have done on this Bill on behalf of rural areas. The negotiations with the Government have been assiduous, and the Minister has been in listening mode.
I am delighted that the Government have agreed to exclude rural exception sites from the requirement to build starter homes and that they have agreed in principle to enable councils to retain their remaining housing stock in rural areas with an exemption from high-value sales requirements. Of course, we wait to see the fine print of the government amendments but, despite the fact that the Bill was regrettably not rural-proofed when drafted, there now appears to be a real understanding that rural areas have very specific challenges if they are to remain as vital and vibrant communities.
The Government recognise that social housing in rural areas needs protection, but much more is also needed. The economic and social viability of our rural communities is dependent on there being a mix of housing, including affordable homes. With an acute shortage of affordable housing in rural communities, I simply do not understand why the Government are trying in Clause 143 to reintroduce the restrictions, already overturned by judicial review, that would mean that local planning authorities should not seek affordable housing for sites of fewer than 10 units.
As most residential development in rural areas is on sites of 10 units or fewer, the ability to seek affordable housing contributions on site, or as a commuted sum from these sites, is critical. In Shropshire, for example, 92% of its development is on sites of fewer than 10 units, and 86% on sites of fewer than five units. For Derbyshire’s rural local authorities between 2011 and 2014, 85% of their committed and completed development was on sites of 10 units or fewer. In 2014-15, 55% of affordable homes in villages were through Section 106 contributions on market sites. Much of this delivery is on sites of fewer than 10 units. In Shropshire, for example, 89% of its rural Section 106 affordable homes were on sites of fewer than 10 units. Because these market sites include homes to meet local affordable housing needs, they are much more likely to gain community support and avoid the delays and costs that result from opposition to development, so it is a win-win situation for the developer and for the mixed housing needs of the community.
In the same period, 44% of rural affordable homes were provided through rural exception sites, whose principal purpose is to meet local affordable housing needs. In seven areas, more than 50% of their rural exception site schemes were of 10 units or fewer, and in four of these more than 70% of their rural exception site schemes were of 10 units or fewer. As we heard in Committee, these sites are a critical source of commuted sums. As the availability of the government grant has declined, these are a vital source of capital funding, particularly for rural exception sites. Shropshire Council has raised £2.5 million from commuted sums, which it has used to help housing associations build 250 new affordable homes, and in the last three years Cornwall Council has raised more than £790,000 from its rural developments, all of it from sites of 10 units or fewer.
I fear that once an affordable housing requirement is removed, the cost to rural exception sites will rise to a point where it is no longer viable to build affordable housing, but others, such as the noble Lord, Lord Cameron of Dillington, will be more aware of the realities. A national threshold is neither necessary nor appropriate. In a survey for the rural housing policy review, 79% of rural local authorities said that they had adopted policies that sought an affordable housing contribution from sites of fewer than 10 units. All had a rural exception site policy.
There is clear evidence from the short period last year when the NPPG changed to prevent affordable housing being sought from small sites that, without this amendment, there would be a huge and adverse impact on the amount of affordable housing built in rural areas. During the time the policy was in place Harrogate lost 64 affordable homes that would otherwise have been provided on schemes of fewer than 10 units. Shropshire has calculated that it would lose £2.65 million annually if it was unable to raise commuted sums from sites of 10 units or fewer. Within three days of the announcement, Derbyshire Dales had already lost £225,000 of commuted sums, as developers withdrew sites on which planning negotiations were well advanced.
In Committee, the noble Lord, Lord Best, spoke of the housing policy review, which he chaired. Its top recommendation was to reverse the Government’s policy at that time, which aimed at the removal from local authorities of the power to require affordable housing on sites of 10 homes or fewer. Everyone involved in rural housing to whom I have spoken during the passage of the Bill endorses that position.
The Minister may well say that removing the need for affordable housing from small units will help SME builders, but many with far greater knowledge than me would say that that was wrong. To manage their cash flow, small builders are heavily dependent on the guaranteed income from the sale of these homes to housing associations. I know of several sites on which the houses on the open market languish, causing a headache for the small local builder, but they are able to get by thanks to the sale of homes to housing associations.
One of the many tensions that runs through the Bill is between the reality of increased centralism that the Government believe is necessary to get the country building and their rhetoric of localism. Yet the Minister has acknowledged on many occasions that devolution of power, not centralisation, should be the way forward, and that is the rationale for this amendment. Noble Lords on all Benches understand that sites of under 10 units are vital to ensuring the appropriate mix of housing in rural communities and that the funding of these sites is critical. They also appreciate that the decisions about the mix should be taken at local level, where the needs of citizens and the communities are best understood and where there is most likely to be support for the building of new homes.
This amendment does not in any way seek to undermine the Government’s plans to increase the number of homes built on small sites. We need more homes in rural areas. It merely seeks to ensure that local authorities will still be able to meet the affordable housing needs of their rural communities in ways appropriate to their circumstances. Without this amendment there will be fewer homes in rural areas for those unable to buy, which could result in the loss of another young family, a worker in a local business or a teacher or carer, and a greater vulnerability of an older resident without the support of family.
I know that the Minister is in listening mode and that there have been discussions about a consensus, but I wait to hear the details. My strong preference would of course be for her to accept this amendment, but I am looking for something in the Bill, because that is what rural communities want and would demand. I beg to move.