My Lords, I declare an interest: I chair the board of the Orbit Group, a large housing association, and it is on housing that I want to focus all my remarks. It seems appropriate to do so as we were told some time before Budget day that housing was to be the centrepiece of the Chancellor’s announcements. While there are some welcome proposals in the Budget, unfortunately the actuality does not match the preceding hype. Andrew Sentance, a former member of the MPC of the Bank of England, described the Budget as a whole as,
“a bits and pieces budget”,
with “small measures” and “little impact”. I describe the housing sections as medium-sized measures with a likelihood of limited impact when very large measures are needed to have a substantial impact on the serious housing crisis we face. The Government’s White Paper which came out before the 2017 general election recognised that the housing market was bust and proposed some, although not enough, radical measures to address the massive problems we face. The Budget picks up on some of the proposals in that White Paper but is not nearly ambitious enough if we are to crack these problems.
As my noble friend Lord Darling said, at the heart of the issue is a problem of supply. We simply do not have enough houses to go around, especially in London and the south-east, but elsewhere too. Moreover, there is an acute shortage of social and affordable houses for rent. This supply-side problem has driven up the price of houses for sale, making them unaffordable for most first-time buyers, yet until now the Government have fiddled around with demand-side measures, such as Help to Buy, that have driven prices up further. I congratulate the Chancellor on recognising that we need to build 300,000 new homes per annum, which is a big increase on the 140,000 average over recent years, but it is a sad reflection on our failure to give new housing the importance it deserves that the last time this country built more than 250,000 new homes a year was under the Labour Government of the 1970s.
The target is to achieve this supply increase by the mid-2020s. I recognise that it will take time to achieve the target but I wonder whether there is enough urgency in the Government’s proposals and whether the £15 billion of new money will be enough to get us there. Incidentally, it is not the £44 billion that was hyped up earlier. I welcome the decision to loosen the housing revenue account borrowing cap on local authorities in areas of high demand for housing. This was a central recommendation of the Economic Affairs Select Committee, on which I sat, in its report on the housing market.
We must be pragmatic and go for a mixed economy in the building of new homes, to which public and private sectors both contribute. I remind the House that in the 1970s 40% of new accommodation was built by local authorities. The ideology of the 1980s and 1990s, of cutting them out and leaving it to the private sector, has contributed to the mess that we are now in. Local government must return to building more social housing for rent, sometimes in joint ventures with housing associations. Allowing them to borrow to do so is vital. I agree with the LGA, the RICS and others that the lifting of the cap does not go far enough to get to the scale that is needed to reach the 300,000 target.
It is obviously crucial to building new homes that land is available and that better use is made of it. Sadly, this Budget fails to address this issue adequately. The National Housing Federation is right to say that the Government must stop selling public land at the highest possible price. They should update their guidance on best value so that all public bodies are required to set a price for their land that will support the delivery of more affordable housing. The Government should also insist that unused brownfield sites owned by their own departments should be sold off in areas of high need. A more radical approach to support social and affordable housing would require new developments on private sites to set aside 35% for it and for public-owned land to deliver 50% affordable housing.
Turning to the related subject of planning reform, I accept that focusing on urban areas and avoiding the green belt avoids a political storm in many Conservative constituencies but I wonder why the Government have not been brave enough to include a policy of green-belt swaps so that suitable sites on the edge of urban areas could be made available for housing. Perhaps the Minister could say whether this will be considered in the review of the planning system that was announced in the Budget. Resolving the scandal of the discrepancy between planning permission levels and the building-out rate should not be batted into the future by including it in the proposed review. We need action now so that developers are forced to get on with the job after permissions are granted. The suggestion that densities in urban areas should be increased and more small sites should be made available is welcome, and I congratulate the Mayor of London on announcing his intention to adopt this approach.
I will end with one of the few tax changes announced in the Budget: the abolition of stamp duty for first- time buyers purchasing a property costing £500,000 or less for the first £300,000 of the price. Apparently, Conservatives in another place cheered this announcement. Perhaps they should think again. The cost of the concession is an enormous £3 billion and it helps only a tiny proportion of those with housing need. Because this is a permanent reduction in stamp duty for first-time buyers, the OBR has calculated that it will increase the price of properties by twice the size of the tax saved; in other words, a first-time buyer of an average-price property will experience a £3,200 price increase to offset a £1,600 tax cut. This really is a nonsense. Moreover, the OBR calculates that the change will increase the number of first-time buyers by just 3,200.
In addition, the Resolution Foundation has calculated that this change will make a tiny difference to how long it takes a first-time buyer to save for a new property. Thirty years ago, it took three years. The current estimate is 19.1 years. Removing stamp duty will lower it to—wait for it—18.5 years. This is not a gain that young people would think worth a celebratory drink in their local pub. The £3.2 million spent on tax relief would be enough to provide government funding to support building 400,000 social rented properties in high-demand areas or to see around 140,000 properties built through the Government’s own Housing Infra- structure Fund. Would the Minister care to comment on this in his reply, especially since these figures are from the OBR?
In conclusion, of course there are elements in the Budget’s housing provisions to welcome. However, I regret that the Government have not been radical in devising policies to ensure that they reach their targets. I fear that the Government have not matched the expectations we had of them after the PM dedicated her premiership to fixing “the broken housing market” and the Chancellor trailed this Budget as the “housing Budget”. It has been a lost opportunity. What is needed most is a big, comprehensive housebuilding programme directly commissioned by the Government, working with local authorities and housing associations. Then and only then will the target of 300,000 new homes per annum be reached, and then and only then will the poor and the just about managing have the housing and, in the words of the Minister in his opening remarks, “the stability and security they deserve”.