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Social Housing - Motion to Take Note

Part of the debate – in the House of Lords at 1:54 pm on 31st January 2019.

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Photo of Lord Young of Cookham Lord Young of Cookham Lord in Waiting (HM Household) (Whip), Lords Spokesperson (Cabinet Office) 1:54 pm, 31st January 2019

My Lords, I am grateful to all noble Lords who have taken part in what has been a very constructive debate, as the noble Lord, Lord Kennedy, has just said. In particular I am grateful to the noble Lord, Lord Whitty, for choosing it and for introducing it with a very eloquent non rant.

It is almost 40 years since my first speech as a housing Minister in 1981. The noble Lord, Lord Whitty, was then working for the General, Municipal, Boilermakers and Allied Trades Union prior to running the Labour Party. The noble Lord, Lord Shipley, was a Newcastle city councillor keeping tabs on the noble Lord, Lord Beecham, who was entering his middle period as the leader, and a youthful noble Lord, Lord Kennedy, was waiting to be able to vote in his first general election. Affordable housing was a priority for the Government then and it remains a priority for the Government today.

It was during my time as a housing Minister in the 1980s that I met the noble Baroness, Lady Osamor. She was campaigning for the renovation of the Broadwater Farm estate and, as important, for the empowerment of the local community and an improvement in its relations with the local authority and with central government. I remember meeting community leaders, of whom she was one, and the charismatic Dolly Kiffin. It is good to renew her acquaintance after all those years. I commend her on her speech and look forward to her future contributions.

An occasional partisan note has crept into our debate. As noble Lords know, I am the least partisan of Ministers. Perhaps I may just put one or two statistics before your Lordships to redress the balance; this debate is about social housing. Between 1997 and 2010, the stock of social housing fell by 420,000. Since 2010, the overall stock of social housing has increased by 79,000. Some 12,440 local authority dwellings were built between 2010-11 and 2017-18, up from 2,920 over the previous 13 years. The briefing we all got from the Home Builders Federation said that housing output was up by 78% in the last five years and that the supply has risen to its fourth highest level since 1971. For the year ending March 2018, the planning system granted permission for 359,000 new homes. There is more in my brief which I will not deploy because I want to answer the debate and because we are in no way complacent about the task ahead.

I would like to make two general points about social housing. First, there has been much emphasis on the need for more housing at social rents, a point made by the noble Lords, Lord Kennedy and Lord Shipley, as opposed to affordable rents. I understand the case, but there is a trade-off between rent levels on the one hand and the number of homes that can be built on the other. For the sake of argument, let us assume that an extra £1 billion became available. On average across England, we would expect either to build 12,500 homes at social rents or twice that number—25,000—at affordable rents: double the number of homes to house those in housing need. Moreover, approximately two-thirds of social housing tenants receive housing benefit to support the payment of their rent. So I understand why housing Ministers want to maximise supply, and I plead guilty to this. More recently, the Government have recognised the case for social rents in areas of high demand, a point made in this debate, and we have turned the dial back to provide a minimum of 12,500 new social rent homes. But those who call for a major reversion to traditional social rents must recognise the cost in lost output, and that is true whatever the level of investment available.

The second general point is one that has not been made at all in this debate: if you are in housing need, of course the number of new social homes built is relevant and the more the better. But someone in housing need is eight times more likely to be rehoused through a re-let of an existing social home, than through a new home. So increasing the number of re-lets is a key ingredient in helping those in need. Without changing the rules on security of tenure, I am all in favour of a dialogue between social landlords and their tenants where the tenants’ circumstances have improved substantially, partly as a result of having a decent home, so that they are now in a position to consider home ownership and explore help to buy, shared ownership, which was mentioned by the noble Lord, Lord Thurlow, and other home ownership options.

That is also why I have always been a keen supporter of portable discounts—basically, turning the discount that a social tenant is entitled to under right to buy into cash so that the tenant can buy a home. It has a number of benefits. It widens the choice of home that the tenant can buy beyond just the one he is in. It secures a re-let at a fraction of the cost of new build, and of course it does so more quickly. Moreover, it does not erode the stock of social houses, a point made by many noble Lords. The concept is being tested through the current voluntary right-to-buy pilot for housing association tenants in the Midlands; the discounts are funded by central government. I hope housing associations consider whether this has a greater role to play in tackling waiting lists.

On this, and in response to points made by the noble Lord, Lord Whitty, I was interested to read in last week’s Inside Housing an article by Mark Henderson, the chief executive of Home Group, supporting voluntary right to buy. He said that 87% of his tenants wanted to own their own homes. He went on to say:

“At Home Group, for example, we want to go a step further”,

than the national federation’s offer of replacing one for one.

“We will be able to build two homes for every home sold, including at least one for social or affordable rent. This means that”,

voluntary right to buy,

“will lead to a net increase in the amount of affordable homes in an area, alongside helping customers achieve their aspirations of homeownership”.

I hope other housing associations might consider following his lead.

This brings me to right to buy and the points made by many of those who have spoken, including the noble Lord, Lord Whitty, and the noble Baroness, Lady Blackstone, about the use of right-to-buy receipts. Since the reform of the housing revenue account and the introduction of self-financing in April 2012, a proportion of receipts is paid to the Treasury to reflect the reduction in the amount owed to the Treasury and as part of the self-financing settlement, but also to tackle the budget deficit. However, noble Lords will know that we have just undertaken a consultation on the use of right-to-buy receipts. We are considering the responses and how to take these forward. I will ensure that all the points made by noble Lords about more flexibility and the use of capital receipts are taken on board before we come to a final decision on that. Capital receipts could be used for the purposes the noble Baroness, Lady Watkins, suggested, namely, regenerating existing local housing stock. The noble Lord, Lord Kennedy, asked whether local authorities that have transferred their stock can borrow. Yes, they can. They can borrow through their general fund in line with the prudential code. If they want to, they can then on-loan to a third party for housing development.

I turn to rough sleeping, a topic covered by many noble Lords, including my noble friend Lord Garel-Jones, the noble Lord, Lord Pendry, the noble Baronesses, Lady Lawrence and Lady Warwick, and others. Many referred to the tragic death of a rough sleeper on our own doorstep a few weeks ago. Under the first rough sleepers initiative, which was launched in 1990 and which my noble friend Lord Garel-Jones mentioned, the number of people sleeping rough in central London fell by more than half—from an estimated more than 1,000 before the initiative began to around 420 in November 1992. The model was taken forward by the incoming Labour Government and extended to other parts of the country, but the challenge today is as acute as ever.

In response to my noble friend, there are four ingredients to a successful strategy. The first is prevention. The Homelessness Reduction Act, backed by £1.2 billion and piloted through this House by the noble Lord, Lord Best, should give people the help they need earlier and reduce homelessness. Secondly, we need outreach workers with the skills to build up confidence and trust with the rough sleepers and persuade them to abandon that lifestyle. Thirdly, we need direct access hostels with all the necessary support services such as health—mentioned by the noble Baroness, Lady Lister—and the resources to deal with the underlying problems. Fourthly, we need move-on accommodation so that people can put their lives back together and re-enter the mainstream.

I join the right reverend Prelate the Bishop of Chelmsford in praising those who do heroic work: Centrepoint, The Passage, St Mungo’s and Change Grow Live. Initiatives such as No Second Night Out are particularly important and worthy of support. I pay tribute and wish every success to my ministerial colleague in the department, Heather Wheeler, committing to halve rough sleeping by 2022 and—in response to the question asked by the noble Lord, Lord Sawyer—end it completely by 2027. It is an ambitious agenda, backed up by £100 million in funding for the first two years, and in December we published a delivery plan showing how we intend to deliver on the 61 commitments made.

I am grateful to the noble Lord, Lord Bird, for his contribution outlining the consequences of ending rent control. When I bought my copy of the Big Issue today from Phil in Great Peter Street, he asked to be remembered to the noble Lord. Phil suggested that those in the Victoria area who are recruiting staff could do well to call in on the nearby hostel where Phil stays, where they would find some motivated and hard-working employees who deserve a break, like him.

Many noble Lords spoke about encouraging local authorities to build, and we want to see councils deliver a new generation of homes. We have abolished the housing revenue account cap, and my noble friend Lord Porter deserves credit for the role he has played in securing that freedom. We hope that will enable them to double delivery to around 10,000 homes per year by 2021-22.

The noble Lord, Lord Whitty, criticised stock transfer, when a local authority transfers its stock to a housing association. This can happen only where the tenants have voted for it. In many cases, after they voted for it, the regeneration of a stock took place at a faster rate than would have taken place under the local authority— so I do not think that is a fair criticism of housing policy.

Removing the borrowing cap will help to diversify the housebuilding market, with councils better able to take on projects and sites that private developers might consider too small. To further help councils build, we are providing a longer-term rent deal for five years from 2020 that provides local authorities with a stable investment environment to deliver the new homes.

I was struck by the phrase “long-term” in the noble Lord’s Motion—a challenge to all Administrations accused of short-termism. I agree with him that if we are to make faster progress we need to give those who supply social housing greater certainty. That is why in September the Prime Minister announced a £2 billion long-term funding pilot, starting in 2022, which will boost affordable housing by giving housing associations the long-term certainty they need and will move away from the stop/start delivery that has characterised previous approaches to funding. This funding certainty makes it more viable for the larger housing associations—many noble Lords have key roles to play in housing associations—to take risks and invest in more ambitious projects and larger sites, with the funding guaranteed beyond the current spending review.

We recognise that our commitment to increase the supply of homes requires a modern construction industry—a point raised by my noble friend Lady Bloomfield, who talked about off-site construction. The strategic partnerships we are developing with housing associations are being used to promote modern methods of construction. This is supported by our £4.5 billion home building fund providing support to builders using modern methods of construction, which will, we hope, help to address the shortage of skilled on-site construction workers in addition to encouraging custom builders and new entrants to the market.

My noble friend Lord Garel-Jones suggested that we should build up rather than along and pointed to the difference between our cities and many in Europe. It so happens that yesterday the Secretary of State for Housing announced that, as part of a fresh initiative, 78 homes will be built on London’s rooftops by the summer after Homes England agreed a £9 million funding deal with Apex Airspace Development. This follows our revised NPPF supporting opportunities to use the airspace above existing buildings. These will be built off-site then winched into position to minimise disruption to existing residents.

Many noble Lords referred to poor standards in the private rented sector. The noble Baroness, Lady Donaghy, asked about selective licensing, which is basically a scheme to drive up standards and safety in the private rented sector, where they are known to be poor. Last year, at the invitation of the noble Lord, Lord Kennedy, I got up very early one morning and went to Newham with the noble Lord, the Mayor of Newham, Rokhsana Fiaz, and the police to see how selective licensing was enforced—basically, by going into premises that are as yet unlicensed but suspected of being tenanted. What struck me—and, I am sure, the noble Lord—was the appalling conditions many tenants were living in, paying extortionate rents, but also the sensitivity of the team from Newham in explaining to frightened tenants exactly what was going on and what their rights were. I was deeply impressed that morning.

Since 2015, eight schemes have been approved by the Secretary of State for Housing: one was rejected but it then successfully reapplied. In response to the noble Baroness, a review is under way: we are due to publish it in the spring and I will make sure that the chartered institute report to which she referred is fed into it before we come to any conclusions.

My noble friend Lady Bloomfield raised a number of important points on planning, investment and construction. Last year we updated the NPPF to tackle unaffordable house prices in many areas across the country. The framework sets out a new way for councils to calculate the housing needs of their local communities. We are working closely with other government departments and local authorities to identify and free up public sector land to maximise the amount of affordable housing built on it. The community trust partnership mentioned by my noble friend is one model that can help bring private sector investment alongside local authorities and provide experience to increase affordable housing.

One of the key points that has arisen during the debate—which I will certainly raise with the Secretary of State—was the cost of land and the Land Compensation Act 1961. At the moment we have the CIL, the infrastructure levy, and Section 106, both of which seek to capture the value of land. Many noble Lords, including the noble Baroness, Lady Blackstone, and the noble Lords, Lord Shipley, Lord Best and Lord Judd, said that we ought to go further and do more. We are committed to capturing increases in land values to reinvest in local infrastructure, central services and further housing. That is why we are at the moment making important changes to ensure that the existing mechanisms for securing funding for infrastructure and affordable housing work as effectively as possible. I take seriously the comments and suggestions made during the debate.

I am conscious that I will not be able to get through everything in the time available but, quickly, on public sector land, an issue raised by the noble Baroness, Lady Warwick, the aim of the programme is to release land with a capacity for at least 160,000 homes in England from the central government estate by 1 March 2020. The noble Baroness asked what the percentage of affordable might be. The answer is, as I think she knows, that local authorities set their own percentages in their local plan. It is a matter for them, having assessed local need, to judge what should happen on new developments.

On supported housing, I was interested in the speech of the noble Baroness, Lady Healy. There is a need for specialist and other supportable, affordable housing for older and vulnerable members of society. We have delivered 34,000 new supported homes in England since 2011 and, together with the Department for Health and Social Care, we continue to make funding available for investment in new supported housing. Our announcement last summer that the housing costs for supported housing would continue to be made by housing benefit has been greatly reassuring to those active in the market. I hope it will be welcomed by the sector and unlock fresh investment.

I apologise for not dealing with all the questions. I have many good replies in front of me which, sadly, I do not have time to read out but which I will answer.

The Government support the case for delivering more affordable housing and are committed to doing so. We want to support the delivery of the right homes, be they for rent, ownership or supported housing in the right places. We have listened to the sector and to today’s debate. We have introduced a number of measures to create a more stable investment environment. We have abolished the HRA borrowing caps; announced longer-term funding; increased our affordable homes programme to £9 billion; announced social rent funding; and set long-term rent certainty. We are not complacent but now is the time for councils and housing associations to step and deliver the affordable housing that communities need. I thank all noble Lords again for their contributions to this debate.