Amendment 201

Levelling-up and Regeneration Bill - Report (6th Day) (Continued) – in the House of Lords at 5:15 pm on 6 September 2023.

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Baroness Hayman of Ullock:

Moved by Baroness Hayman of Ullock

201: After Clause 95, insert the following new Clause—“Definition of affordable housing(1) Within 90 days of the day on which this Act is passed, a Minister of the Crown must publish the report of a consultation on the definition of affordable housing.(2) Within 30 days of the publication of the report, a Minister of the Crown must by regulations update the definition of affordable housing as set out in Annex 2 to the National Planning Policy Framework.”Member's explanatory statementThis amendment means that the Government must update the definition of affordable housing following a consultation.

Photo of Baroness Swinburne Baroness Swinburne Baroness in Waiting (HM Household) (Whip)

I apologise but, given that we are running over what we thought was the anticipated time for starting, and given the large number of topics to discuss today on Report, I respectfully remind all participants to have a brevity objective in mind, as required in the Companion for Report stage.

Photo of Baroness Hayman of Ullock Baroness Hayman of Ullock Opposition Whip (Lords), Shadow Spokesperson (Environment, Food and Rural Affairs), Shadow Spokesperson (Levelling Up, Housing, Communities and Local Government)

As I was saying, I thank the noble Lord, Lord Stunell, and the noble Baroness, Lady Bennett of Manor Castle, for their support for my Amendment 201. My amendment inserts a new clause for the definition of affordable housing. It asks that, within 90 days of when the

“Act is passed, a Minister … must publish the report of a consultation on the definition of affordable housing”.

Following the publication of that report, within 30 days, the definition must be updated in the National Planning Policy Framework. The reason we have put this forward is because we feel that the current definition in the National Planning Policy Framework is simply not fit for purpose.

Earlier today, we passed the amendment from the noble Lord, Lord Best, on social housing. He is not in his place, but I point out that getting that sorted out is part of managing our problem with affordable housing. So, in many ways, although they are not in the same group, these amendments in fact work together. The noble Lord is also the chair of the Affordable Housing Commission, and although he is not here, I pay tribute to the important work that he has done with that. The Affordable Housing Commission has produced an important report on this issue, Making Housing Affordable Again, which I urge all noble Lords with an interest to study.

When we consider affordable housing, we need to look at a number of issues, the first of which is to ask who has a problem with it. What the commission did was to divide the overall picture into four different groups: struggling renters; low-income older households; struggling home owners; and frustrated first-time buyers. So this issue affects a very large proportion of our population, including people who are trying to find themselves a decent, secure home. The way that housing affordability is currently defined and measured is as rents or purchase costs that are lower than in the open marketplace; we believe that that definition is both misleading and confusing. It is a crude definition, which is not helping to solve the problem. It brings “affordable housing” to a level that is way beyond the means of many who need a home.

The commission offers a new definition of affordability, which views the issue from the perspective of the household and not from the marketplace—as the current definition does. What can people pay for their housing without risking financial and personal problems? Who is facing these problems of unaffordability, and exactly what is the scale of the problem?

The NPPF definition of affordable housing is made with reference to various housing products, from social rent to low-cost home ownership. Even if eligibility is bounded by local incomes, except for social rent, of course, affordable housing remains market-led, rather than being defined by personal income. This has led to a number of local authorities being extremely sceptical about their ability to deliver the affordable housing their areas need.

A cursory glance at the affordable rent level shows that in many areas a three-bedroom, affordable-rent property cost £400 per week. This is clearly way out of the pocket of many people in this country. I suggest that the Government look at what the Affordable Housing Commission is calling on them to do. We believe it provides a good starting point for solving the housing crisis we are in.

First, it suggests a rebalancing of the housing system so that there will be affordable housing opportunities for all by 2045. Affordable housing should be made a national priority and placed at the centre of a national housing strategy. The safety net for struggling renters and home owners should be improved. A new definition and alternative measures of housing affordability should be adopted which relate to people’s actual income and circumstances, rather than just to the market.

We agree with the Affordable Housing Commission. Will the Minister accept that the current definition is not fit for purpose? In order to help the very many people who are struggling either to buy or rent a home, will the Government put into the Bill a commitment to act to change the definition so that affordable housing actually means what it says?

I have spoken on this issue a number of times. Others are saying what we are saying. The Affordable Housing Commission is saying it. People who understand the system and have identified how it can be changed for the better are offering concrete, constructive ways in which things can be improved. I hope that the Minister can accept my amendment as a starting point on this journey to improve the current situation. If I do not have her assurance that this will be the case, I will test the opinion of the House on this matter.

Photo of Lord Stunell Lord Stunell Liberal Democrat

My Lords, I have added my name to Amendment 201 in the name of the noble Baroness, Lady Hayman of Ullock. As she clearly set out, there is a complete absence of focus on what is and is not affordable when it comes to government policy-making. That policy is in desperate need of overhaul and a recalibration. This amendment puts that overhaul firmly on the agenda. It is a fitting addition to the Bill. I hope that the Minister will accept it. If not, I and my colleagues will strongly support the noble Baroness in pressing it to a vote.

In Committee, I made the case as strongly as I could that the highly desirable objective of the provision of affordable housing, which is shared on all sides of this Chamber, is not being achieved in real life. It has failed by a wide margin, as the noble Baroness has just set out. At present, about half of affordable homes—the ones which are given capital letters by policy-makers—are supposedly delivered through planning obligations placed on developers. The reality is that in many parts of England this is being completely undermined by basing the calculation of affordability on a figure of 80% of the open-market price of that property on that site or, for renters, of 80% of the market rent. The noble Baroness, Lady Hayman of Ullock, gave one practical example of the consequence of this for renters.

Amendment 201 calls for a review. The Minister may reply that all government policies are under constant review, but when she replied in Committee, I got the impression that any such review of this policy has not been particularly diligent. It certainly has not been timely or purposeful. This amendment would put that right and task the Government with producing a review and publishing it, with recommendations for a change, on a short, fixed timescale.

In Committee, I drew noble Lords’ attention to the experience of my noble friend Lord Foster, who unfortunately cannot be with us today, in his local area of Southwold in east Suffolk. A so-called affordable estate, built with £1 million of government subsidy, is so out of the price range of people on median incomes there that its homes have proved unsaleable and the developer has been released from the planning obligation. The homes are now going on the open market. This is not in inner London; it is 100 miles away. In Southwold, the price/median earnings ratio of the affordable homes, at 80% of full price, is still 13:1, reduced from 17:1 for full-price homes. Obviously, that is completely out of the reach of those seeking an affordable home.

I am sure that the Minister will know of similar circumstances in many other places. It is certainly true in Cheshire and Derbyshire, for instance—they are known to me—and is quite possibly so in Wiltshire as well. Far too often, affordable homes as delivered by planning obligations are nothing of the sort. I sometimes think that saying this out loud is seen as swearing in church. Nobody seems to confront this obvious truth. This Levelling-Up and Regeneration Bill is exactly the place to begin putting that right. It must be the case that when median incomes in a locality are not sufficient to buy such homes, it is misleading to describe them as affordable, wrong to put them on the credit sides of the affordable homes balance sheet and deceitful to boast that their provision makes a worthwhile contribution to fulfilling an election promise.

Amendment 201 would kick off that process of reform, but my Amendment 201A and its consequential amendment, Amendment 285A—they are also in this group—would go further by setting out the principles that should underlie that review. Those principles have been set out by the noble Baroness, Lady Hayman. They include the principle that affordability must be defined by reference to the income of the purchaser or renter, not solely by the inflated price on the open market. My amendment does not specify the mechanics or precise formula for that. The Affordable Housing Commission certainly provides a professionally generated one, while two others were quoted in Committee. We all know how it can be achieved, but the vital point of any government review must be to take into account the obvious truth that the current measuring stick is not solving the problem of affordability but is instead costing the Treasury a hatful of cash, which is being wasted and at the same time leaves many families stuck in wretched housing conditions.

There is a second part to my Amendment 201A, which I believe would help to close the yawning gap between open market prices and affordable home prices. It would disapply the current exemption in the Freedom of Information Act for the disclosure of viability calculations used by developers when haggling with local planning authorities over their planning obligations. At present, commercial confidentiality can be exploited to leverage cuts in affordable home provision, and it often is. Transparency would ensure that there was no temptation to inflate falsely the figures of costs that are deployed in those negotiations. It would also be likely to lead, over time, to less profligate bidding and purchasing of land by developers. Simply by removing that commercial exemption in this specific situation, at nil cost to the public purse, more affordable homes will be provided by developers. It is a no-brainer and one that I hope the Minister will find irresistible.

If levelling-up is to proceed from an election slogan to real delivery, it has a long road to travel. On that road, an essential milestone will be a proper affordable homes policy. Amendments 201 and 201A would provide the Government with that milestone. I hope that they pass today.

Photo of Baroness Bennett of Manor Castle Baroness Bennett of Manor Castle Green 5:30, 6 September 2023

My Lords, I rise with pleasure to follow the noble Lord, Lord Stunell, and the noble Baroness, Lady Hayman, to speak to Amendment 201, to which I have attached my name. Essentially, I associate myself with everything that they said. I will seek not to repeat them but just make a couple of additional points.

Democracy demands clarity. We all know that we are heading into a general election, in which discussion of affordable housing will be right up there at the top of the agenda. We need to set out a definition about what we are talking about, if we are to have a sensible debate about our housing policy future.

For any noble Lords who have not seen it, I recommend the excellent briefing from the House of Commons Library—if I am allowed to recommend that—on the definition of affordable housing in July this year. One of its top headlines is:

“No agreed definition of affordable housing”.

It notes that the most commonly used framework is that of the National Planning Policy Framework, used by local planning authorities, which takes in social rent, as well as a range of so-called intermediate rent and for-sale products. As the Affordable Housing Commission of 2020 concluded, “many” of these so-called affordable homes are “clearly unaffordable” for those on middle or lower incomes.

This being the House of Lords, we should look for a second at the historical framework of this. If we go back to 1979, we see that nearly half of the British population lived in what were clearly affordable homes—they lived in council homes, with council rents. That reality is not that long ago. We have since seen the massive privatisation of right to buy, and a move towards treating housing primarily as a financial asset, rather than as homes in which people can securely, comfortably, safely and healthily live. That is what brings us to this point today. This amendment is not going to fix that but it would at least set out the clarity of terms for us to be able to talk about this in a practical kind of way.

I looked at the Green Party policy for a sustainable society. It starts with the absolute foundation, stating that it is

“a universal human right to shelter which is affordable, secure and to a standard adequate for the health and well-being of the household”.

That is why we are now saying today: right homes, right place and right price. We need to think about what that price means. In the Green Party we have set out very clearly what we believe the right price is. On purchase, we should be looking to move towards a situation where house prices are not more than four times average salaries. On rent, where the real extreme levels of suffering are now, there should be a living rent—a definition backed by many of the NGOs. Genuinely affordable housing means that median local rents would not take up more than 35% of median local take-home pay. That is what I would set out.

I could perhaps have put down an amendment to set those figures out, but that is not what I have done. What I have said instead is that we need to set out the terms of this debate, as this amendment does. I strongly commend Amendment 201 to your Lordships’ House.

Photo of The Bishop of Southwark The Bishop of Southwark Bishop

My Lords, the noble Baronesses, Lady Hayman and Lady Bennett, and the noble Lord, Lord Stunell, have all spoken eloquently on Amendment 201, which I support. I thank them for tabling it.

The independent Archbishops’ Commission on Housing reported in March 2021, and your Lordships’ House may recall the debate that the most reverend Primate the Archbishop of Canterbury secured on 24 March 2021, on the subject of housing. I simply wish to highlight a few points from that which I believe are relevant to the debate on this amendment.

The first is that the object of central government policy and of legislation should always be the ready provision of good housing—homes in which people want to live, in areas capable of flourishing. Too often, sadly, that is not the case, and we build among the smallest dwellings in Europe. Secondly, we require a bipartisan approach that enables a consistent policy to be followed across decades, and not one that is beholden to the sort of interests that have so limited housebuilding. It is worth remembering, as has already been mentioned today, that the last year in which we achieved house- building at the current target of 300,000 was 1969, over 50 years ago. Thirdly, we require a definition of affordable housing that relates specifically to income. Without this, any policy on affordable housing will fail. I support Amendment 201.

Photo of Baroness Scott of Bybrook Baroness Scott of Bybrook Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

My Lords, Amendment 201 in the name of the noble Baroness, Lady Hayman of Ullock, relates to the definition of affordable housing. The amendment proposes a consultation on the definition that currently appears in the National Planning Policy Framework. We have had good debates about these issues, both today and in Committee, and I recognise the strength of feeling around the importance of ensuring that affordable housing meets the needs of those who require it.

I can reaffirm the Government’s commitment to delivering more houses for social rent. We are carefully considering the consultation responses to our proposal to amend national planning policy to make clear that local planning authorities should give greater importance in planning for social rent homes. A large number of the new homes delivered through our £11.5 billion Affordable Homes Programme will be for social rent.

Nevertheless, it is also important that the definition of affordable housing in the NPPF provides local authorities with sufficient flexibility to plan for the type of affordable housing that is needed in their area. The existing definition includes a range of affordable housing products for those whose needs are not met by the market. Those needs will vary depending on people’s circumstances and in different housing markets.

I am also mindful of the point made during our debate in Committee by my noble friend Lord Young of Cookham, about the trade-off between the level of discount that a type of affordable housing provides and the number of such homes that can be delivered.

We all agree that we need to consider this issue further. That is why we have committed to a wider review of the national planning policy once the Bill has received Royal Assent. That will include the production of a suite of national development management policies. This work will need to consider all aspects of national policy—and that includes the way that affordable housing is defined and addressed—and would be subject to consultation. I look forward in that consultation to hearing all the views from the sectors which have been mentioned this afternoon. I think we all agree on this.

What we do not agree on is how we should process this particular issue that we want to deliver. I therefore hope that the noble Baroness, Lady Hayman of Ullock, feels able to withdraw her amendment at this stage.

Amendments 201A and 285A from the noble Lord, Lord Stunell, raise two important matters relating to affordable housing. The first matter is how affordable housing is defined for the purposes of this Bill. The approach has been to link this to the definition of social housing in the Housing and Regeneration Act 2008. This definition encompasses both rented and low-cost home ownership accommodation that is made available in accordance with rules designed to ensure it is made available to people whose needs are not adequately served by the commercial housing market. While I understand the noble Lord’s argument that affordable housing should be defined more tightly, I am eager to avoid depriving local authorities of sufficient flexibility to determine what is most appropriate to meet the needs of their area.

However, the Government are taking action to secure the delivery of more social rented homes, as I have said, for which rents are set using a formula that takes account of relative local incomes. A large number of these new homes, as I have said before, will be delivered through our £11.5 billion Affordable Homes Programme and will be for social rent.

We are also carefully considering the consultation responses to our proposal to amend the national planning policy to make clear that local planning authorities should give greater importance in planning for social rent homes. The noble Lord, Lord Stunell, also raised the disclosure of information relating to the viability of affordable housing in housing developments. Although I recognise that the noble Lord is seeking to improve the transparency of this process, I do not believe that the change he is proposing is necessary. As discussed earlier on Report, the new infrastructure levy will allow local authorities to require developers to pay a portion of their levy liability in kind in the form of on-site affordable housing. This new “right to require” is designed to replace site-specific negotiations of affordable housing contributions.

While viability assessments may be used in setting infrastructure levy rates, any developer that wishes information to be taken into account must submit it to be examined in public. Levy rates and charging schedules will be matters of public record.

Photo of Lord Stunell Lord Stunell Liberal Democrat

I hesitate to interrupt the Minister, but can she confirm that the infrastructure levy will not be operational in most of England for another eight or 10 years?

Photo of Baroness Scott of Bybrook Baroness Scott of Bybrook Parliamentary Under Secretary of State (Department for Levelling Up, Housing and Communities)

As the noble Lord knows, we have already discussed this. We will have a test and learn throughout the country and then a rollout, but with any large change in any planning system, as with the community infrastructure levy, it will take time—up to 10 years, we believe.

Levy rates and charging schedules will be matters of public record, as I said. For these reasons, I hope that the noble Lord will agree not to move his amendments.

Photo of Baroness Hayman of Ullock Baroness Hayman of Ullock Opposition Whip (Lords), Shadow Spokesperson (Environment, Food and Rural Affairs), Shadow Spokesperson (Levelling Up, Housing, Communities and Local Government)

My Lords, I thank all noble Lords who have taken part in this debate and the Minister for her response. I welcome the right honourable Michael Gove to the Chamber and thank him for taking the time to listen to our debate. Clearly, he is enthralled by our discussions at the moment, and I am sure that he will take our concerns away for further consideration.

Noble Lords:

Oh!

Photo of Baroness Hayman of Ullock Baroness Hayman of Ullock Opposition Whip (Lords), Shadow Spokesperson (Environment, Food and Rural Affairs), Shadow Spokesperson (Levelling Up, Housing, Communities and Local Government)

I thank the Minister for spelling out the Government’s commitment to social housing through the affordable homes programme and for the wider review that she talked of. I understand the need for flexibility that she talked about for local authorities. However, this does not change the fact that houses classed as affordable should actually be affordable and currently are not. Otherwise, what on earth is the point of having the definition?

I am afraid I have heard nothing to convince me that the Government are serious about changing the definition. On that basis, I would like to test the opinion of the House.

Ayes 158, Noes 166.

Division number 4 Levelling-up and Regeneration Bill - Report (6th Day) (Continued) — Amendment 201

Aye: 156 Members of the House of Lords

No: 164 Members of the House of Lords

Aye: A-Z by last name

Tellers

No: A-Z by last name

Tellers

Amendment 201 disagreed.

Amendment 201A not moved.

Schedule 8: Minor and consequential amendments in connection with Chapter 2 of Part 3