Examination of Witnesses

Housing and Planning Bill – in a Public Bill Committee at 2:46 pm on 10th November 2015.

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Mark Patchitt, David Montague, Sue Chalkley and Tim Pinder gave evidence.

Photo of James Gray James Gray Conservative, North Wiltshire 3:15 pm, 10th November 2015

We are looking forward to hearing from this big panel. It will be quite a lengthy session lasting for an hour. Our witnesses are from the Riverside Group, from the London Housing Association, from the Hastoe Group and from Peaks and Plains Housing Trust. Please will you introduce yourselves for the record, starting on my right?

David Montague: David Montague, chief executive L&Q.

Sue Chalkley: Sue Chalkley, chief executive of Hastoe Housing Association.

Tim Pinder: Tim Pinder, chief executive of Peaks and Plains Housing Trust.

Mark Patchitt: Mark Patchitt, director of development and growth for the Riverside Group.

Photo of James Gray James Gray Conservative, North Wiltshire

Colleagues, we have an hour.

Q 169

Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Housing)

Thank you, Mr Gray. The Government have suggested that the voluntary agreement on the right to buy was necessary to avoid legislation. How voluntary was the voluntary agreement? Why did you decide to accept or reject it and should a voluntary agreement be subject to statutory monitoring?

David Montague: I am on the board of the National Housing Federation. I also chair G15, as well as being chief exec of L&Q. We were concerned at L&Q from the outset that a statutory right to buy would give us less flexibility over the long term, so we were keen to support a voluntary proposal. We believe that it would be better for housing associations in the long term, better for our tenants in the long term, and better for social housing in the long term. We supported it from the outset, as did the vast majority of housing associations. That is not to say that we do not have some concerns. As others have mentioned, we are concerned that it will have a negative impact on supply, particularly in London. Having said that, along with my G15 colleagues, we are determined to ensure that there is a net increase in social housing in London.

Sue Chalkley: We voted no for two reasons. First, the proposal is not adequately rural-proofed. We have quite a few concerns around the impact on rural communities. Secondly, we do not believe the proposal is future-proofed. It is mandatory for us because it will be in the regulatory framework, but it will be voluntary for the Government, because they could change their view as to what proportion of the discount might be paid in years to come. We felt it put us in a very uncertain position. We would rather something was in legislation so that there was certainty about what the deal contained.

Tim Pinder: Our association voted no as well, on the basis that, as a charity, they felt uncomfortable voluntarily giving up their charitable assets. They absolutely respected the fact that the Government had made it clear in their manifesto that they would bring forward legislation. Our board was of the view that it would happily go along with any kind of legislative provisions, but was not comfortable voluntarily giving up its charitable assets.

As the Bill is drafted, we still have concerns about the use of the word “may” in terms of the Secretary of State’s powers for potentially providing grants. The language was very different to a voluntary agreement that we were asked to vote on, which talked about full compensation for the discount at which we would sell our properties. The whole notion of a grant does not strike us as giving the same kind of powerful commitment that we will not be out of pocket. The fact that it says “the Secretary of State may” sounds a rather weaker commitment than we were led to believe the voluntary agreement had struck, which was that we would be, without condition, reimbursed for the discounts that are available under the right to buy.

Mark Patchitt: We voted yes for the voluntary offer—we thought the voluntary offer made was very clear about the conditions, that we would go through with the right to buy and that it is on full compensation. Our board thought long and hard about it and we also asked our residents and tenants to see what they thought of it. We are a charity as well. As long as we can get the one-for-one replacement so that we are able to help just as many customers in the long run, we are in favour of the voluntary deal. It is on those terms that we have set out.

Q 170

Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Housing)

What about the statutory monitoring of this? What do you feel has happened to you, becoming categorised now in the public sector? Are you concerned about it? Do you think that should be addressed?

David Montague: We are satisfied that our regulator will be required to monitor and we think that is an appropriate level of monitoring. As far as reclassification is concerned, naturally we were disappointed that we were reclassified, but we were pleased that the Government came out so swiftly after that announcement to confirm that it would take deregulatory measures to place us firmly back in the private sector. We believe that that is where independent charities belong.

We were also satisfied that, the day after the announcement, the chair of the regulation committee wrote to all of us and confirmed that, until the Government took the action that it had proposed to take, it was business as usual in terms of borrowing and expenditure plans.

Sue Chalkley: We were reassured by messages from the Secretary of State and the regulator but slightly disappointed that this was used as a reason for needing to say yes to the deal, whereas in fact it does not seem to be that much of a big deal after all.

Tim Pinder: There is a bit of an inherent contradiction between the regulator being given the power to enforce, monitor, control a voluntary agreement at the same time as the Government are making the commitment that they want us back in the private sector and to reverse the Office for National Statistics classification. Those two seem at odds to me.

Q 171

Photo of Marcus Jones Marcus Jones Parliamentary Under-Secretary (Department for Communities and Local Government) (Local Government)

In relation to this point about reclassification, Mr Pinder and Mrs Chalkley, you mentioned that would rather see the right to buy firmly in legislation and the whole thing legislated for. Do you not think that that would pose a significant risk of the ONS continuing to classify as they have done?

Sue Chalkley: My understanding is that in deciding the ONS takes into account whether there is a certain level of Government control, regulation and legislation, so I am not sure whether it would have made a lot of difference whether it was in one or the other; it is still Government control and that is what they take into account. That is my understanding.

Tim Pinder: As far as we are concerned, just to be clear, we absolutely accept the democratic vote of the sector. Our position was that our board was not comfortable accepting the voluntary deal but we respected that the majority of the sector did and at that point, therefore, we were happy to accept the voluntary deal rather than legislative provision.

Q 172

Photo of Matthew Pennycook Matthew Pennycook Labour, Greenwich and Woolwich

Some 1.3 million housing association tenants expect, I think, on the basis of this Bill, the right to acquire or buy their own home. I would assume that you would not be able to cope with that level of take-up; I wondered what level of demand you think you can cope with annually, say next year. Are you concerned that there are not any measures in the Bill to help you to cope with the demand of people accessing that right?

David Montague: Our estimate is that 10% of our tenants will be eligible and will be able to afford the right to buy. That estimate is supported by the National Housing Federation, which also estimates that 35% of housing association tenants in the midlands and the north will be eligible and able to afford the right to buy. We expect our 10% to exercise their right to buy over  probably a five- to 10-year period and we think that we can manage that level of demand. The average L&Q tenant has an income of £13,000, so even with a discount of £100,000, the vast majority of L&Q tenants will not be able to exercise their right to buy.

Sue Chalkley: We have some older stock in suburban areas but the vast majority of our schemes are in 250 rural villages. I know that this sounds really counterintuitive but we have had hardly any inquiries—fewer than five—from our tenants. Twice a year I do chief executive’s free-phone day, when people can ring me about anything. On my previous free-phone day in August, I only had one inquiry. I really do not know how you interpret that, but we do not have a sense that we will be overwhelmed.

Tim Pinder: Nor do we. We are a stock transfer housing association, so any tenant that was a tenant of Macclesfield borough council in 2006 retained their right to buy when they transferred across to us. Obviously that number has diminished each year as new tenants move in, but we have always managed to cope with the demand from that group. The new tenants who will be entitled to this right to buy do not represent such a significant challenge for us, so we are quite confident. I was interested to read the Minister’s comments about the potential for phasing in right to buy. We would be interested to understand whether that is a geography-based phase-in or whether it is about particular groups of tenants. How would that work? I am not so sure that we need that to manage the demand but gaining an understanding of those proposals would be welcome.

Photo of James Gray James Gray Conservative, North Wiltshire

The Minister has been called away to a meeting with the Secretary of State but I know that the officials are present and they will no doubt take note of the fact that you would like information, and provide it for you.

Q 173

Photo of Matthew Pennycook Matthew Pennycook Labour, Greenwich and Woolwich

Do you think there is a risk, if this is phased in or if you are not able to meet all the demand, that housing association tenants who want to purchase their own homes may feel let down?

Tim Pinder: They may well do. I do not know what lay behind the initiative to think about phasing in. One of the issues must be a concern about whether the amount of high-value properties in the local authority sector, which are designated as funding the discounts to housing associations, will be sufficient to allow the demand that you are identifying may well be out there to be met. For us, one of the issues is that we are aware of a very strong lobby from London-based local authorities to ring-fence any of the proceeds from its high-value properties. If that is successful, it prevents that money from heading north to where we are, where most local authorities have transferred the housing stock. The ability for local authorities in our neck of the woods—the north-west of England—to dispose of high-value stock if it was there is very limited because they are no longer stock-owning local authorities. That is my suggestion for what might lay behind the phasing in.

Q 174

Photo of Matthew Pennycook Matthew Pennycook Labour, Greenwich and Woolwich

Just picking up on the logic of what you just said, can I take from that that you think that like-for-like replacements in the local area where the forced sales will happen is unlikely?

Tim Pinder: No, when we say like for like, we are confident that we can replace at least one for one.

Q 175

Photo of Matthew Pennycook Matthew Pennycook Labour, Greenwich and Woolwich

With the same 10-year entitled spending?

Tim Pinder: Yes. However, where I take slight issue with the definition of like for like is that the area that we work in has some incredibly high-value properties and high-value areas. I was just looking yesterday at some land in Prestbury, where we have properties that will be attractive under the right-to-buy provisions. We are looking at £1 million-plus per acre. Now, there is no way that we can compete in the market to purchase land and build new in that village. We would be able to replace for every home sold in Prestbury, but it would not necessarily be replaced in Prestbury. That is the disadvantage.

Q 176

Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Housing)

In areas of low-value housing, do you accept that it might not be possible to do a one-for-one replacement in the area because it would cost perhaps two or three times as much to replace the home that has been sold than the value of the home itself?

Mark Patchitt: It is going to be a challenge. We expect the average sale price of our right-to-buy properties to be about £82,000 or £84,000. That is probably less than it will cost to replace it, like for like, with a rented property. On your previous point about like-for-like properties and where you build them, it is important that there is some flexibility about where we build so that we can get the maximum efficiency in how we are building so that we can do the deals on the land now and try to get the land to replace these properties. We will have to look at whether we can replace exactly for all the affordable rented sales, but certainly we would expect to be able to replace affordable accommodation one for one.

Q 177

Photo of Seema Kennedy Seema Kennedy Conservative, South Ribble

Mr Patchitt, you said that when your housing association took the decision to vote for the voluntary agreement, you consulted your tenants and your customers.

Mark Patchitt: We did, yes.

Q 178

Photo of Seema Kennedy Seema Kennedy Conservative, South Ribble

Could you expand a little on how you did that? Do you think that they were interested in the proposals of the Bill overall and this idea of starter homes and expanding?

Mark Patchitt: We consulted them specifically about the voluntary right-to-buy offer. That was all that we consulted them on. We consulted our board and our residents at the same time. That was on the basis that if they voted no, there would potentially be a statutory right to buy, and if they voted yes that would be in favour of the voluntary right. They saw the benefits of the voluntary deal over a statutory deal in preserving some of the flexibilities that we had hoped for, and it was very much on the basis that they wanted one-to-one replacement. They did not want to see a net loss of affordable homes in Riverside, and they thought that was the best way of achieving that.

Q 179

Photo of Seema Kennedy Seema Kennedy Conservative, South Ribble

Can I ask the other panellists whether they went through a similar process? I am sure that you did on your boards, but was there any of that sort of consultation with the actual people living in the homes?

Tim Pinder: We did not, no.

Sue Chalkley: No, we did not.

David Montague: Nor did we. We consulted our board, which includes residents, and we have a resident board.

Q 180

Photo of Seema Kennedy Seema Kennedy Conservative, South Ribble

You have representatives on the board. Mr Pinder, you are based in Macclesfield, and you have cited the example of Wilmslow. Where else do you have homes?

Tim Pinder: We have homes in some very affluent parts of the borough, in places such as Alderley Edge, Wilmslow, Knutsford and Bollington. I think that is interesting because quite often the housing debate is characterised by a kind of north-south divide, which is far too crude.

Q 181

Photo of Seema Kennedy Seema Kennedy Conservative, South Ribble

That is why I asked, because I know the area well. You gave the example of Wilmslow for a family on £40,000. How far would that go? Would you get a house in Warrington or in Macclesfield itself?

Tim Pinder: Macclesfield is lower value than those areas, and even within some of those towns with a reputation for being incredibly affluent, there are lower value properties and lower value areas. It is quite a complex mix.

Q 182

Photo of Seema Kennedy Seema Kennedy Conservative, South Ribble

Would you accept that the example that you gave of a family spending 56% of their income is an outlier?

Tim Pinder: I would not say that it is an outlier. There are more properties in that field than there are lower values one. I would say that that is more typical than not.

Q 183

Photo of Seema Kennedy Seema Kennedy Conservative, South Ribble

Perhaps that is because of that stock transfer from Macclesfield borough council, but surely in the rest of Cheshire there are definite examples where this sort of percentage would not be paid.

Tim Pinder: Absolutely. I would agree with that.

Q 184

Photo of Helen Hayes Helen Hayes Labour, Dulwich and West Norwood

I wanted to ask your views on the pay-to-stay measures in the Bill. I would be interested in your views on what you think the impact of pay-to-stay will be on your organisation, administratively and in terms of your capacity, on your tenants and your relationship with them, and also on the wider communities that you manage as housing associations.

David Montague: I will start by saying that we welcome any flexibility on the way that we set our rents. As charities, we will always use that flexibility carefully and prudently. We would prefer to see that flexibility extended across all of our stock, particularly given that we are not sure what will happen to rents in five years’ time. We think that the best people to set rents are the boards of charitable housing associations. We broadly welcome any flexibility that we are given.

On this specific measure, we think that pay-to-stay, for those who can afford to, will equal right to buy. It will encourage people to exercise their right to buy. They will have a choice of either seeing their rent doubled or accepting a discount of up to £100,000 to buy their home. It is a big incentive to buy their home. The difficulty is that if someone is living in a one-bedroom  flat in Westminster and they cannot exercise their right to buy, then they could be stuck. That is why we welcome the flexibility that we are being offered through the voluntary deal, which will mean that the discount is portable —people can take it to a more affordable area. We are concerned about the administrative complexity of pay-to-stay. It is going to be a bit of a burden, and we are not yet convinced that the income we will receive will outweigh the cost of collection. It will require co-operation between us and statutory agencies in a way that has not happened before.

We would like to see some of the detail as well. We are not sure whether the same rules apply to a single person on £40,000 as to a couple on £40,000. There is a danger if it does that we could be drawing more people into the benefit system as a result of this policy.

Sue Chalkley: If it was a simple system to administer, we think that pay-to-stay might help to offset some of the rent reductions that we are facing. However, there are rural considerations with this initiative as well, in that many of the schemes that we have built for rural communities have been built with an undertaking that we will hold them as affordable housing in perpetuity. This could trump that deal with the rural community and cause a lack of confidence going forward, so that is a concern.

The other issue from the point of view of a rural community is that many families have seasonal part-time work and they have a portfolio of jobs, so it will be potentially quite complex to decide what the income is and how the rent is calculated on that. On top of that, there is plenty of evidence to show that living costs in rural communities are between 10% and 20% higher than they are in urban communities. Should the taper be in some way tapered to reflect the difference between rural and urban communities? We really just call for this to be fully rural-proofed.

Tim Pinder: We welcome pay-to-stay. I said before that our association had taken its view on right to buy because of its charitable status. On the same basis, pay-to-stay makes sense to us as a charity because to maximise our charitable assets, they should be going to the people in greatest need. We actually welcome it as a principle. I think, again, there is a bit of a potential conflict here with the Government’s intention to have us reclassified as private bodies, because they are talking about a legislative provision rather than a voluntary arrangement.

Some of our concerns are around the proposed level. For us, it is £30,000 outside London. From April 2015, a couple on the living wage would be at that £30,000 mark, so in our view £30,000 does not feel like the right level to reflect a high income household. Some of the details around how this would work in practice also give us some concern. If you are £1 above the £30,000 limit, does that immediately mean that you will move to market rent? If so, you are suddenly faced with an extra £3,000 rent per annum, which seems to fly in the face of the whole concept of “work must pay” and people bettering themselves in a way that does not have a financial disincentive. We very much welcome the principle. We would very much like, perhaps through the National Housing Federation, to work with the Department for Communities and Local Government to look at how that would pan out in practice.

Q 185

Photo of Stewart Jackson Stewart Jackson Conservative, Peterborough

First of all, Mr Pinder, I think you are slightly gilding the lily in quoting Prestbury, because Prestbury is probably in the top 3% in the north-west, if not in England, as a super-output area for wealth. You could easily have said Widnes, Warrington, Winsford, Crewe, Chester or various other places. It illustrates the point that Ms Kennedy was making. There are obviously social and demographic variations even within one region.

Can I just address the issue of pay-to-stay? Because we ran out of time, we were not really able to challenge David Orr to the extent that we would have liked. The evidence that was given earlier seemed to suggest that housing associations were not expeditiously collecting data on the household income of their tenants. Is it not incumbent on you to have been doing that from day one? You are trying to allocate very scarce public housing resources. Why is it only now that you are saying, “We are not going to have the capacity,” or, “It is too bureaucratic to collect data on the income of our tenants”? You should have been doing that some time ago.

Tim Pinder: We certainly do for new tenants. The point you are rightly making is that, at the point at which we allocate a new property, to ensure that we are discharging our charitable responsibilities appropriately, we absolutely do check. In our case, having inherited 5,000 tenants from a local authority, if they are still our tenants now we have no record of their earnings.

We are in a very strange situation where we have really no right to know the earnings of existing tenants, but we have for new tenants. From the Information Commissioner point of view we should restrict the amount of information we hold on tenants to that which we ought to collect.

Q 186

Photo of Stewart Jackson Stewart Jackson Conservative, Peterborough

But the legislation says that they have a retained right to buy. Am I correct in saying that?

Tim Pinder: Yes.

Q 187

Photo of Stewart Jackson Stewart Jackson Conservative, Peterborough

Surely their financial bona fides are pertinent to an application for retained right to buy, if they wish to purchase a property?

Tim Pinder: What we find in practice is that a huge proportion of right-to-buy applications are funded by family members rather than by the applicant or tenant themselves. I am not so sure that helps us in the processing of right to buy. That remains a big challenge for us. If we do not have that data, how do we get them? There has been talk that Her Majesty’s Revenue and Customs will make those data available to us. How easily accessible they are is another matter.

Q 188

Photo of Stewart Jackson Stewart Jackson Conservative, Peterborough

So the Government are doing you a favour in prompting you to collect information better, to use the resources at your disposal better. Would you agree?

Tim Pinder: I am not so sure it helps, no.

Q 189

Photo of Peter Dowd Peter Dowd Labour, Bootle

With your permission, Mr Gray, I will use Mr Patchitt as a case study, to tease out an issue. Many of the houses under your control, Mr Patchitt, are in my constituency. I have some figures here. You say that you have 53,000 homes. Is that correct?

Mark Patchitt: Yes.

Q 190

Photo of Peter Dowd Peter Dowd Labour, Bootle

So, on the figures we were given before, around 10% of them were sold. Is that a fair figure? Let us take that as an example. That is 5,300 at £85,000 a home, as you were saying before, which is £450 million, if my maths are correct. The full receipt to replace is not received because of the difference between the replacement cost of £100,000 as opposed to £85,000. The cost to replace at £100,000 leaves you short of about £20 million does it not, if you were replacing like for like?

Mark Patchitt: It could do. There are different ways we can procure homes. This is an important point. Currently, we are able to acquire some homes under section 106 agreements with developers. That discounts the cost of rented homes, so we are able to get properties purchased from developers at around £80,000 in the north at some point, some time. That would help offset some of that, but to build new would definitely cost more. We are looking for a balance and we may have to consider some affordable home ownership to replace that.

Q 191

Photo of Peter Dowd Peter Dowd Labour, Bootle

Would you agree that, if you had the absolute guarantee, or at least the guarantee in the Bill, that you were going to get, not just pound for pound, but perhaps £1 for £1.10, to rebuild all the houses that have been sold—

Mark Patchitt: It is a national offer. Nationally, as a sector, we say we will replace one for one. It may be that in some parts it is a bit more of a challenge for somebody to replace exactly one for one, but somebody might be able to replace a little bit more than one for one, and as a sector we will do that. We have signed up to the fact that roughly one-for-one replacement should be possible, if we get full compensation for the sale of the property.

Q 192

Photo of Peter Dowd Peter Dowd Labour, Bootle

Can I pursue this further? You are a charity and are concerned with your charitable status and the people you deal with. You are not interested about what is happening in London or Manchester, or wherever it might be. The bottom line for you as a charity is whether you have the guarantee that you will, pound for pound, or £1 for £1.10, get that money back. Have the Government given you that guarantee in the Bill?

Mark Patchitt: The voluntary offer that we have signed up to—we have said why we would sign up to it—is that we get full compensation for the sale of our properties. If that falls, I do not see how we could provide the one for one, and our board would probably take a different view.

Q 193

Photo of Peter Dowd Peter Dowd Labour, Bootle

That brings me to the question: are you confident that the Bill—not what Ministers say might be there—guarantees housing associations the full value of homes sold through the right to buy?

Mark Patchitt: The Bill mentions grants, and I have mentioned full compensation for the right to buy. Whether that is in the Bill or outside it, and how it is legislated for, I leave for others to decide.

Photo of Peter Dowd Peter Dowd Labour, Bootle

That is a no, then.

Photo of James Gray James Gray Conservative, North Wiltshire

Before I call the next speaker, it may help the Committee to know that we expect a Division in the Chamber at 4.40 pm. Therefore I intend, with the  Committee’s agreement, to wind up this session at 3.55 pm in order to get the next panel in before the Division. That gives another 10 minutes in this session.

Q 194

Photo of Richard Bacon Richard Bacon Conservative, South Norfolk

We heard from the previous witnesses from Shelter and Crisis that there is “nothing in the Bill for social renters”. As people running housing associations, do you think there is anything in the Bill for social renters?

David Montague: The overall picture is very positive and is backed up by statements from the Minister, from the Secretary of State and from the Prime Minister. A million homes over five years—we are totally behind that. We are very pleased to see efforts to release brownfield land and for the planning process to support the provision of new housing, but I am concerned that there is not enough in there for social rented housing.

Sue Chalkley: I entirely agree. We will do our best to continue providing affordable, rural, rented housing, and we support the general thrust of the Bill to deliver more homes of any tenure, but the Bill itself does not really incentivise more social rented housing.

Tim Pinder: I largely agree with that. I was struck by some work that the Halifax did recently on people who are renting, which found that 15% of renters across all sectors have no aspiration for home ownership. So, welcome though the Bill’s provisions are for starter homes, there is that chunk of people for whom I do not think there are provisions in the Bill to assist. However, I think that our ability to re-provide, probably, more than one to one and right to buy, means that, in that respect, there is something for social renters.

Mark Patchitt: I agree with the previous comments.

Q 195

Photo of Richard Bacon Richard Bacon Conservative, South Norfolk

I am specifically thinking of vulnerable groups, such as the disabled, the unemployed, those on benefits and homeless ex-servicemen and women. The Community Self Build Agency seems to think that the approach of self-build can do something for all those groups. On the front page of its website it says:

“I was encouraged by the local council to apply for the CSBA Scheme, I rang them and said; ‘I am disabled, unemployed, on benefits and I know nothing of building.’ They said; ‘You fit all the criteria!’ I have never looked back.”

None of you, in your answers, mentioned self-build, although that is chapter 2 of the Bill. What do you think self-build might do to help you? This refers to different kinds of tenure, including affordable rent and shared ownership, both of which the Community Self Build Agency does. What do you think that you, as housing associations, might do in this space?

David Montague: Self-build has a really important role to play, but will it deliver a million homes over five years? I fear that it will not. Will it deliver 50,000 homes a year in London? I do not think it will. Everybody has a role to play, but there is so much more than self-build that needs to be offered as a solution.

Sue Chalkley: I absolutely think that the solution is lots of little schemes. I really like the Self-build and Custom Housebuilding Act 2015. We held a landowners conference in Newmarket three weeks ago and we have been overwhelmed by landowners expressing an interest in doing self-build. We are following up a number of leads at the moment, so we feel really positive about that. It is a good, local solution that will be something that the local community will own and be proud of.

Tim Pinder: We have had discussions with the local authority about making provision on our sites—as we develop them for either shared ownership or for rent—available for self-builders as well, so we are happy to accommodate them as part of the mix, as Sue suggests.

Mark Patchitt: I think it can be complementary. It is a very intensive support system to help self-building get off the ground—it takes a lot of human resources and time—and we have preferred to concentrate our efforts on commercial building, affordable building and other off-site manufacturing ways of trying to add quantity to the whole output.

Q 196

Photo of Richard Bacon Richard Bacon Conservative, South Norfolk

Is there anything in law which prevents housing associations—which, after all, are actors who play in the space at scale—from promoting mutual housing co-operatives and taking part in them?

David Montague: I doubt whether there is.

Sue Chalkley: I do not think so.

Photo of James Gray James Gray Conservative, North Wiltshire

We do not need to hear from all four of you.

Q 197

Photo of Richard Bacon Richard Bacon Conservative, South Norfolk

If you wanted to do that, you could?

Sue Chalkley: There are co-operatives that are housing associations.

Q 198

Photo of Richard Bacon Richard Bacon Conservative, South Norfolk

Yes, but if you as housing associations wanted to support new co-operatives and take part in them, you could do so?

Sue Chalkley: Yes.

Q 199

Photo of Gareth Thomas Gareth Thomas Party Chair, Co-operative Party

Mr Montague, can you flesh out a point you made in your opening remarks about your concerns that the Bill will not add to supply in London?

David Montague: We believe there is a lot that is positive in the Bill, as I mentioned earlier—brownfield sites and so on—which will help us to deliver more homes in London. The tides that we are swimming against in London are the loss of local authority stock that will be difficult to replace and the effect of the starter home initiative, which is still difficult to determine. Our fear, as others have suggested, is that it will replace social housing.

Q 200

Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Housing)

Can I follow on from that? The G15 are quite strongly against this forced sale of council housing. Do you share the concern that the Government should not be seeking to support the right to buy through the forced sale of council housing?

David Montague: We are concerned that it will lead to the loss of affordable social rented housing in London. We would have preferred to have seen the voluntary right to buy funded through other means—means which we suggested. Given that we are where we are, we are determined to work with local authorities to protect against the loss of social housing in London.

Q 201

Photo of Maria Caulfield Maria Caulfield Conservative, Lewes

I am interested in your opinion on the concern about matching the loss of right to buy for one to one. Have you looked at other methods, other than traditional house building methods? My local authority only this year has gone down the modular  housing route, which has enabled 100% affordable rented housing to be turned round that meets all building regs, along with the “Code for Sustainable Housing” and the Lifetime Homes standards, and the houses are three and four-bedroomed detached houses for low-paid workers. The cost to build each house is less than £30,000, so you could easily replace two for one, for example. Have you looked at those models?

Mark Patchitt: We have been working with housing associations in the north-west collectively to look into modular off-site and to see whether we can collectively bring the purchasing power that would make a difference. We first thought that we might be able to get discounts. That wasn’t the case, but we could help the industry with modular. Our experience to date—we have done a number of pilots—is that the actual cost of modular today is slightly more expensive than traditional. However, we are still pursuing it, because we believe that in two, three or four years’ time it will be as competitive, if not more competitive, as you see labour and material costs go up.

Q 202

Photo of Maria Caulfield Maria Caulfield Conservative, Lewes

I am slightly concerned about that. With the modules that we have been using, we can build a three or four-bedroomed house for less than £30,000 in 18 weeks. They are quick and cheap to build. I am surprised if you have not looked at that route at all.

Mark Patchitt: A lot of the modular solutions have very good headlines—I don’t wish to dispute the figures—but we found £60,000 per house didn’t include the garden, the fencing or the roofing in one instance. We have looked into a number of schemes, and I believe it is a very good point. We should be looking at off-site and modular housing. I really believe it has its place going forward if we are going to create the million homes that we are aspiring to.

Q 203

Photo of Andrew Griffiths Andrew Griffiths Conservative, Burton

All of the panel have discussed the £30,000 as the limit for pay to stay. The Government are consulting on a paper or a gradual system that could even have regional variations. Could the panel tell us if you have contributed to that consultation and, if so, what have you said?

Tim Pinder: We have, yes. Some of our suggestions are around perhaps starting a taper at a rent that is earning 25% above the existing £30,000 threshold, so there is clear blue water between them—perhaps as a taper similar to the rent convergence that housing associations and local authorities adhered to over recent years, which means that we set a rent as a target that we want to get to over, say, a five-year period and the rent increases by £5 per year until we get there. Those are some of our ideas.

Mark Patchitt: We have contributed. In terms of the taper, we are concerned that £30,000 is on the low side. The difference for some of our residents, for example in Bromley, between what they would have to pay as a market rent and what they currently pay today would be an enormous jump. That £30,000 threshold in 2020 is two people on minimum wage.

Q 204

Photo of Andrew Griffiths Andrew Griffiths Conservative, Burton

Have you made a specific suggestion on what the taper should be?

Mark Patchitt: We have not. We would prefer it to be a higher threshold.

Sue Chalkley: We have not yet. I would not imagine that we would make a specific suggestion about the taper. We will probably be majoring on the impact on rural communities.

David Montague: We will make a submission. We believe in a higher threshold. More importantly, we believe that pay to stay should be voluntary and it should be part of the general flexibility for housing associations to set their rates.

Photo of James Gray James Gray Conservative, North Wiltshire

We thank the panel very much indeed for their evidence. I hope you do not mind me curtailing it slightly but the business of the House demands that we should do so. Thank you for coming in. Will the next panel take their places with no undue delay?