The Minister for Housing and Planning (Matthew Pennycook)
I congratulate the hon. Member for North East Hertfordshire (Chris Hinchliff) on securing the debate, and thank the other hon. Members who have made contributions to it.
The provision of council housing is of the utmost importance to this Government. After decades of marginalisation, we are once again asserting the necessity and value of social and council housing, as a crucial national asset to be proud of, to invest in, to protect and to maintain. Doing so is imperative, because successive Government have, for decades, failed to build sufficient numbers of social and council homes in England, and that failure is at the heart of the acute and entrenched housing crisis we face today.
As has been noted, as a result of diminished social and affordable housing supply, particularly in the wake of the coalition Government’s decision in 2010 to slash grant funding for affordable homes, over 1.3 million households now languish on local authority waiting lists, millions of low-income families have been forced into insecure, unaffordable and often substandard private rented housing, and, to our shame as a nation, over 169,000 children will go to sleep tonight in temporary accommodation. Acutely conscious that it would not be quick or easy, we entered government determined to turn that situation around, and that is precisely what we have begun to do. In the brief time available to me, I will detail how the Government are kick-starting a decade of social and affordable housing renewal, and set out the ways in which we have laid the groundwork for a reinvigoration of council house building.
As the House will know, the Government stood for election on a clear manifesto commitment to delivering the biggest increase in social and affordable house building in a generation. We did so to address the urgent need to provide homes for those for whom the market cannot cater, but also because the provision of social and affordable housing supports wider housing delivery. We know, for example, that on sites where more than 40% of homes are affordable, build-out rates are twice as fast. Boosting the supply of social and affordable homes is therefore at the heart of our efforts to ramp up housing supply more generally, and to meet housing need and housing demand in full across the country.
Matthew Pennycook
The hon. Member will know that we have not set a target as things stand, for the reasons that we have debated on many occasions, but we keep the matter under review.
Matthew Pennycook
And we have debated that issue on many, many occasions. I have given the hon. Member very detailed answers as to why, at this point in time, we have not set a target, but we will keep it under review.
As I have said, boosting the supply of social and affordable homes is at the heart of our efforts to ramp up housing supply more generally, and because direct delivery by councils has been key to high rates of house building in the past, getting councils building again is an essential part of our strategy.
On social and council housing, the Government have put their money where their mouth is. As the hon. Member for North East Hertfordshire made clear, at the spending review we announced £39 billion for a successor to the affordable homes programme over 10 years from 2026-27 to 2035-36. I can confirm that given the priority this Government accord to social rented housing, at least 60% of homes delivered through the programme will be for social rent.
Accurately forecasting long-term delivery is inherently challenging—that is one of the reasons we have not set a social affordable housing target to date—but we believe our grant-funded social and affordable homes programme could deliver around 300,000 social and affordable homes over its lifetime, with around 180,000 being for social rent. The programme will continue to support regeneration schemes that provide a net increase in homes. It will also permit a limited number of acquisitions. We know these two delivery avenues are important to councils, including those with older homes and those who are looking to rapidly grow their housing portfolios to deal with acute local pressures. We also recognise that certain types of much-needed social and affordable housing can cost more to deliver, including those built by councils. That is why the programme has been designed to be flexible in order to support the greater diversity of supply required, with councils encouraged not to self-censor when coming forward with bids.
To improve financial capacity, to deliver new supply and support long-term planning, for the first time, we announced a 10-year social housing rent policy at the spending review. In addition, we have recently completed a consultation on how to implement a social rent convergence mechanism, the outcome of which will be confirmed at the autumn Budget. The inclusion of this mechanism will be beneficial to councils, with many authorities letting homes below formula rent. Both these measures will support their capacity to borrow and invest in new and existing homes.
Beyond investment, we have developed a series of measures designed to enhance councils’ confidence, capacity and capability to deliver, and I want to cover some of them as they directly address the subject of the debate. As the hon. Gentleman is aware and has noted, one of the Government’s earliest acts was to introduce transformative changes to the right to buy. We want to retain a scheme that helps long-standing tenants to buy their own homes, but we could not ignore the detrimental impact the right to buy was having on existing stock and councils’ confidence to deliver new social and affordable housing. So we took decisive action to deliver a fairer, more sustainable scheme that provides better value for money and creates the certainty for councils to once again build at scale. Changes that have already come into effect include returning the maximum cash discounts to between £16,000 and £38,000. We have also enabled councils to keep 100% of their right to buy receipts for reinvestment in new and existing homes. But we will not stop there. Following consultation, we will legislate for a more comprehensive set of reforms when parliamentary time allows. These reforms will include a 35-year exemption from the scheme for newly built homes, and a first option for councils to repurchase homes acquired through right to buy if they are sold on. On top of this, from 2026-27, we will act on a long-standing ask from councils by allowing them to combine right to buy receipts with grant funding from the social and affordable homes programme.
In addition to revenue generated from sales through right to buy and capital subsidy, we know how important borrowing is to councils’ delivery plans. Since 2023, a preferential borrowing rate has been available from the Public Works Loan Board for council house building. So far, this preferential rate has enabled councils to borrow £6 billion for investment in new and existing homes. I am conscious that this rate is due to expire at the end of this financial year, and recognise the calls from councils for long-term certainty. Considering this, we will confirm our approach to this discounted rate at the autumn Budget.
Many of the measures I have mentioned so far relate to councils’ financial capacity, yet we know—the hon. Gentleman again mentioned this—that the challenges they face are not solely financial, and that as rates of delivery have declined in recent decades, so too have the skills and capacity of their housing teams. In response, in partnership with Homes England and the Local Government Association, we have launched the council house building skills and capacity programme, backed by £12 million of funding this year. This programme aims to upskill councils’ existing workforces, recruit and train new graduates to become qualified surveyors and construction project managers, and drive engagement with the social and affordable homes programme.
To conclude, this Government remain firmly committed to delivering the biggest increase in social and affordable house building in a generation. Within that commitment, we have prioritised the delivery of social rented homes, and we are taking steps to enable councils—whether those already delivering or those with closed housing revenue accounts who want to deliver—to once again build at scale. We have achieved an incredible amount over the space of just 14 months, but there is much more to come. We will continue to engage with councils and pull every lever at our disposal to increase their confidence, capacity and capability to deliver the social homes that low-income families across the nation need to live, grow and build a better life for themselves.
Question put and agreed to.