Housing: Availability and Affordability

Lord Smith of Leigh Excerpts

Thursday 12th October 2017 Lords Chamber

Moved by

[Lord Smith of Leigh]

That this House takes note of the impact of Her Majesty’s Government’s policies on the availability and affordability of housing.

[Lord Smith of Leigh (Lab)]

My Lords, this is a timely debate for this House and I am grateful for the number of noble Lords who have expressed an interest in participating. I am sure that we will have a lively and interesting debate, and I see that we have a Minister who has considerable experience of housing in the past. I need to start by declaring my personal interests: I am leader of Wigan Council and also a vice-president of the LGA.

Both the Prime Minister and the Secretary of State for Communities, speaking at the Conservative conference last week, told us that the housing market is broken—we can all agree with that statement, I think. But there are many views on the way forward to fix it. The Government are really just tinkering around with the problem, not looking at the fundamental issues that will lead us to improving that market. Whatever way we want to look at housing, the market is in crisis. This country is failing to deliver the number of houses we require by a substantial margin. It is suggested that we need a minimum of 250,000 houses a year—300,000 is probably nearer the mark and was the number in the Conservative manifesto for the last election, so let us see what comes from that. The latest figures show that we are well over 100,000 short of that figure. The contribution of council houses was a mere 1,600—and there are 1.2 million people on council house waiting lists.

We can see the impact of the shortfall on both houses prices and rents in the private sector. In 2000, house prices were about four times average income; they are now about eight times average income. One in seven of those renting is spending more than half their income on rent. This increase in housing costs has the biggest effect on those who are trying to get into the housing market in their 20s and 30s and on those who have the lowest incomes. Too many families are trapped in poor-quality housing. It affects their health, their children’s education and their whole life experience. We are failing to give these families their right to decent housing.

In advance of the Prime Minister’s contribution to the Conservative conference, it was trailed that we would see a return to the era of Harold Macmillan. When he was a rather reluctant—I understand—housing minister in the Churchill Government of 1951, he managed to achieve an amazing 300,000 houses a year, of which 250,000 were council houses—an amazing proportion. The Prime Minister’s statement promised a figure that seemed generous but when it was unspun meant the delivery of an additional 5,000 properties for social rent per annum. That is nowhere near the figures that Macmillan achieved and obviously not the figure we need.

However, I welcome the Government’s recognition of the role of council houses. It is about time that we recognised that local authorities have a role in providing them, but we do not need these little initiatives which will not stimulate the sector. The Government need to change fundamentally the restrictions on council housing to ensure that local authorities have the freedom to borrow for housing. Why can they not do this? They borrow for other things: why not housing? It is incredible.

The right to buy is controversial, but why should local authorities not keep all the moneys from the right to buy, as that would enable them to build more new properties and give them greater flexibility to use the assets of housing as security against borrowing? Councils need not more money but freedom and flexibility to enable them to get on with the task of building more properties.

Local authorities clearly also have a role through housing planning. The Government seem to think that in the last few years a blockage has arisen in the planning system and that local authorities are not approving houses in sufficient numbers, so they have reduced the ability of local authorities to refuse planning permission. However, at the end of the day over 90% of applications to local authorities have been approved. The problem was that not all those approvals led to real building. Sometimes developers held on to land, hoping that its value would rise even more before they would commit to building.

The Government have previously stated that they prefer development on brownfield sites, which is a principle that I think we can all share. However, although the principle is fine, the practice is not quite what it seems, because Defra has reduced the subsidy for remediation of brownfield sites. In many areas such as my own, former industrial sites need to be cleaned up before new developments can be built on them. The Government reduced the grant for that and now it has gone away totally. That affects the balance of costs between building on greenfield sites and building on brownfield sites. The balance is moving more towards building on green-belt, undeveloped land.

The Prime Minister said in Parliament in February that the Government were very clear that the green belt must be protected. However, that commitment is not what it appears, given the pressure to meet housing targets. The Prime Minister ought to have been aware of that as her area, the Royal Borough of Windsor and Maidenhead, has a housing plan which includes putting 6,000 additional properties on green-belt land. I am not saying that is the wrong strategy for the royal borough, but it adds to the pressure on green-belt land.

In my own authority a proposal to build an estate on green-belt land was submitted in an area which already had quite a lot of housing. The proposal was vigorously opposed by the local community and the local council. After we turned it down, the developer appealed, so it went to the government-appointed planning inspector. The government appointee chose to overturn the local authority’s view, permitting development on a green-belt site. The justification was that although we were expected to have a target of around 1,000 new properties a year and the council had given planning permission for them, because the developers had not actually built those houses there was a shortfall of housing and this justified development on the green-belt site. That is my example, but it is not the only one I could give because I know that neighbouring authorities have had similar experiences. So what is the real strategy for green-belt sites? Are the Government being flexible or have they changed their policy? If they have not, why do they tell their inspectors to carry out what is actually government policy instead of doing their own thing?

The most extreme example of the failure of the housing market is obviously homelessness. In big cities and in smaller communities, we can see with our own eyes that the number of people who are rough sleeping has increased dramatically over the past few years. It is a disgrace for us as a society to see that happening. However, people who are rough sleeping are just the tip of the iceberg. I have some figures from Manchester City Council, which has a number of people to accommodate, and it says that it probably has to deal with 75 to 100 rough sleepers. That is bad enough, but on the back of that are 500 families living in temporary accommodation and 500 single people in inappropriate accommodation—but it has housed them—along with a further 900 people in supported accommodation. In other words, the number of people who do not have homes is much greater than the number of people who are sleeping on the streets.

In Manchester the biggest cause of people becoming homeless is eviction by private landlords; the second is domestic violence. Eviction by private landlords is not normally associated with not paying rent; it is simply to do with changes in the strategy of the landlord and moving on and so on. I think we all recognise that. However, we need to admit that the causes of people becoming homeless are many and varied. If we are going to reduce homelessness properly, we need to provide not only appropriate additional accommodation but a range of supporting services to help those who for various reasons have chaotic lifestyles. They often do not have access to health services, particularly mental health services. Many in the north are ex-servicemen who come out of the Army and cannot adjust back into society. They have played their part but they are not given the support they need. As I say, it is not just a problem of getting more accommodation; it is a question of providing support for these people.

I understand that the Prime Minister is visiting Greater Manchester today and will be making announcements on both housing and homelessness. I am not claiming any credit for the fact that the Prime Minister is going to my home patch and making these announcements, but it is likely that your Lordships will recognise that our debates may have an influence on national affairs. I do not want to seem to be ungrateful. If the Prime Minister is giving some more money to Manchester, I will accept and thank her for it, but for me it is just an example of more tinkering at the edges and not looking at the fundamental causes of the housing crisis in this country. If the Government could only develop a strategic plan to get more houses built nationwide, that would provide support not only for Greater Manchester but for the whole country. This House would be behind such a strategy.

The housing crisis of course is not just about bricks and mortar; more importantly, it is about people whose lives are being blighted because of its impact. Housebuilding should be regarded as an investment in both the physical and social fabric of our nation. Let us commit ourselves to that investment, and I am sure that in the long term we will reap the benefits.

--- Later in debate ---

[Lord Smith of Leigh]

My Lords, I thank everyone for their contribution to the debate today. I think there was an overwhelming consensus on the scale of the problem. Considerable expertise and knowledge were shown. As the Minister reflected on, there were obviously criticisms of government, but they were criticisms of outcomes. There were a lot of positive suggestions from across the House on what we should do and what changes are to be made to see results.

I also felt a lot passion, again from across the House, with speakers understanding that if we are to help people achieve that aspiration for decent houses we have to do better than we are doing today. The Minister is well respected in the House and gave us a good summing-up—we will obviously read all that. It is an issue of supply, although it was not mentioned that the Governor of the Bank of England has already advised us that interest rates are likely to rise in the near future, which usually impacts on housing—and of course we do not know the impact of Brexit. My noble friend Lord Morris of Handsworth suggested that we might put as much emphasis on housing as we do on Brexit. I hope that he was not suggesting that we put David Davis in charge of housing, because that is something that I do not think that we could agree on.

The word that we heard across the House was “investment”: investment in buildings and investment in people. That should remind us that the benefits of housing are financial across the range for the Government. If we did a proper cost-benefit analysis of getting affordable housing right, we would see that we would save on housing benefit, on social welfare costs and right across the piece. I welcome the Government’s commitment to housing. We want to see a positive outcome—that was the mood across the House. I again thank noble Lords for their contributions.

Motion agreed.

Local Government Finance

Lord Smith of Leigh Excerpts

Thursday 13th July 2017 Lords Chamber

[Lord Smith of Leigh (Lab)]

My Lords, in thanking my noble friend for securing this debate I must apologise to him for missing his first sentence. I was coming down on a train today and unfortunately it, like the Government, had a loss of power. Fortunately for Virgin Trains, the loss of power was only in Milton Keynes, not over the whole country.

I need to declare my interests in local government. I am leader of Wigan Council, a member of the Greater Manchester Combined Authority, a vice-president of the LGA and vice-chair of an organisation called SIGOMA.

In looking at the Government’s loss of power, one of the factors that affected the election in June was the impact of austerity. As the campaign went on and as issues such as school funding, police funding, the loss of police numbers when the Prime Minister was Home Secretary and social care, which was a total disaster, came out, it made people understand that if you cut back public services you cut back on the way they affect people’s lives—and people had had enough. I shall say a bit more on this later.

In Wigan, one of the things we do now which we did not do before is that we go around to the different communities to explain to them what we are doing and answer questions from the local community. We were in a former mining village the other Wednesday. It was one of those rare evenings in Wigan when the heat was blasting down and I would rather have been in the garden with a long, cool drink than in the venue—but enough people turned up and they listened to my explanations, and then we got to question time. Again, austerity was the dominant issue.

The first question people asked was about the increase in anti-social behaviour by young people and the lack of police response. In the last few years, Greater Manchester Police has lost 2,000 officers and does not now come out. If somebody now rings the police and says: “We have an anti-social”, the police reply, “It’s category 3 and we only come out to category 1 and 2. You’ve had it. We don’t turn up at all”.

In the same area, people criticise the council for not having enough youth workers on the scene. As the noble Lord, Lord Greaves, was implying, this was a discretionary spend. Where we are looking to make the kind of savings we have to make, we do it, but not as much as we did before.

One gentleman raised the issue of transport. People cannot get in and out of the place early in the morning or in the evening because there is no public transport; the buses stop running. Why is that? Because Transport for Greater Manchester lost funding and can no longer subsidise non-profitable routes, so they go. He made the point that if you want to get a job on a shift pattern, you could not do it. We have also reduced street cleaning. To be precise, I think about £3 billion has been taken out of the neighbourhood services budget nationally.

I think the Government were sleep-walking when they went into the election, not understanding the way austerity was hitting people. In some ways, there is an excuse. The former Prime Minister—as I was stuck on the train, I have not heard on the news today whether the current Prime Minister is still with us, but I assume she is—David Cameron said, “We are all in this together”. That was a totally untrue statement. The unfairness in the way that austerity is applied has come through quite dramatically. In cash terms, local government lost 20% of its budget from 2010 to 2016. There will be a slight increase between 2016 and 2020—which is distorted, as the noble Lord, Lord Greaves, pointed out. Huge amounts are not going into local government services, except for the better care fund for dealing with some of the problems. My authority, Wigan, lost far more in that period. In real terms, we have lost over 40% of our budget, as has the noble Lord, Lord Storey, in Newcastle. All the northern authorities lost out.

If we turn to a place such as the Royal Borough of Windsor and Maidenhead—not perhaps unknown to the Prime Minister—the losses are much less. It has not taken the hit; there has actually been an increase in funding in some of those areas. The cuts taken in more affluent areas have not been the same.

I also want to talk about the continuing unfairness of one of the ways in which the Government tried to fund the social care increase: namely, through the increase in council taxes, the so-called social care precept. The level of cash that can be raised by authorities depends on the level of council tax banding in those areas. In a place such as Wigan, there are not many £1 million properties, I have to confess. Most of the properties are in band A or band B. So if we put a 2% or 3% increase on council tax, it does not raise as much money as more affluent areas raise. SIGOMA gave me some figures that show that in SIGOMA authorities, for every dwelling that raises £713, the figure for the rest of the authorities that run social care is £857—quite a significant 17% difference between the amounts that can be raised in that way. Clearly, those in urban areas and the most deprived areas are having to put more money in to solve the problems of social care.

The one area of local government activity that was in the Queen’s Speech with a promise was the fact that the Government are looking for a solution to social care funding. I think that all sides of the House would welcome a proper approach to that funding, but it cannot be done by the Government. It has to be done working with local government and across parties, because we need a solution that will be satisfying and sustainable in the long term. If we do not do that, a number of local authorities and health services will be overwhelmed by the increase in pressure of the ageing population. I believe this is an urgent problem. It is not an immediate problem but it is certainly urgent, because the longer we do not solve it, the greater the pressures are going to be.

I also want to echo what my noble friends have said about business rates. We need to know what is happening with this promise to return business rates to local authorities, in two ways. The questions that my noble friends asked are absolutely right, but I also want to know what is going to happen to the pilot schemes which are in progress but which we are told will run only until the end of this year. The pilots are meant to teach us things, but how can we learn if we do not know when that will happen? We need to see what we can get from those.

The other issue around business rates is of course the mess the Government got into of their own making on valuations. I remember arguing with the Government—it always seemed to be at 11 pm—along with my noble friend Lord McKenzie of Luton and the noble Earl, Lord Lytton, about their plans to defer the regular revaluation of business rates. We tried to point out to them that if you defer it and then try to come back to the scheme, you will actually get into more of a mess—and of course it proved to be that way. The figures for revaluation were so high in many cases that, as soon as the Government saw what they were like and got such bad publicity, they had to bury it. The third issue around business rates is equalisation because, clearly, the ability of different areas to raise funds through business rates is quite variable. I fully support the principle of return, but the Government still need to find a mechanism by which they can make sure that places that are not able to raise such a big amount of money can do it.

Then of course the other main source of income now for local authorities is council tax, and I welcome the comments of my noble friend Lord Desai on this matter—again, I am banging on. It is over a quarter of a century now since we last revalued houses for council tax. The council tax was brought in as a desperate measure to replace the poll tax: “What can we do? We need to replace the poll tax?”. So allegedly the noble Lord, Lord Heseltine, as he is now, sent round teams of estate agents to run up and down streets with fairly arbitrary rules saying, “Band A, band B, band C”. These bands have stuck for all that period and have not been revalued since. But of course there have been huge changes in the values of properties over that period, and changes in quality. A house built in 2017 will have broadband and different facilities that were not available in 1991. How do you say, “Ah, but if this house had been built in 1991, what would it be valued at?”. It is a rare art to be able to look at a house being built in the current year and think what it might have been valued at all that time ago. As my noble friend said, if we do not have the change in valuations, we have no buoyancy in the tax. Unlike with income tax, VAT and other taxes, the only way to raise more money through council tax is to raise the rate of the tax—and that is not the best way to do it, so we need to do this.

It is easy to have a glass-half-full or even a glass-quarter-full mentality, but I like to see opportunities from what has happened. Many local authorities, including my own, have responded to the cuts in as positive a way as we can by looking to see what we can do for public service reform. Again, I have spoken before about this in the House, but the Government have not really taken much of a lead on this. In a programme that we call “The Deal”, we are looking to see how much more we can help people. We take what is called the asset-based approach on individuals, looking to see what their needs are and what their benefits are. When you do that and look at people, what you find is that the individuals we are dealing with as a local authority are often undergoing health treatments for various things—often mental health problems—or may have housing issues, and probably the police know them. So if we can get a holistic approach to families, we can begin to start turning them around. Rather than waiting until a child has problems and we have to put them into care, we try to support the family so that they can remain in the heart of the family.

We have to do much more on integration, working with all the different agencies to ensure that we can look at the family and help to address those issues. One of the problems we have is getting people back to work. We do not ask people just to rewrite their CVs, as they were often asked to do under the previous job creation scheme; we get them to understand what their issues are. If you do not have a home, you are likely not to be able to get work, so we need to address that.

The final area is working better with the community. I think we are one of the few authorities that puts more money now into the community than we did in 2010. We call it investment because it is an investment. We have attracted visits from various parts of the UK and Europe and we are holding a conference in September 2017, so if any noble Lord wants to come, they should get in touch.

I agree in part with the noble Lord, Lord Greaves, on how we deliver services. We have to go back to units that people understand in terms of delivery. However, we need a strategic role in local government, which is where the larger authorities can work together. I am a great supporter; it has been a challenge and a privilege to be a leader of local government, it continues to be so, and I continue to be positive.