PARLIAMENTARY DEBATE
Local Authority Housing - 20 December 2017 (Commons/Commons Chamber)

I am grateful that, at this late hour, I have the opportunity to secure the Adjournment debate. I am grateful, too, to see a few Members still here, including my right hon. Friend the Member for Wentworth and Dearne (John Healey) on the Labour Front Bench, and the Minister. Madam Deputy Speaker, I would also like to associate myself with the earlier comments in respect of your colleague, Mr Deputy Speaker: he is a good friend of mine, and I can only imagine what he is going through.

At this auspicious time, with yet another Cabinet Minister falling on his sword, I do think that we ought to get back to some reality after the European Union (Withdrawal) Bill and talk about housing and what it means, and the threat of homelessness to far too many of our people. However, I come here today not to pick fault or to criticise but to try to find solutions. I believe that the Government need some help in this area, and one of the ways in which they could meet their laudable aim of providing 300,000 new units a year would be to recognise that local authority housing has a part to play.

I am grateful for the help I have received in preparing for this debate from the Local Government Association, the District Councils Network, the Energy Efficiency Infrastructure Group and my own council, Stroud District Council, to which I will largely be referring. I am also grateful to the researchers who have helped me with this: Jessica Cobbett, Jessie Hoskin and Vicky Temple.

I make no apology for using Stroud as an exemplar. It is the authority that I associate myself with, having been a councillor there on two previous occasions, and I know the area very well. It is also a good example because it is an authority that has now bought its stock, thanks to the Government’s initiative, which we very much welcome. For £92 million, we effectively own our 5,000 units. That is a good thing, but it comes at a cost, as I will explain in a minute.

We have been able to build 230 units of accommodation over the past few years, which is a considerable achievement for a relatively small district council. To illustrate the impact of that on Stroud, I can tell the House that we still have a waiting list of 2,275 people, which is estimated to be about 51.4% of the shortfall in social housing, according to the local authority district measurement. That shows the scale of the problem. We need to replicate those 230 houses on a regular basis. An additional problem is that Stroud is included in the same local housing allowance area as Gloucester, which is a lower rent area. So, because Stroud has higher rents, the differential between the benefit available and the rents charged means that many of our residents in the private sector are disadvantaged. That is the reason that they are looking for local authority housing.

I hope that, in this debate, we can look at areas in which we can make progress. We are not just dealing with statistics; we are dealing with real, living individuals. I shall give the House two examples to illustrate how the problem is affecting people in my constituency. We were recently approached by a very young family living in totally unsuitable accommodation. They have been waiting a year for resettling, but whenever they bid, they are unsuccessful. Likewise, we heard from a lady with two young children who is renting a one-bedroom flat in the private sector. The accommodation is totally unsuitable and in a poor state of repair. Every time she bids, she fails, and she is around 300th on the list. That shows the scale of the problem in areas such as Stroud.

To be fair, the Government have looked at ways in which they might begin to address the problem. On page 63 of the Red Book, they say that

“the Budget will lift Housing Revenue Account borrowing caps for councils in areas of high affordability pressure, so they can build more council homes. Local authorities will be invited to bid for increases in their caps from 2019-20, up to a total of £1 billion by the end of 2021-22.”

Stroud is in this dilemma, because it has reached its borrowing cap.

Does my hon. Friend recognise that the delay of a year in lifting the borrowing cap is too long? Also, the fact that the borrowing cap has been lifted by only £1 billion, rather than the £22 billion if it was removed completely, means that it will be inadequate to deal with our national crisis.

I totally accept that. The point I am making to the Minister is that Stroud has reached the cap. We are trying to do our bit to overcome the immediate housing problems in Stroud, and yet we are unable to build any more houses. The situation is made worse, however, by the fact that 70% of the money goes back to the Government whenever a unit of council accommodation is sold under right to buy. We have bought the stock, and we are trying to do our bit, but we face a borrowing cap that has been totally imposed on us without any consideration of the value of the asset that we have. Then, the Government still reap the benefits from our accommodation when units are sold, so I ask the Minister to consider that. If we are to be part of the solution, how is that an incentive? How is that fair? How is it in any way reasonable?

I thank the hon. Gentleman for securing this debate. The situation is slightly different in my constituency back in Northern Ireland. Some 1,000 people are on the priority list, with some 4,000 on the list overall, so there is a real need for housing. One of the key sources of need in my constituency—I suspect things are the same in the hon. Gentleman’s constituency—comes from young married couples who cannot buy a house because houses are too dear, so they need social housing. Does the hon. Gentleman have the same problem in his area? Other than by building more social housing, which is what he and I want, how could the Government address the issue?

Of course I want to build more social units. The leader of Stroud District Council—Councillor Steve Lydon, who is a good friend of mine—came to see the shadow Housing Minister and has written to the Prime Minister to ask for help with this particular problem. We are pleased to be a pilot area for business rates retention. That helps with the problem of potentially negative revenue support grants, which affected our ability to do some of the things that we would like to do with housing, but this is a different matter. This is about the housing revenue account and about allowing Stroud the freedom to go on and do what the Government want local authorities to do, which is to provide the answer to the immediate housing problems. This is about having the vision to look back and to look forward.

The last time we genuinely met housing targets was in the 1950s, when that well-known socialist Harold Macmillan was able to prove that public authority housing was the best way to deal with a housing crisis. He was convinced of that, and I am convinced that we can play our part.

I am largely talking about the role of the local authority, and we had that issue, but we defeated large-scale voluntary transfer. That happened the last time I was an MP, and I actually led the campaign against the Conservative council. We won because the tenants decided that it was important that we kept local authority housing not for themselves, but for the generations that follow. I am pleased because we still have the ability to do the things that we need to do both strategically and in reality by building our own houses.

On tenant participation in council housing, does my hon. Friend agree that no estate should be redeveloped anywhere in the country without the agreement of the tenants who live in that estate? There should be no bulldozing, no ghettoising, and no pushing tenants out.

Of course, and to be fair, that was how large-scale voluntary transfer was supposed to work. Sadly, because of the way that debates were often handled—the manipulation and the propaganda—it did not work that way, but thankfully in Stroud we saw through that and kept our stock.

To add to our dilemma, we are still trying to do other things. I am not here to talk about private renting or the housing association answer, but Stroud District Council has a good reputation for trying to have an impact in those different areas. To add to the frustration, in the order of 5,800 units of accommodation have been given planning permission, but we have no ability to bring forward the development of those sites. That adds to the problem of a lack of affordable units, which means that the local authority is even more crucial to how we deal with housing issues today.

There is support across the political spectrum. The Local Government Association and the District Councils Network, both of which are Conservative-led, are adamant that local authorities can be part of the solution, so it is vital that we be given the tools, and that the barriers and hurdles are removed. Otherwise, the Government will never reach their 300,000 target, which is a steep climb as it is, given that they are at just over half that number of units per year. We all have to do our part.

Although the Minister is principally here to answer on local authority housing, I ask him to recognise that planning is part of the problem. We would love to have “use it or lose it” and the opportunity for planning permission to be “lost” to the local authority, so that it had the traction to start to solve our immediate problem. Yesterday, a number of things were said about the new homes bonus. I have not yet quite got my head round how that will benefit or disadvantage Stroud, but that incentive to bring forward new units of accommodation is important. However, that is all unimportant if we are not able to provide the right type of accommodation in the right places.

The galling thing is that people now want to move into local authority accommodation because the houses are of better quality. It is not the lender of last resort. We talk about energy efficiency, conservation and how we are trying to bear down on carbon, which is so important in the building industry; local authority housing is leading the way. This is not about trying to dump people in a council house as a cheap alternative; it is now a genuine choice that people are pursuing.

In conclusion, I ask the Minister—he has plenty of time to respond—to please give Stroud and other authorities in a similar situation freedom from the cap. Secondly, can we please renegotiate the idea that 70% clawback from every sale is fair or justified? Then we will be part of the Government’s solution, not part of their problem.

I congratulate the hon. Member for Stroud (Dr Drew) on securing this important debate on local authority housing, and I commend him on the manner in which he has presented his point of view.

Successive Governments over many decades have not overseen the building of enough homes in the right places. We are determined to address that, and we are making progress. Last year, there was a net addition of 217,000 homes across England—the highest number in almost a decade—and housing was front and centre in the recent Budget, in which there was a commitment of at least £44 billion over the next five years to address the broken housing market. That includes the £15 billion of new financial support announced in the Budget—the biggest budget for housing in decades. More money was announced for infrastructure and to help small and medium-sized builders. There were more financial guarantees for the house building sector and a revamp of a more muscular Homes and Communities Agency; and, of course, there was more support for local authorities to get more homes built. I will return to that point shortly.

Of course, providing good-quality, affordable homes for people who need them most is an absolute priority for this Government—Members on both sides of the House can all agree on that—and we are making progress on delivering those homes. Since 2010, more than 357,000 new affordable homes have been delivered through the affordable homes programme, including 128,000 homes for social rent, but we recognise that there is much more to do. That was why the Prime Minister recently announced an extra £2 billion to deliver new affordable housing, including for social rent, taking our total investment in the affordable homes programme between 2016 and 2021 to £9 billion. David Orr, the chief executive of the National Housing Federation, described that extra money as

“a watershed moment for the nation.”

Local authorities, as well as housing associations, will be able to bid for the money, which will go where it is most needed—areas of acute affordability pressure.

As the hon. Member for Stroud mentioned, the Budget provided a further boost through the decision to increase local authority housing revenue account borrowing caps by a total of £1 billion. The hon. Member for Brighton, Kemptown (Lloyd Russell-Moyle) talked about increasing HRA headroom and, as at 31 March 2017, there was £3.5 billion of headroom available in housing revenue accounts across England. Again, we will deploy that £1 billion in areas of high affordability pressure where authorities are ready to start building.

Stroud District Council has previously raised the issue of the borrowing cap with my Department and, as the hon. Member for Stroud noted, its leaders have written to the Prime Minister. I sense that the decision to lift the HRA caps by up to £1 billion is welcome news. From 2019-20, local authorities will be able to bid for increases in their caps of up to a total of £1 billion by the end of 2021-22. We will be releasing information in the spring on how councils can apply for an increase in their HRA cap.

The Budget also more than doubled investment in the housing infrastructure fund to £5 billion, and of course an additional £400 million has been made available to regenerate run-down estates. On top of all that extra funding, we are giving local authorities and housing associations more certainty over their rental income up to 2025. From 2020, they will be able to increase rents by up to CPI plus 1%, and the feedback I have received suggests that the sector will build more homes more quickly as a direct result of receiving that certainty.

All of that—rent certainty, additional HRA borrowing and billions for new affordable housing—affirms our commitment as a Government to building social housing. I know that Stroud District Council, like other local authorities and many housing associations to which I have spoken, welcomes these measures.

Does the Minister accept that many authorities are struggling, particularly with the allocation of housing through developers? The viability studies supposedly always prevent such houses being built. As we have recently seen with Persimmon, the lack of viability is purely because the developers do not make enough profit. They are in fact making huge profits, but there are just no teeth available to local authorities.

I will address that point, because it was also raised by the hon. Member for Stroud. I agree it is important that developers build the required amount of affordable homes.

On affordability, is there not a huge problem in our planning guidelines at the moment? Affordability is often the criterion we use but, in many of our cities, affordability is not affordable for the vast majority of people. Instead, councils should be encouraged, and be able, to require a percentage of council-owned and council-run social housing as part of planning considerations, which would be a real game-changer.

First, I would say that we have talked about the extra £2 billion, with a proportion to be made available for social rent. Secondly, we just need to get more homes built. The reality is that we have not built enough homes over many decades and successive Governments have not gripped the issue sufficiently. That is what we are now trying to do.

I want to get on to the point about right to buy that was raised by the hon. Member for Stroud. I know he has expressed his concerns about how this is affecting councils’ ability to invest in new housing. The Government remain committed to ensuring that for every home sold, an additional one will be provided nationally. There is a rolling three-year deadline for local authorities to deliver replacement affordable homes, through new build or acquisitions, and so far they have delivered within the sales profile. As the hon. Gentleman knows, the 2012 reinvigorated right-to-buy scheme introduced a requirement to replace every additional sale nationally with another property through acquisition or new supply. By September 2014, after the first 30 months of reinvigoration, there had been 14,732 additional sales, and by September 2017, three years later, there had been 14,736 starts and acquisitions. However, I recognise—

Let me continue, as I may be able to deal with the point that the hon. Gentleman wants to raise.

I recognise that there are limits on how local authorities can use the receipts from sales under right to buy. We do, of course, encourage local authorities and housing associations to work together at a local level to provide social housing. A council can bring its right-to-buy receipts to the table and a housing association can supplement that with its own resources to get homes built. The extra HRA borrowing should make a real difference in helping councils to deliver more replacements more quickly, but of course we will keep under review whether there are further flexibilities we can offer.

The point I am making is that Stroud District Council took on the onerous task of buying the stock. We used the option that the Government gave us to own that stock, for which we are grateful, yet the Government are still taking money off the assets that we have to sell. That cannot be fair or reasonable.

Local authorities have received almost £2 billion as a result of the voluntary right to buy in order to provide additional affordable housing across the country. Some of this money flows back to the Treasury, but that is part of the self-financing settlement and it is to tackle the budget deficit. Perhaps the hon. Gentleman should encourage Stroud District Council, at the appropriate time, to bid for an increase in its HRA cap.

I have just set out that this is over a three-year cycle and I have set out the numbers available to me now. However, I would be happy to discuss this with the hon. Lady when we meet to discuss it and other matters.

Let me get back to Stroud District Council, which has a track record of building replacement homes and has worked with affordable housing providers and neighbouring authorities to achieve that. As the hon. Member for Stroud may know, we expect to make a decision early in the new year on the council’s application to designate 32 parishes within the Stroud District Council area as “rural” for the purposes of section 157 of the Housing Act 1985. If they are designated as such, that will enable the council to impose restrictions on the resale of properties that it sells under the statutory right to buy.

I have a few minutes, so I shall address a couple of points made in the debate. The hon. Member for Stroud talked about planning permissions not resulting in homes being built fast enough. As he will know, the Chancellor announced at the Budget that my right hon. Friend the Member for West Dorset (Sir Oliver Letwin) will be conducting a build-out review. Indeed, his work has already started.

As Members will know, we consulted on viability in the local housing needs consultation that closed on 29 November. We will of course consider the feedback on that. We have been clear that we want viability to be considered much earlier in the process—at the plan-making stage—so that local councils and developers can be clear about what is required with respect to affordable housing.

I think I should move on.

The hon. Member for Stroud talked about regeneration. To be clear, the Government believe that residents’ engagement with and support for a regeneration scheme is crucial for its viability.

The hon. Member for Brighton, Kemptown asked what local authorities should do if they have sold housing stock to a housing association. It is up to the housing association to bid through the affordable homes programme for a grant to build new housing. Of course, housing associations can also borrow.

We are taking action on all fronts, providing significant new funding and working with local authorities to deliver, as the Prime Minister has put it, a new generation of council housing. Following the terrible events at Grenfell Tower, an important part of that is our work on the forthcoming Green Paper on social housing, which will be informed by the views of the social housing tenants throughout the country whom I have been meeting over the past few months. I am hugely grateful to them for sharing their experiences. I look forward to working with the hon. Member for Stroud and others to ensure that we deliver the safe, secure, affordable homes that people need and absolutely deserve.

Question put and agreed to.