Local Authority Housing Debate

20th December 2017

Alok Sharma responds to a debate on local authority housing.

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—

rose

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.

As I understand it, in the financial year that has just finished, we lost more than 12,000 homes to right to buy and rebuilt only 5,000 new council homes, so clearly this system does not work with the like-for-like replacement.

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.

rose

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.

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