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Affordable Housing

Volume 762: debated on Thursday 25 June 2015

Motion to Take Note

Moved by

To move that this House takes note of the amount of affordable housing in all forms of tenure and the case for increasing the supply of affordable housing.

My Lords, the stark demographics that lie behind this debate and the general dysfunction in the housing market are clear and well known. For at least the past decade, and likely to continue for the next decade, it is estimated that household formation in the United Kingdom has been running at about 250,000 a year. On the other hand, the rate of new build of new dwellings of all sorts and all tenures has been running at about half that level. The inevitable consequence of this is that prices rise in all forms of tenure, in mortgage conditions, house prices, private and social rents and leaseholds costs, and it hits all parts of the country. However, the reality is that it is particularly harmful to those on average and lower incomes and probably far worse in many of the big cities, particularly to the south of England, although it also applies in many rural areas.

We need a massive increase in the supply of new housing, although I do not see any sign of that coming. Supply and demand are in clear imbalance. In particular, we need affordable housing available to lower-income groups. I should point out that in this debate I am using the word “affordable” in the sense that most people use it—that is, that ordinary people can afford it. I do not use it in the Orwellian newspeak used in social housing these days, whereby affordable rents are deemed to be 80% of private rents and therefore in many parts of the country totally unaffordable to people on middle and lower incomes.

This is a Labour debate and I shall be challenging the Government, but I hope that the Minister does not respond simply by pointing to the Labour record. I am glad to see her either shaking or nodding her head. Noble Lords may experience a bit of déjà vu in my speech, because they may recall that I have been fairly critical of the policies of at least the last three Governments on housing, and I continue to be so. The situation at the end of the last Labour Government was poor, the coalition made it worse and the current Government look to be making it worse still.

Many commentators expected housing to feature large in the recent election campaign. In practice, it did not really do so. All parties made a vague commitment to produce 200,000 houses a year by about 2020, without much indication of how they would do it. The only thing that got any mileage during the election was the Labour Party proposal for some form of rent regulation, which was attacked by the Conservatives as being Venezuelan or Vietnamese socialism when, as no less an organ that the Sun pointed out this week, most other cities in Europe have some form of rent regulation and a much larger private rented sector, and the net result is that rents are about half those in Britain. The Tories’ main commitment was to the right to buy for housing association tenants, which is due to be presented to this House in legislative form shortly. I and other speakers will, no doubt, revert to that.

Neither of these measures that were debated in the election even pretended to tackle the central problem of housing: the need to provide more housing and thereby to bring down the cost and availability. Right to buy is about change of tenure; it does nothing in relation to supply or availability. The coalition Government at times appeared to be taking housing seriously. Indeed, about a year ago I asked the Minister’s predecessor to list all the schemes introduced by the coalition Government. I would read it out, but I have only limited time and there were at least 18 or 19 of them. Some of them had some benefit for a few people and no doubt they had marginal benefits all over the place, but the net result was that they did not change the overall level of supply or bring supply and demand into better balance. Some increased pressure on the demand side, and none tackled the problem of supply. Fundamentally, the situation has not changed.

I shall say a few words about the right to buy for housing association tenants, although I see from the list of speakers that there are speakers who are more qualified and knowledgeable than me to comment on that area. This week, the Times revealed how strongly the Government were advised against going down this road. Indeed, the cost to the Exchequer seems to be £5 billion. In one fell swoop the Government seem set on undermining the finances of housing associations, local government and, eventually, the Exchequer. Almost everyone in the housing world has asked them to think again, and we will debate that in due course. I am not an opponent of right to buy, but this particular measure seems fairly cack-handed and not thought through. My main concern about it in relation to this debate is that it will undermine the finances of housing associations, reduce their ability to borrow and therefore their ability, and local government’s ability, to invest in new housing stock or improve older stock. It will therefore do nothing to alter the balance of supply and demand and will, indeed, make it worse.

The net result of all this reflects the dual problem of high costs for those seeking first-time buys and a lack of availability in many parts of the country for any access to social housing. That means that real strain is put on the private rented sector, which is rather inadequate and unstructured. Families who, two decades ago, would have got social housing are now either paying for themselves in the private sector or are being paid for by the local authority in the private sector. Families who, two decades ago, could easily have afforded a mortgage are, unless they have the bank of mum and dad to turn to, likewise dependent on the private rented sector. The Government are trying to help landlords in this area by giving tax breaks to buy-to-let landlords, but supply is still well behind demand and, moreover, much of the supply is inadequate and in some cases unsafe. Many of those in housing emergency and other crisis situations end up in the private rented sector, even though they may be paid for out of the public purse. Ultimately—this is the biggest problem, politically—the cost of all this falls on housing benefit.

In recent years, the growth of the housing benefit budget has become a serious issue. It has gone up tenfold over that period, but four-fifths of the increase has been due to escalating private sector rents and only one-fifth has been due to an increase in the number of people seeking housing benefit. The pernicious effect of this is that the escalating cost of housing benefit looks scandalous to those who are not receiving it, and the Daily Mail is able to find all sorts of examples where very high housing benefit costs are paid for by the Government and use it as an attack on the welfare system as a whole. It is no coincidence that most of the housing benefit scandals are in areas of high-cost housing, mainly in central London. I say in passing that the real scandal is that housing benefit eventually ends up not in the pockets of small struggling landlords but of large companies, overseas investment trusts and corporations.

We need a root and branch review of housing benefit, but that will involve us in a root and branch assessment of the total intervention of government in housing. Thirty years ago, the expenditure side of government intervention in housing was very heavily geared to the supply side, to council housing, grants for home improvements and so on. Indeed, 80% of government expenditure was on that side. Now, more than 90% of the expenditure is on the demand side—in other words, using housing benefit to meet escalating costs in the social and private rented market.

The social costs of all this are pretty evident. Even people on reasonably high incomes cannot get a mortgage until they are in their late 30s. People are living at home with their parents. There is overcrowding. There is strain on families. There are many people living in bed and breakfast accommodation and in inadequate private rented spare rooms. There is multiple occupation, with several people living in the same room. At the worst end, there are beds in sheds. Indeed, the London Fire Brigade this week issued figures showing that in recent years it has had to deal with more than 400 fires in accommodation that was not appropriate for habitation. Those are the social costs.

The economic costs and the costs to the Exchequer are evident in the housing benefit costs. What is needed is a rethink that will redirect those costs to the housing benefit budget into the provision of new and improved housing. The escalation in housing benefit needs to be seen as a failure of the housing market rather than as a failure of the welfare system. Even at this late stage, I urge the Government to take housing benefit out of the move to universal credit—indeed, that might ease the introduction of universal credit—because it needs to be seen as a whole. Public support for housing and for those seeking housing who are unable to afford it needs to be seen as a whole. I suggest that that needs to be seen as part of a new overall strategy. I want the Government to come up with a clear White Paper proposing a whole new approach. I can make certain suggestions about what should be in that approach, but it is an emergency. It is a serious problem, and it is one that, in their five years in office, the Government will have to tackle or it may well be the failure of this Government.

I suggest that they set a clear target of 250,000 new homes, of which perhaps a quarter should be social housing. There should be an emphasis on local delivery, and we should amend the Cities and Local Government Devolution Bill and the Localism Act so that the new combined authorities and unitary authorities take clearer responsibility for housing and have the means of delivering it. Policy on housing ought to be concentrated in one Whitehall department under one Secretary of State, covering housing benefit and construction as well as the traditional areas of CLG. We need a long-term strategy to switch expenditure on housing benefit into areas to improve housing supply, which will take 20 years. There are some immediate things that we need to do. We can integrate and redirect the Help to Buy schemes into a help to build scheme. We need to end the ability to overturn Section 106 agreements providing for social housing and instead give back to local authorities the ability to negotiate with developers for improvements in affordable housing in their areas. We need a fundamental review of the affordable rents policy. We need to ensure, perhaps most of all, that local authorities are in a position to go to the market to borrow to create housing assets. This should not be regarded as part of the central government borrowing requirement, but as something with which local authorities can build and provide the housing that is needed for their communities.

There are other ways of dealing with this in terms of finances; there are ideas about housing bonds and about corralling the pension funds into providing more private investment in affordable housing. There need to be discussions with the banks and with the construction industry, particularly about bringing some of the smaller builders back into the housebuilding market.

All this will require new legislation. I hope to see in the next Queen’s Speech, if not before, a major Bill from the Government—incorporating many of my ideas, of course, but perhaps a few others, too—that would be indicative of their intention to tackle this problem, which affects millions of our fellow citizens, not just in central London, where at this moment some of them face the demolition of their homes, eviction or the buying off of leaseholders and tenants, but across the country. It will become a political problem for the Government if they do not do something substantial about it. I beg the Minister to talk to her colleagues, including those in the Treasury, to ensure that they do just that.

My Lords, I thank the noble Lord, Lord Whitty, for the opportunity to debate the supply of affordable housing. However, while trying not to prematurely run the debate on the right to buy that we will have later in the year, it is extremely hard not to consider the impact that this will have on affordable housing. Everyone is entitled to a home. We need mixed communities with rented properties, low-cost buying, shared ownership and market rents.

I will start with land and planning. There is a proven case for affordable housing. Some believe that Section 106 affects developers’ profits. Section 106 is not a gift from a developer; housing associations pay for the housing. In times of austerity, developers build Section 106 houses first. This is often also used to open up new sites; the Docklands development is an excellent example.

Starting developments lifts the local economy. I believe that the Government should encourage local planning authorities to enable rural emphasis in the NPPF, including encouraging the local community land-trust model. In my area two villages, Queen Camel and Norton-sub-Hamdon with Chiselborough, have been exemplars of developing community land trusts, providing an asset lock for the community and the housing associations. The Hastoe and Yarlington housing associations have provided the housing management expertise needed by the communities.

The Government should also encourage villages to take up neighbourhood plans, thus devising the balance of new market to affordable housing for their communities themselves. This process is currently cumbersome and expensive for villages. The Government could assist by reforming the system to make it far more user-friendly. Both these measures would put the community in charge of what is happening in their areas.

What thought have the Government given to tax breaks to rural landowners for providing sites and/or barn conversions for affordable housing? Many philanthropic landowners exist do not need the encouragement of a tax-break system, but others might be tempted by such a system. However, no landowner is going to sell his land at a reduced rate if the houses built on it are then going to be sold on at a discount under right to buy. This will lead only to a drying up of affordable homes, not an increase.

What of the Homes and Communities Agency? Is it not about time that the HCA had a rural quota to achieve, set within the overall programme but outside London, where rural schemes are often of a higher cost pro rata and subject to being outbid by more urban, cheaper schemes? The Government get a good return on their investment through the HCA. There is of course a cross-subsidy to affordable rents, which do not cover the costs, but the strength of housing associations is based on their past performance and individual business plans. Investors will not put money in if the asset is then to be sold off at a discount.

The Government should be encouraged to release more surplus land and buildings specifically for affordable housing. There are some very good examples around the country, such as Borden in Hampshire and redundant MoD land. Although the HCA has been set up as a clearing house for national land, many government departments have been recalcitrant in releasing land for much-needed housing; the Highways Agency springs to mind.

Park homes are another excellent example of low-cost housing that could be promoted on land released from the MoD. In South Somerset, the council leases land from the county council and provides good-quality homes at affordable rates. Are the Government considering promoting such schemes?

The Government have set 10 properties as the national threshold for affordable housing obligations. What was wrong with the localism agenda and allowing the local planning authority to set its own threshold? In a rural environment, this might be set much lower and be based on local evidence. A small infill site in a rural setting could be very lucrative for a developer and yet yield no affordable housing for the community, thanks to the one-size-fits-all approach from the Government.

Currently tenants of existing rural affordable housing become eligible for the spare room subsidy or so-called bedroom tax. Would it not be better to exempt such affordable housing, thus reducing demand from families who are forced to move as a result of the imposition of the tax? This is particularly hard where there is no suitable housing to move to within their community.

It is often said that housing associations have huge balances that are retained for the benefit of their staff. While this is the case for some, it is definitely not the case for all. The majority of housing associations exist to serve the public and those requiring housing. They reinvest their income into the business by providing housing but also by training and educating their tenants and getting them into work. This needs to be recognised, and legislation should not penalise the good because of the poor. We might be in danger of throwing the baby out with the bathwater.

I summarise the two biggest factors in the effect on supply and demand as the proposed extension of the right to buy and the imposition of the 10-homes threshold, which fits the urban context but is far more pernicious in rural areas.

My Lords, I thank my noble friend for tabling this debate. My comments today deal with a particular problem that arises with the availability of affordable housing in the Lake District, where a voluntary organisation, the Keswick Community Housing Trust, part of the National Community Land Trust Network, is struggling to deal with a local housing crisis. Trust members and supporters, many of whom are motivated by their Christian beliefs, are truly upset by the prospect of being forced to sell off their cherished housing stock. In that light I asked its chairman, Mr Bill Bewley, a prominent Quaker, to set out in a letter the concerns of the trust, which I now offer to the House as testimony from those on the front line in this debate:

“Dear Dale … First of all a short explanation of how Keswick Community Housing Trust came into existence and my motivation, with others, to forward its aims. KCHT was started by myself and a group of people who had been empowered by a series of meetings organised by Churches Together in Keswick, looking at all aspects of life in Keswick. At all five meetings the problem of a lack of affordable housing in Keswick was raised. Keswick suffers from the double blow of high house prices and low wages. In order to afford an average priced house in Keswick you would need a family income of £70,000. The average wage in Keswick for 2014 was £14,000 for the lowest 25%. So a quarter of the couples in Keswick could not even afford half the cost of an average house. After a public meeting to look at this very point we were strengthened by more … committed people. So in December 2010 we managed to formally establish Keswick Community Housing Trust as an Industrial and Provident Society with Charitable Status. We have a board of 12 active volunteers.

My motivation is based on my deeply held Quaker convictions. If the words of Jesus ‘To love God and your neighbour as yourself” mean anything it means to do whatever you can to make a difference in your community. I feel I can do that as Chair of KCHT. Quakers have always had a concern for ‘proper housing’. The Cadbury’s Bourneville and Rowntree’s New Earswick housing schemes strongly demonstrate this. Present day Quakers are also involved in this area with Quaker Housing Trust, Quaker Social Action and The Joseph Rowntree Trust. Others on my board are motivated by a desire to keep Keswick a vibrant community, which is very close in our view to what David Cameron may have had in mind when he so powerfully spoke of ‘The Big Society’. We are the living and working proof of that, now-a-days, less mentioned initiative. We completed our first project of 11 3-bed houses in November 2013. One was for local occupancy sale, five for shared ownership and five for affordable rent. In order to keep the shared ownership affordable we do not charge rent on our half. Our current rents are below the National Housing Federation’s target of affordability. If we take the previously quoted income figure of £14,000, a couple in the lower quartile could earn £28,000 so rent should be less than £7,000 pa (25% of income). Our rents are currently just over £6,000 pa.

The above financial model is very secure for the moment unless an earthquake in the form of the ‘Right to Buy’ strikes. If this scheme should badly affect Keswick Community Housing Trust, it will make all of our houses unaffordable and destroy all our hard work. We are currently two months away from refurbishing a disused building into 4 x 1-bed units and 18 months from completing a further 22 affordable homes. These projects were financed using our existing houses as assets, and should we lose a significant number we would be unable to finance future developments. This is because our assets would have been jeopardised by loss of collateral. We all feel very proud of the fact that in under seven years we will have delivered 37 affordable properties to help keep Keswick a vibrant community. We would be heartbroken if all the thousands of hours spent on this fantastic community effort, was taken away from us by some ill thought out idea. I have recently visited Bulgaria, where in the last 20 years over half of the villages have become deserted due to rural decline. I do not want this to happen in Keswick or anywhere else. Just a few years ago, David Cameron was happy to take a drink with Rory Stewart and others”—

he is a local MP—

“to celebrate the work of the Lyvennet housing trust. The Trust had delivered a scheme of 16 affordable houses in Crosby Ravensworth, not far from Keswick. Surely this is the height of hypocrisy in the present light. There are hardly any spare sites in that village and certainly not enough to replace all the houses they have already built, should they be forced to sell them. It is absolutely imperative that this impending disaster is NOT allowed to happen.

The special problem in Keswick is that we need to provide truly affordable housing for people who work here on low wages and to RETAIN available affordable housing against a property market which attracts high prices from wealthy purchasers nationwide seeking second homes or to retire here. To grant a ‘Right to Buy’ measure in the proposed form defeats the object of our charitable trust and totally undermines our … efforts. I ask you to do all in your power to prevent the ‘Right to Buy’ being imposed on Community Land Trusts like ourselves. Larger Housing Associations should be adequately compensated for any loss they could incur”.

That is signed by Mr Bill Bewley, a man who, with his colleagues, has made a huge contribution, and it would be absolutely wrong if people like that were stopped in their tracks because of the madness of the policies that the Government are going to pursue.

My Lords, I am grateful to the noble Lord, Lord Whitty, for instigating this debate and for his powerful opening speech. I declare my interest as president of the Local Government Association and various housing interests as on the register.

I thank this House for decisively rejecting the proposed extension of the right to buy to housing associations by a huge majority vote—in 1983. That decision, by a largely Conservative House of Lords, has been of enormous importance over the last 32 years. Had the vote gone the other way, something over a third of these affordable homes would have been sold by now, assuming similar figures to those for sales in the council sector.

Over these three decades, literally hundreds of thousands of families have had the benefit of affordable rented homes which they would have been denied. The housing associations have been able to borrow extensively against all their property assets and, with blood, sweat and tears—illustrated by the noble Lord, Lord Campbell-Savours—extensively borrow against those assets and develop new homes without the fear that all their hard work could be short lived because their properties must be sold.

Now it seems that this House will be asked again to consider a right to buy for housing association tenants when the housing Bill reaches us. Will we be asked to accept exactly the same proposal as was so heartily rejected last time?

There are some changes today compared with the position in 1983. The terms for the council right to buy have become much more generous, with bigger discounts—up to £104,000 per property in London and up to £77,000 elsewhere—and a shorter period of time to qualify: just three years’ residence. This time, it is suggested that funding to pay for the discounts be raised by compelling local authorities to sell their most valuable council homes when they become vacant; this means selling off still more affordable housing. In addition, today, because of the much larger size of the housing association sector, the cost of the discounts will be massively more than in the 1980s: the National Housing Federation estimates the total at some £11.5 billion over the next few years.

What could be the justification for bringing back this extraordinarily costly mechanism for helping a relatively small number of currently well-housed households to become owner-occupiers? It cannot be to increase the number of home owners, since the same money could assist three times as many aspiring potential first-time buyers in other ways—for example, by building 660,000 new shared-ownership homes for those desperate for a first home.

When the House of Lords debated the rather less damaging proposition in 1983, two issues were stressed. First, housing associations, as charities, as independent bodies, were not creatures of the state which could simply be ordered to sell their assets. Today, the added danger of accepting that housing associations have become de facto public bodies is that their borrowing—with some £60 billion outstanding in private sector loans—and all their future borrowing, increases public sector debt. That undermines hopes of eradicating the deficit and suddenly caps and limits all future borrowing on which their building programmes depend.

The receipt of government subsidies in the past has not changed the status of these independent bodies any more than it does for private landlords. Lump sum grants to housing associations followed by relatively low rents thereafter—in London, for example, they are at about a third of full market rents—cost the Government less over time than covering private sector rents for those on housing benefit. Yet few would argue for private landlords being subject to a right to buy.

The other argument against the extension of right to buy that was advanced back in the 1980s was that the nation needed to keep the hard-won affordable rented homes provided by housing associations and add more, not sell them off. This consideration is so much more pertinent today. Now, there really is a desperate shortage of homes that are affordable for those on average incomes and below.

I am strongly in support of the Government’s manifesto pledge to achieve an additional—note, additional—275,000 affordable homes over the lifetime of this Parliament. This output may not quite keep pace with growing demand but it is a respectable staging post to a more ambitious programme. The trouble is that this important manifesto commitment will be impossible to fulfil if, while the 275,000 homes are being added, a similar or even larger number of affordable homes is being lost for ever under the new RTB proposals and the forced sale by councils of their best homes when they fall vacant—trying to fill the bath with the plug out. One manifesto commitment is being sabotaged by another. We cannot vote for both. One has to go and, to me, the choice is easy: we need to be rid of the extraordinarily extravagant RTB idea. If your Lordships agree then I believe that, in 30 years’ time, our successors will bless us for retaining this precious stock of affordable homes for the next generation.

My Lords, a common way of measuring our standard of living is to look at household expenditure. When I got married in 1962, the average household spent 24% of its income on food; today, that figure is 9%. We used to spend 11% of our income on clothing; today, it is 6%. On recreation and culture, we used to spend 7% of our income but we now spend 11%. We are better off. We also travel more: we used to spend 9% of our income on travelling; now, it is 14%.

But much of that progress and increased standard of living is thrown away by the fact that in 1962 we spent 13% of our income on housing, whereas today that figure is 26%. This is why the cost of housing is holding down our standard of living. Put in these terms, surely the purpose of our economic policy should be to put this imbalance right, as recommended by my noble friend Lord Whitty, instead of continuously compensating for it.

Noble Lords have mentioned right to buy and help to buy, and these are meant to satisfy our aspiration to be home owners. In fact, generally all they do is transfer public money to the fortunate few, and there is no guarantee that they will be the home owners. This is not responding to the fundamental social need to provide housing, as the noble Lord, Lord Best, explained.

I hesitate to talk economics in the presence of my noble friend Lord Desai, but why do the Government not understand that subsidising something in short supply merely increases the price? If there is a shortage of bread and you give each hungry person £1 to buy it, unless you increase the supply, the price will shoot up. And, yes, economists have worked out that for every pound spent on subsidising housing, the cost goes up by 77p. That is why a house which cost two and a half times the average income in 1963 now costs five times the average income. It is why it makes more sense to use the money to fund social housing. Not only does it cost less but more people will be housed and it will help to overcome the social costs mentioned by my noble friend Lord Whitty in his excellent opening speech.

Some £24 billion is paid in rent subsidies—one-quarter of our budget deficit. As has been pointed out, paying this subsidises landlords and employers, while it does nothing to increase the housing supply. This arrangement also encourages the wrong kind of economic growth: a housing boom. Instead of subsidising low pay with housing benefit, why do the Government not address this by encouraging firms to be more productive so that they can pay a living wage? Surely that makes sense.

Of course, planning policy is central to this, and both Kate Barker and the Lyons commission spoke a great deal of sense about it. As they pointed out, developer incentives keep land prices rising, especially land with planning permission, and this becomes an incentive to hold on to the land as it rises in value, rather than build on it. The sensible suggestion by Labour to do something about this unused building land was to tax it. This was labelled by the Conservatives as Stalinist. How would the Minister describe the proposed expropriation of social housing: as Leninist, Trotskyist, or what?

This crazy mix of competing policies which push up prices has been identified as one of the biggest threats to our economic growth, and not only in London. Wherever the economy improves, house prices go up. It then becomes more difficult to hire skilled staff and that threatens investment. As housing becomes unaffordable, so services suffer and businesses go elsewhere. The position in London is particularly serious. The GLA says that London needs 42,000 new homes a year, but last year only half that number were constructed.

The right to buy has been criticised by many noble Lords because nobody believes that the homes sold will be replaced, and they are right. Since 2008, London has financed 43,220 subsidised homes, but the net increase during this time has been just 13,585.

Another important factor affecting London is the corrupt funds flowing into London property. In spite of government promises about transparency, a whole industry is dedicated to laundering money by anonymously acquiring properties through companies registered in secrecy jurisdictions. According to Transparency International, one-third of all foreign companies holding inner-London property are incorporated in the British Virgin Islands. Much inner-London property is not even offered to UK citizens any more. Not only does this kind of money laundering raise housing costs in London; it is a major contributor to global poverty. Some justify this through the “trickle down” theory, but rising inequality shows that this is just wrong.

I started by speaking about household expenditure in the 1960s. I also remember a political consensus at that time: a consensus to provide decent housing for everybody. Is there no way in which we could come together again and agree that housing is not a traded commodity which is holding back our standard of living but a public good that can raise it?

My Lords, I think that we are all extremely grateful to the noble Lord, Lord Whitty, for bringing this subject forward today. It is a serious and urgent subject, and I hope that he feels gratified by the quality of the debate which has taken place so far, with so much knowledge and experience readily on show.

The noble Lord said that he was critical of the last three Governments on housing policy; I would take it back 40 or 50 years. I think that the supply of housing has been a disaster for the past 40 or 50 years, and I am afraid that all parties in the UK, perhaps excepting the SNP, are complicit in what has happened. In 1968, we produced 425,000 houses per annum; last year, it was 140,000, when we know that we need roughly 250,000 houses per year to deal with the demand.

The result, as the noble Lord said, is that house prices have rocketed. The average price for a house in London nowadays is about £500,000; rents in London are now double what they are in other European cities; and it adds salt to the wounds when you find that, in 2012, 70% of the houses in central London were sold to foreign buyers—the noble Lord, Lord Haskel, made this point eloquently. John Kay, in an excellent column in the Financial Times the other day, said that all these trends,

“are … entirely explicable by reference to changes in public policy”.

Therefore, it is up to the Government and up to Parliament to rectify this appalling situation.

One proposal that will not improve matters is to extend the right to buy to housing associations, because it will make it more difficult for housing associations to add to the stock of new houses, which is what we need. I can see perfectly well as a politician how the proposal suddenly got into the Conservative manifesto during the heat of a hard-fought general election campaign, but I had hoped that wiser counsels would prevail in the cooler aftermath of victory. So far, that has not happened, but I hope that the wiser heads in government, in the Civil Service, in the wider housing community and in this House will prevail before we go much further—and I note what the noble Lord, Lord Best, said about the fate of a previous attempt to impose this on the country.

That is a bad idea; there are plenty of good ideas around. The Housing Minister has produced some good ideas about how to refurbish estates in London to a much higher density. Ken Shuttleworth, the architect, has produced ideas about densification, which are also very good. The noble Lord, Lord Adonis, who is not in his place today, has produced some excellent proposals for housing. The Government themselves have done a brilliant job in improving and simplifying the planning rules, which are fundamental to all this. So there is a lot of good thinking around, much of it evidenced in the debate today.

However, I sense—with the noble Lord, Lord Whitty—that such thinking needs to be pulled together into a big idea and given much higher priority by the Government. It also needs full-hearted support from the Chancellor of the Exchequer—that is crucial. The important point—here I speak as an economist and, like the noble Lord, Lord Haskel, I invite the noble Lord, Lord Desai, to agree—is that housing is capital expenditure. Capital expenditure has a return over many years; it is not current expenditure. It does not conflict in any way with the Government’s necessary desire to contain current expenditure if we spend the money in capital spending on renewing our housing stock. Nothing less will do.

It is a great pity that the Chancellor of the Exchequer is not here today to hear what is being said—I think that he might agree with a lot of it—but I implore him and the Government to take this extremely seriously. Nothing less will do.

My Lords, first I must declare my interest as the chairman of the advisory board of the Property Redress Scheme. It is clear that there is a shortage of housing—that has come through in the words of every other Peer who has spoken. The Government’s response is to make mortgages easier to obtain and to propose the sale of housing associations properties to their occupiers. Let it be said clearly that neither of those profound announcements increases housing supply by even one unit.

On mortgages, 20% of first-time buyers will be paying off their mortgage beyond the age of 65, which is a big increase from a few years ago. With all the Government’s boasts about housing, the Office for National Statistics says that home ownership fell for the first time in a century in 2011, while renting and overcrowding increased. The policy of right to buy, particularly of housing association properties, has been mentioned by other noble Lords. But to extend it to 1.3 million housing association homes with discounts, as the noble Lord, Lord Best, said, of up to £104,000 costs at least £5 billion—and not one unit more is made available.

Will the Minister say in detail how the sale of housing association homes for 30% less than their value can conceivably be enough to build a new home? Just selling off a few expensive homes—which again reduces the housing stock—cannot be an answer. Although I thank the noble Lord, Lord Whitty, for introducing this debate, I take issue with him on one point. He said that he had always supported the right to buy. I have always been against the right to buy, not because it gives a bonus to those who live there but because it reduces the housing stock available to the poorer people in society. That is what was and still is wrong with the sale of council stock and is even more wrong—in spades—with the sale of housing association properties.

In housing, one of the buzzwords is “regeneration”. That often means demolition of large tranches of council-owned housing that is replaced with a mixture of private homes and so-called “social housing”, often at high density. A point was mentioned in passing by another noble Lord about properties such as these that are compulsorily acquired for leaseholders and some freeholders. What happens on estates that I know is that when there is regeneration and people are forced to move, they are not given enough in the sale of their properties to buy a property on the same estate and therefore have to take out additional mortgages or move further away. I trust that the Government will look at some way in which people who are forced to move because of regeneration can at least have a property in the same development without having to borrow more.

Another buzzword used in the title of this debate is “affordable” housing, but “affordable” means different things to different people. To me, it has always meant social rented housing, which is the obvious way of providing affordable housing. There is also intermediate housing, affordable housing ownership and all the various different schemes where you buy a small part of the property, sometimes at a discount, with a covenant that you have to sell it at 80% of its value. But this is fiddling at the edges of affordable housing for those who really need it. This Government have a paranoia about private home ownership, which is often the nail in the coffin of affordable housing.

I now move beyond affordable housing to introduce another element into this debate that has not been mentioned so far. How do we extend this figure of 200,000 or 300,000 properties without relying on brownfield sites or the other methods that I and other noble Lords have mentioned? Perhaps the development of garden cities is the way forward to tackle the deficit in the housing stock. Communities need to provide proposals. I hope that the Minister can say what has happened to the proposal of the Liberal Democrats when in coalition to invite bids for £1 billion of investment that was announced in the Autumn Statement 2013 to unlock local housing schemes for, at that stage, more than 1,500 homes. The funding was intended to unlock up to 250,000 new homes between 2015 and 2020 in locally led garden cities. If people locally want the schemes, money should be available. They could be a great boon to the localities of various parts of the country and would provide additional housing in larger amounts than by tinkering with odd bits of brownfield site and increasing housing density, which impinges on the way of life of those who live within them.

My Lords, I declare an interest as chair of Peabody, chair of the recently formed London Housing Commission and president-elect of the Local Government Association, to follow the noble Lord, Lord Best.

The defining question for this Government on housing is how they can substantially increase the level of supply and, crucially, hold that high level of supply for a sustained period of time. This should be the Government’s overriding priority and they should invest considerable time and effort into meeting housebuilders, local authorities and housing associations to discuss the ways in which it can be achieved. Other noble Lords have spoken about this, but by any reckoning, to meet the country’s need for new housing we should be building well in excess of 200,000 new homes a year.

This agenda is not just about affordable houses for rent and affordable houses for sale, and it is certainly not just about housing for market rent—it is about all of the above. Unless we address housing shortage and lack of supply in every way possible, we are unlikely to move from our current level of building around 140,000 new homes per annum. It ought to be the Government’s most important and defining priority, and I hope very much that we will see proposals that will address the issue on this basis.

The issue is significant across the whole of the country, but it is particularly acute in London, where the price of housing and levels of rent are increasingly moving away from Londoners’ incomes. Indeed, the current calculation is that the average price of a property is now 14 times the average salary. That is an unsustainable position, and that is why I am delighted to be taking on the role of chair of the commission, whose aim is to identify how we might more than double the supply of housing in London over the next five years.

When we look back at what has worked and what has not worked on housing supply, we can see that one of the triumphant successes—I think it can be described as that—has been the model whereby housing associations borrow privately and, with support from government grant, deliver new housing and fund the borrowing through rental streams. This has been an enduring success in the new supply of affordable homes. We have seen the level of government subsidy come down and the level of cross-subsidy from houses for sale under Section 106 agreements go up. We have seen innovative new schemes around shared ownership. It is a model that we know works. After an initial wobble, it is interesting to note that the last Government not only committed to a programme of affordable housing but actually invested in growing the programme by making two crucial decisions which I think will be critical to the future stability of supply.

The first decision was to commit to an increase in rent by CPI plus 1% from 2015-16 for a period of 10 years. This has given housing associations confidence about their rental income streams and enables them to borrow for the long term. The second decision has already been referred to: a commitment to a programme over the whole of the Parliament of capital investment to deliver 275,000 affordable homes. These are two crucial additions to the way in which affordable housing works and I would be grateful if the Minister would confirm that both will remain in place for the duration of this Parliament under the new Government.

The question noble Lords might think was on the minds of delegates at the Chartered Institute of Housing conference that I attended this week was how they could play their role in delivering new supply and how they will respond to the challenge I have just described. Sadly, the debate was entirely dominated by the extension of the right to buy to housing associations and the forced sale of council homes. This risks becoming an overwhelming distraction from the underlying task we face in this country. As time goes on, the contradictions and challenges of this policy will grow. For example, there is a big issue around not just whether the sums add up but whether funding from the sale of council homes will come through in time in order to fund the discounts for housing associations. If those two things do not match, who will pick up the difference? There are major issues around rural housing where land has been set aside to deliver affordable homes in perpetuity. There are also major issues around Section 106 planning agreements, which again identify affordable housing in perpetuity.

As each day passes, we see more issues and more challenges. With those challenges, people are coming forward with ways in which the policy could be addressed and improved. Potential ideas are to replace the cash discount with an equity loan; to exclude certain types of properties, such as those in Peabody, where the funding came from private sources; to exclude rural housing; and, crucially, to decouple the council house sales policy from the policy of funding right to buy in order to develop a more sensible policy on this issue. These are creative solutions to try to improve a policy that, as I have said, is wrong in principle and wrong in practice.

I hope that the Government are open to new ideas and that we do not see what the French describe as the politics of the stiff neck. This House will have a significant role to play when the legislation comes forward.

I am grateful to my noble friend Lord Whitty for securing this debate. We hear time and again how this country managed a major housebuilding programme after the war despite our devastated finances. We could do that again now if we were determined to do so.

I grew up with pictures of the devastated City of London on my father’s office walls. He spent his civic life working to rehouse Londoners. In June 1950, as chairman of the City public health committee, he won approval for the Golden Lane Estate, which rehoused everyone on the City of London housing register at affordable rents. Later, as chairman of the Barbican committee, he ensured that thousands more would find a home—these were rental homes—in that war-devastated area. I am proud to say that Eric Wilkins was called the unsung hero of the Barbican in David Heathcote’s book about the scheme.

It was war that devastated London then and made a wasteland of it. Now it is short-sighted, selfish financial greed. As we have heard, house prices are soaring way out of the reach of ordinary Londoners. However, there is one area where London has been leading the country for the good, which is the mandatory requirement on developers to build to Lifetime Homes and wheelchair standards.

This Government are putting all that at risk. It is not only the supply of affordable housing that is important but the quality of it, and I want to focus on that issue. Last year, Leonard Cheshire Disability published No Place Like Home, its research into the state of the country’s housing as it affects disabled people. It found that only 5% of homes in England can be visited by someone in a wheelchair; that one in six disabled adults and half of all disabled children live in housing that is not suitable for their needs; and that 300,000 disabled people are on waiting lists across Great Britain.

The impact that this lack of disabled-friendly housing has on individual lives can be catastrophic: people being unable to reach their bathroom, having to strip wash at the kitchen sink, or no longer having visitors because they have to use a commode in the living room. Making all new homes disability-friendly is an obvious solution, and one that comes at no cost to the Exchequer. Lifetime Homes provides just that. When all developers are required to build to these standards, as has been the case in London, they are all in the same boat. In 2008 the Labour Government committed to building all new homes to Lifetime Homes’ standards by 2013, but now things are going backwards for disabled and older people in this as in so many other areas.

The Government have just introduced a new housing standards policy which has put accessible home building at risk. From 1 October this year, category 2 of the standards, which equates to Lifetime Homes’ standards, and category 3, the wheelchair standard, have been made purely optional. What is more, additional hurdles have been put in the way of councils wanting to build disabled-friendly homes. They will have to prove “clearly evidenced need” for them against a narrow viability test that is weighted in favour of the developer. The Leonard Cheshire research clearly shows that councils do not have that evidence in place. Given their squeezed finances, they are unlikely to have the time or the money to collect it now, so disabled-friendly housing will not get built. This is at a time when we have a rising population of disabled and older people. More than 5 million people in Britain have a mobility problem. Every year, more than 800,000 people become disabled.

Across the UK, disabled people are facing a growing crisis in finding suitable accommodation. This hits them hard, but it also drives up totally unnecessary costs in the NHS and in social care. Together with the lost employment opportunities that they face, it is costing the Exchequer millions of pounds every year. Delayed discharge from hospitals due to inaccessible housing costs the NHS more than £11 million a year. When people are prevented from being independent in their own homes, the costs of social care are driven up, or costly residential care becomes necessary. One week’s residential care for one person equates to the extra cost of building a house to Lifetime Homes’—now category 2—standard.

The Government’s current policy of optional accessibility standards and viability testing is economic folly. If we weaken requirements for accessible homes, disabled and older people will continue to be disadvantaged in the future, as they are now. The Lifetime Homes standards, or their new equivalent, need to be mainstreamed for the good of us all, not treated as a solution for a small section of the population. Someone in each of our families will be immobilised at some point in their lives, but instead the Government have decided to favour the short-term profits of private developers, for which not only our generation but future generations will pay the price.

My Lords, I add my thanks to those already expressed to the noble Lord, Lord Whitty, for initiating this interesting debate. I am sure that your Lordships, and, indeed, the Minister, will understand if I restrict my comments to the existing supply of affordable housing in Wales, and in particular the case for increasing it.

I remember, perhaps eight years ago, attending a housing conference in north Wales and castigating the Welsh Labour Government for the fact that there were 80,000 households in Wales on waiting lists for homes. Despite all the words, plans and promises I heard from the Welsh Government Ministers and housing officials that day—and, I will admit, all the hard work in the mean time—the situation overall has not improved. Shelter Cymru—Shelter Wales—estimates that 90,000 households are on waiting lists for homes in Wales, with all the personal anxieties that that entails. It also estimates that we need 5,000 new affordable homes every year. It makes the point that we need not only to make the case for increasing the supply of affordable homes but to find ways to increase the supply. It has been very informative to hear experienced voices here pointing the way forward.

Although there has been some increase in the supply of affordable homes in Wales in recent years, which is to be commended, it does not make up for the lack of building in previous years. It certainly has not met and does not meet demand. As a relatively young borough councillor in the 1980s, I experienced the impact of the right to buy local authority homes scheme and the frustration that my council colleagues felt because we were prevented from using the receipt from the sales to reinvest in new social housing. The housing associations that were formed at that time struggled, and still struggle, to meet demand, and along with others I despair at the impact of the right to buy housing association homes and the loss to the social housing numbers. To add to an already difficult situation, Shelter Cymru also reports that social housing repossessions hit a seven-year high last year in Wales, with nearly 1,000 social tenant households losing their homes, the majority of them having to turn to the private rented sector.

The area I live in is extremely beautiful at this time of year, as are most rural areas. However, the beauty of the area masks the reality of social and affordable housing in our rural communities. Conwy council has seen house prices soar and, like our neighbouring county of Gwynedd, admits that one of its biggest challenges is to provide affordable housing for people who have been priced out of the housing market. Gwynedd and part of Conwy make up the largest part of the Snowdonia National Park: breathtaking scenery, I know, and a wonderful place to live, but the reality of living in a national park can equate to planning restrictions, a lack of development and industry, and living somewhere that is sometimes described as being preserved in aspic.

People living in Gwynedd and Conwy rely on the tourism industry for employment—employment that is often seasonal and part-time. Well over a quarter of all employment in the Conwy county borough area is related to tourism. In fact, many people have two or three part-time jobs to help make ends meet. In our part of the world, we knew all about zero-hours contracts before the term was invented. In Conwy, the proportion of part-time workers is high at 42%, compared with a Great Britain figure of 31%, and wage levels in Conwy county borough are significantly below levels for Great Britain as a whole at only 88% of the average.

During the last few years, both Gwynedd and Conwy have encouraged the development of attractions that are open throughout the year and give employees the opportunity of a year-round wage, using our natural environment to build the local economy. If you care to visit Snowdonia at any time of the year, you can climb trees and use high ropes to move from one treetop to the other, take a trip on the longest zip wire in the northern hemisphere across a slate quarry, bounce to your heart’s content on large trampolines in massive underground slate caverns and, from 1 August, surf on the world’s longest man-made surfing wave, which will create six-foot barrels once a minute—I do not really understand that—in Surf Snowdonia’s new surfing and water sports park. These are ambitious attempts to increase employee incomes but, with many inhabitants in both Gwynedd and Conwy surviving on part-time or low wages, providing affordable and social housing is obviously a challenge and replicates the situation in rural areas throughout the UK.

I can see that my time is up but, as I make my final point, there is one question which the Minister might want to answer, which is the responsibility of the UK Government. Less than 15% of Conwy’s social housing stock is in one-bedroom accommodation, and the council itself admits that this,

“limits the opportunities for tenants to downsize if they are affected by caps on housing benefits due to under occupation in their existing accommodation”.

In circumstances such as these, does the Minister agree that, if residents have made two attempts at downsizing and cannot move because of the lack of alternative properties, they should not be penalised by having to pay the bedroom tax?

I thank my noble friend Lord Whitty for enabling this debate, and for his powerful opening speech. I declare my interest as incoming chair of the National Housing Federation.

The Government are committed to increasing the number of affordable homes so desperately needed in this country. Prior to the election, the Conservative Party said that it would place affordable homes at the heart of its plans for home ownership by building 275,000 of them by the end of this Parliament. As I understand it, these are in addition to the 200,000 starter homes available at a discount for first-time buyers under 40, and I hope that the Minister will confirm that. The Prime Minister seemed to invoke the spirit of Harold Macmillan when he talked about housebuilding on the steps of No. 10 on 8 May. I applaud his aim and look forward, in my role at the National Housing Federation, to supporting it.

Everyone in this debate has stressed the importance of a healthy supply of homes of all types, for people of all incomes to buy and rent, in all the different housing markets. A home is where we feel secure as children, can develop as teenagers and are able to support our own families as adults. It is a foundation for success in life. It must not become the preserve of those and only those who can pay. For many people now, not just those on low incomes, that kind of home is not possible without access to affordable housing. We need 80,000 affordable homes every year in this country; that is 80,000 families who need that security to prosper.

The need for affordable housing in Victorian times led to the creation of housing associations. Today, they still house those on low incomes and they can deliver even more of the homes Britain needs, given the right conditions. Their founding principle is that everyone should have a home that is right for them at a price they can afford. That is why they also build homes for people to buy and rent on the open market and homes for shared ownership: to help those who need a bit of extra support to get on the housing ladder. It is a principle that has provided 2.5 million homes to 5 million people and investment in a diverse range of neighbourhood projects. It is a principle that delivers for tenants and the economy too: housing associations directly support almost 150,000 full-time jobs and add nearly £14 billion to the economy every year.

As I have learnt about the sector, I have been surprised by the different types of homes that housing associations provide and impressed with the sector’s ambitious vision to do so much more. Last year, housing associations built approximately 38,500 affordable homes. By 2033, they want to scale that up to 120,000 of the 245,000 homes the country needs every year. Of these, 80,000 would be available at affordable rates. Associations would be housing one in every five people. This would add £70 billion and 170,000 jobs to the economy, representing incredible value for money.

But housing associations do so much more than this. I have been impressed by the ways in which they help to create strong vibrant communities. A secure, safe and stable home is a starting point, but there are many other factors beyond bricks and mortar that people need to succeed in their lives. They need access to jobs, education and health services, and tenants living in affordable homes provided by a housing association will find an open door to many of these services. For example, housing associations have a strong track record of supporting their tenants into work by offering employment and skills support. They have invested their own resources to provide these, together with programmes to aid money management and digital inclusion. They do this so that their tenants can overcome barriers to finding gainful and fulfilling employment.

We have talked a lot in this House about apprenticeships. Housing associations had a target to hire 10,000 apprentices by 2015. They beat that target, and a year early. The Government plan to create 3 million apprenticeships by 2020 and to extend to more people greater opportunity and the security of a pay packet. We welcome the opportunity to work with the Government as delivery partners in this work.

Housing associations also provide health, care and support services, allowing older people and people with complex needs to live independently. This is excellent news for our NHS, as an integrated approach to health and housing can reduce the number of acute interventions and help to reduce pressure on hospitals. Most importantly, it can help to keep people where they most want to be: at home. The sector attracts £6 more from private sources for every public £1 invested. It would be hard to disagree that this is one of the most successful and consistent public-private sector partnerships in recent history.

The noble Lord, Lord Best, and others raised the issue of right to buy. I hope that the Government will balance what they want to achieve with the right to buy scheme and its proposed welfare cuts, both of which will have a major impact on this sector and the people it serves, against what it will lose in the provision of affordable homes, successful communities and support into work.

The sector is full of passionate, energetic and, yes, commercially astute people who want to build homes and communities. I have no doubt that it will achieve its vision, but if the Government were also able to make the right investments, cut red tape and improve access to land, housing associations would achieve even more. I am an extremely proud advocate for the sector and I would certainly welcome an opportunity to talk in more detail about how the Government could help housing associations to reach their potential to end the housing crisis once and for all.

My Lords, one of the questions that must be raised in connection with the crisis in housing concerns the extent to which it has been the consequence of the misguided policies and oversights of successive Governments.

It is fair to raise this question in view of the success of early post-war Governments in meeting the huge demand for housing that arose from the destruction and neglect of the housing stock during the Second World War and from the need to house demobilised military personnel. We ought to remember the role of Harold Macmillan at the Ministry of Housing and Local Government in Churchill’s Government of 1951. Macmillan was given the task of overseeing the building of 300,000 houses a year. This objective had been adopted by the Conservative Party conference in 1950, and was amply fulfilled.

The policy of housebuilding depended on close co-operation between central and local government. Local government was empowered to finance house- building by issuing bonds, and there were substantial subventions from the Treasury. The percentage of people renting from local authorities rose to over a quarter of the population—from 10% in 1938 to 26% in 1961.

There was a complete reversal of the housing policies of the Conservatives in the era of Margaret Thatcher. The Housing Act 1980 gave a right to buy to council tenants and by 1987 more than 1 million houses had been sold. Thereafter, the building of houses by local authorities virtually ceased, and there have been almost none built since the early 1990s.

Thatcher’s policy of the right to buy envisaged that the market could be relied upon to assume the housebuilding role of local councils. Rules were introduced that prevented councils subsidising their housing from local taxes, and grants for construction of new social housing were to be channelled to housing associations. However, the housing associations were expected increasingly to borrow their funds from banks and building societies, which proved to be less than willing lenders. Within a decade it had become clear that these policies were not providing the needed housing. The problem was belatedly emphasised in a debate in the House of Lords on the eve of the election in 1997.

However, as it transpired, the succeeding Labour Governments failed to meet the challenge. During their periods in office, the ratio of house prices to incomes rose from 3:1 to 5:1, while the levels of housebuilding fell to half of what they had been in the late 1960s. During the Conservatives’ recent period in office, the ratio lurched to something approaching 6:1 before falling back to 5:1 when the trade in properties virtually ceased.

The Conservatives have reprised Margaret Thatcher’s free-market ideology and have sought to stimulate the housing market from the demand side by offering help to buy. In the run-up to the election, as we have heard, they revived the policy of the right to buy by proposing to dispose of the assets of housing associations at heavily discounted prices. The fact that they do not have the rights of ownership of these assets has not deterred them.

In common with so much that the Conservatives have proposed, the policy represents a remarkable triumph of ideology over reason. It is clear that the market cannot be relied upon to satisfy the housing needs of our nation. What is required is a steady supply of new houses at the rate of 240,000 per year. The unaided market appears to be capable of providing, at most, half that figure, and it cannot be relied upon to do so consistently. Its supply of houses is tied to the economic cycle for the reason that the unsupported demand of consumers is likewise tied to that cycle. Moreover, the provision by banks to housebuilders of loans to finance their building projects is also unreliable and tied to the economic cycle.

Housebuilders have been under an injunction to provide a proportion of affordable houses in each new development but have failed to do so. Among the reasons for this failure have been the various exemptions from the requirement that have been offered by the Conservative Government and, notably, by the Conservative Mayor of London. These exemptions were originally proposed for small-scale developments but have been extended to cover developments where there are pre-existing vacant properties. Under present circumstances, housebuilders in London have found it more profitable to provide houses for speculative investors from overseas, who are prepared to leave their properties empty. There needs to be a radical change in policy with a co-ordinated strategy, overseen at the centre by people charged with fulfilling a national housing policy. The houses have to be built where they are needed by working people and, for this purpose, local authorities must be fully involved. We need to embark on something similar to the early post-war housing strategy.

Apart from the question of the availability of houses, there is the matter of their affordability. The persistent rise in house prices must be staunched if it is not to end in the bursting of a bubble. This will be hard to achieve at a time when the banks and the building societies, which are the suppliers of mortgages, have been stuffed full of money by the programme of quantitative easing. They must be compelled to make their loans elsewhere than to the housing market. House prices should also be constrained by taxation. Stamp duty levied on the buyers of properties is an absurdity. It should be abolished and, in its place, a significant sales tax should be levied on the sellers of properties in order to capture a fair proportion of their capital gains. This would make investment in houses less attractive, which should serve to reduce their prices.

We must act now—decisively—to relieve the damage and pain of the housing crisis and put housing on a road to recovery. If we do not do so, the consequences will be dire. I do not have the time to describe these consequences but I trust that others will have done so fully by the conclusion of this debate.

My Lords, I thank the noble Lord, Lord Whitty, for his opening remarks. I shall focus my remarks on having the right incentives in place to increase housebuilding. I declare that I am a director of Peabody and London First.

In London, we are building roughly half the houses that we need. Simplistically, if there were a free market, we would be providing everything from cheap and flimsy broom cupboards to penthouse flats. Instead, we have layer upon layer of well-intentioned policy intervention, which has the unintended consequence of building for the very rich and the very poor but not doing much for those in the middle. Those who are the backbone of the London economy—the supermarket checkout people, the waiters, the PAs, the newly graduated, even the professors—are neither rich nor poor enough to be housed. In a recent survey by London First, a lack of reasonably priced housing was ranked as a top three competitiveness risk for the capital.

Our housing crisis is the result of a range of misaligned incentives, from welfare to planning and cumbersome public sector procurement processes. These incentives include: housing benefit underwriting private landlords’ rents or indirectly subsidising employers’ salary costs; muddled incentives for social tenants when they weigh up staying on benefits versus being in work; local authorities being legally required to house people in need, but having no similar requirement to house London’s lower-paid workers; demands for social housing on private developers causing the rest of the housing to be more costly to make the schemes add up; and state bodies that have no incentive to dispose of unused land and property, and instead hoard for the future.

Among the other incentives, a narrow definition of affordable housing for planning purposes makes large-scale provision of private housing for rent less attractive than market sale. Two-thirds of New Yorkers live in rented accommodation. Making a substantial intervention in this space must be part of the answer. The green belt includes more land than is needed to limit urban sprawl. In particular, it includes scrub land near transport nodes which could be used for housing. The planning system continues to bog down development, particularly in negotiations that can last for years around what associated infrastructure will be provided. Resistance to innovation prevents higher-density or new housing products that could serve a market need. For instance, many first-time buyers of studio flats would be happy to start with smaller floor plates than policy typically allows.

There is no silver bullet, but I have three specific requests for the Minister. First, would she consider giving local authorities greater freedom to build homes by granting more borrowing headroom, albeit within existing prudential rules? As alluded to earlier, building at scale was delivered by the public sector until the 1980s, with a substantial and sustained drop in the last 20 years since local authorities were capped. I say in parenthesis that I am yet to be persuaded of the benefit of forcing local authorities to sell property to subsidise housing association right to buy. The long debate that we will no doubt have on that subject in this House is an unwelcome distraction from increasing supply, which the housing associations are well placed to do.

Secondly, although I am enthusiastic about the new London Land Commission, bringing public sector sites to market is easier said than done. Will sufficient resource be given to the commission to get land out into the market and will the Government set a target level of land disposal that will be actively monitored?

Finally, on targets, I want to deal with the rhetoric versus reality of London housing targets. Only this morning, the mayor launched another few housing zones, which are set to deliver 100,000 jobs and 50,000 homes. Every year, the London Plan sets targets for local authorities which add up to the number of houses required in London—roughly 50,000. Every year, we fail by a factor of roughly half, and surely we need a much tougher regime. On the one hand, where a local authority repeatedly fails to meet the targets, the mayor should be given step-in rights to start determining more applications; on the other, local authorities could be given a more generous new homes bonus for exceeding targets. Would not a carrot-and-stick approach to housebuilding better align our incentives to meet housing need?

My Lords, thanks to my noble friend Lord Whitty, we have had an excellent debate. Many noble Lords have spoken, about all aspects of the problem, so as the last Back-Bench speaker I have to do something new. It is quite clear that once upon a time, people wanted a house for living in but that is no longer the need. The first 10 places I lived in were all rented, but when I arrived in London, I was told that it was madness to rent and that I had to own. The incentives of owning were such that it would be mad to rent. Since then, we have gone on adding incentives to buy and therefore anybody who has the money buys houses not just for living in but for capital gain. Affordable housing has become a rather exotic item in the social circles that cannot buy, although with the Government having introduced the right to buy, even that bit has now powered on to home ownership.

Home ownership is very good but it is also a very irrational thing. Our last crisis was caused by home ownership, both in America and here. We should not forget that the idea that homes always go on increasing in price is a delusion. But people have delusions, and in democratic politics you cannot tell people that they have delusions—instead you have to feed them delusions. That being the case, how do we increase supply? As my noble friend Lord Whitty and many other noble Lords have said, it is a problem of supply. I have studied the historical gentrification cycles in London. Two noble Lords declared their connections with Peabody. Of course, we know that the London housing situation was dire, as Booth discovered in the 1870s. It was rich, private, charitable people who built a large amount of London housing in the late 19th century. Peabody is a perfect example.

As other nobles Lords said, in the post-war period public housebuilding took over the task of renewing London’s housing and keeping affordable houses supplied. In the mean time, a lot of small private builders were involved in the gentrification of various areas. We now face the problem that the public sector can no longer be a sufficiently large provider of houses and the small private builders do not have incentives to build affordable houses. That being the case, we ought to find some way to get big money into housebuilding.

People think I am an economist so I get invited to conferences where very rich people ask me how they can invest money. Sovereign wealth funds, pension funds and other such funds sit on a large amount of money globally. These people have really global ideas of where to invest. They are also, unlike many other private investors, long-term orientated and willing to accept a proposition in which the returns will come over 50 years. That is especially true of pension funds and sovereign wealth funds. The Government ought to be able to do something by which they give an incentive to sovereign wealth funds and pension funds, those people who invest on a 50 to 100-year basis, to revamp the housing stock of the country.

My noble friend Lord Adonis suggested something of this sort but we could do it on a much larger scale if we can harness a lot of money. My view is that there is a lot of money out there. Those in charge of that money, especially if it is private equity or sovereign fund equity, do not have to face shareholders. They have no short-term pressures on them to make money all the time. It is a very rare thing: if you have a little money you have short-term pressures but if you have a lot of money you do not. The Government ought to find some sufficiently clear incentive-based mechanism to attract this money into housebuilding. They may be able to do that through some sort of green bank but it would be very good if we could invite back the Peabodys of the 21st century to invest massively in London housing.

No other agency has the money and the Government will hardly try. We will be told by the Treasury sooner or later that we do not have the money. The fact that housing benefit is costly precisely because we have a short-sighted policy on supplying housing does not impress the Treasury. The Treasury is not an economic Ministry—it is made up of bean-counters who care only about the ins and outs of money. They will not care about that argument on the rationality of saving on housing benefit. If we can get a lot of private money into housing by some clever device, and I am sure we can all think of one, that would relieve the constraint on London’s housing supply.

My Lords, I declare my interest as chair of Housing & Care 21. I also join others in thanking the noble Lord, Lord Whitty, for initiating this debate. It takes at least five years to have any chance of getting real change in the housing market, so it is good to have this debate right at the beginning of what is, I hope, a five-year parliamentary term.

Affordability of housing is a growing issue. I think we are all aware of that. Politically it is a very potent issue, not only in owner occupation, with young people finding it increasingly difficult to get on to the housing ladder; there is also a problem in building all sorts of housing when the price of land is accelerating.

I thank my noble friend Lady Bakewell of Hardington Mandeville for talking about rural housing, my noble friend Lord Palmer of Childs Hill for his remarks on the right to buy, and my noble friend Lady Humphreys for talking about Welsh housing. I shall talk mainly about the role of housing associations in providing more affordable housing, so I am very much in the same area that the noble Baroness, Lady Warwick, and the noble Lords, Lord Best and Lord Kerslake, were talking about.

There is a huge undersupply in all markets, as we know. In the last month of the coalition Government, nearly 65,000 households were in temporary accommodation. As the noble Baroness, Lady Valentine, said, there is a concern about the danger of key skills not being available in our urban centres as housing prices force people to buy outside and move outside our cities. There is the huge growth of housing benefit costs, as private rents rise and living standards stagnate; it is a huge, unsustainable problem in public spending. In all sectors, we simply have to build more. That has been a theme of this debate. The figures are quite clear: we have been building an average of 137,000 homes, and we need at least 100,000 more, per annum.

The coalition had a difficult start on housing. With the public sector restraints, it was difficult to get it to sustain some of the plans which the Labour Government already had for affordable housing growth, but we did, as the noble Lord, Lord Kerslake, told us, put in two important reforms: the stability of income growth, and trying to set a plan for five years. We increased the stock of social housing over the period of government for the first time for many generations.

However, I add another problem. It is not simply a problem of shortage of land; there are also significant capacity problems in the construction sector. It has been a very cyclical business, which means that lots of capacity gets lost every time we have a cyclical downturn, not least during the last recession. Small contractors, self-builders, and private developers through consolidation all disappeared in the last recession. There has also been a loss of skills, which is why we had to bring in immigrant skills to help out in the construction sector. Developers are very cautious; they build only when they can sell, and they have an interest in keeping prices moving upwards.

I turn to what housing associations can do. They are an important source of delivery, and we have to look very carefully at what we need to do to encourage them to do more and to meet the affordable market demand. I welcome the increase that the Government have committed themselves to in moving from 175,000 affordable homes built under the coalition Government to 275,000 in the next five years. However, as the noble Lord, Lord Kerslake, said, we have to sustain this. How can we increase the 55,000 homes per annum increase that is projected and get it nearer to the 80,000 that we need to reach the extra 100,000 houses overall?

There is capacity and potential in housing associations. At the end of the Labour Government there was a significant expansion. Under the last Government, the housing associations, with the guidance of the HCA, delivered on the targets set at the beginning of the Government. They have the ambition and the development teams to expand what they are doing. They also have unused security in their assets to help to fund this, and there is further potential if the Government would look particularly at the values of council-house transfers in their stock.

Housing associations have a track record of partnerships with developers and councils to help to rebuild communities and regenerate housing estates. I particularly value the work that has been done by the noble Lord, Lord Adonis, on the concept of city villages to regenerate some of the many old council estates, a concept that has been supported now by the Minister, as I am very glad to see. I have been involved in one of these projects in Rowner, in Gosport, Hampshire. It takes 20 years to do it, but it is immensely valuable. That community alone has been transformed by the work of a housing association, a council and English Partnerships, now the HCA, in that development, along with the private sector.

Housing associations can use their assets better. They have to be cautious. I am always worried when people say that housing associations can be more profitable. They can certainly be more efficient, but we have seen the dangers of HBOS going into the Halifax and turning the treasury department into a profit centre, and where that leads us. We have to be cautious. Property is a very cyclical market, and cash is important in order to survive. Housing associations can be so flexible that if there is a recession they can transfer houses that they were intending to sell into the rented sector, because there will be an overwhelming demand for them. That can provide stability. It also means that they can borrow money at cheaper rates because of the guarantees and security that their income streams can provide.

As the noble Lord, Lord Kerslake, said, we know that housing associations access private finance, which is vital at a time when public spending is under pressure. One of the initiatives not mentioned in this debate is the Government’s guaranteed loan schemes. If housing associations can borrow money at 1% less than they would otherwise be able to, that provides money that is almost as good as a grant. We need to look at this. The Government put forward a £10-billion facility. How much has been used, how much is committed, and are the Government going to pursue this over the next five years? That is important for future expansion.

Housing associations must manage their property portfolios well to develop other sources of funding. I am not one of those who oppose selling off expensive council house properties or, indeed, housing association properties, but only if they are being used to build more, new, affordable homes and regenerate old communities. They should not be used simply to subsidise the right to buy. We have huge concern that under the right to buy, properties will not be replaced, but more importantly that if housing associations’ assets are subject to this policy we will undermine their whole business plans and their financial viability. We know that when the right to buy council housing was imposed, councils simply stopped building, and we do not want that to happen at a time when we need housing associations to build more.

Housing associations build homes for social, affordable and private rents, for right-to-buy sale, and more importantly for shared ownership. It is the Government’s role to galvanise their hidden potential and to increase affordable housing. They have five years to do it with an economy that we hope is improving. They must not miss this opportunity. They will have no excuse if they do.

My Lords, I thank my noble friend Lord Whitty for initiating and leading this debate. His focus on increasing supply and affordable housing is entirely right. The term “affordable housing” has been the subject of comment by a number of noble Lords, but in this debate I understand that it covers a variety of provision, encompassing social rented homes and homes for sale or rent provided at a cost above social rented homes but below market levels, sometimes just below. It encompasses shared ownership, shared equity and homes for intermediate rent. The noble Baroness, Lady Valentine, suggested that that definition is too narrow in planning terms, but I agree with my noble friend Lord Whitty that attaching the term “affordable” to any particular provision does not of itself bring it within the reach of many who are in desperate need of a home.

Today we will doubtless have our ritual exchange of statistics with the Minister using starts or completions and differing times zones, whichever suits, but it is undeniably the case that the Government are simply not causing enough homes to be built to meet the needs of our country. People on low and middle incomes are struggling to get a home to call their own. Home ownership is at its lowest level for 30 years and the number of homes built for social rent has been the lowest for many years.

Despite the rapid growth of private renting, the sector has not changed to meet the needs of those living in it, with short-term tenancies causing insecurity and instability. Rents in many parts of the country increasingly push many to seek the support of housing benefit. Over the five years to 2013-14, the proportion of renters who are in work and claiming housing benefit doubled to 14%. Over that period, average private rents increased by 15%.

The UK has long faced a large and growing shortfall between the number of homes that we need and the number that we are building. Estimates may vary, as they have today, but an additional 250,000 homes per year over the next 10 years seems to be about the consensus. Perhaps the Minister could say what figure the Government are working to. As my noble friend Lord Whitty made clear, we need to build not only more homes, but more affordable homes. The noble Baroness, Lady Wilkins, reminded us that we need to build homes of quality to meet people’s real needs. Homes to buy or rent for those who cannot afford the market rate should be part of that.

Shelter has provided us with an estimate of the range of provision that is needed, suggesting that 50% should be market homes to rent or buy, 30% should be for social rent and 20% for intermediate tenancies, renting or shared ownership. Perhaps the Minister can say whether that breakdown of the total is something that the Government would recognise and support.

Of course we know that one of the first acts of the coalition Government was to change the funding model for affordable housing. They cut capital grant subsidies and enabled intermediate rent tenure of rents up to 80% of market rent levels, switching the funding burden in part on to the housing benefit bill but also taking more from tenants. This is part of the reason why we have a burgeoning housing benefit bill. The Government are now encouraging more conversions of social rented homes to affordable rents.

There have been a plethora of other initiatives by the coalition Government, which are documented in the helpful briefing provided by the Library. We have had the affordable homes guarantee programme, affordable rent to buy, the new homes bonus, the growing places fund, the Get Britain Building fund, the builders finance fund, the estate regeneration fund and the single local growth fund, while home ownership initiatives have variously included FirstBuy, Help to Buy and the NewBuy guarantee. We accept that these were all with good intent and with some advances, perhaps of marginal benefit, but what has it all amounted to? The number of affordable homes provided in the last year of the coalition Government fell by 26% from 2009-10 levels, while the number of homes built for social rent fell by a staggering 75% from 2009-10 levels.

Statistics reported today in the Guardian quoting DCLG data reveal that there are nearly 50,000 families living in temporary accommodation, a rise of 25% in five years, and a quarter of those are couples with dependent children. There has been a rise of 300% since 2010 in the number of families living in bed and breakfast accommodation and, last year, 111,000 people in England made an application to their council as homeless. Over 1.3 million households are on social housing waiting lists. Rough sleeping in England has increased by 55% over four years—you can see evidence of that outside the very doors of this place.

This is, sadly, not a success story. We should not deny that there have been heroic efforts by many to try to make advances, particularly those associated with the housing association movement. We will doubtless hear today that local authorities are building more council homes than at any time under the last Labour Government, and that is fine; certainly the reforms to the housing revenue account that we devised have helped local authorities to get back into business, but of course it is Labour councils that are leading the way.

The Government’s current commitment to build 55,000 affordable homes for each year of this Parliament should be welcome—my noble friend Lady Warwick welcomed it in particular. It is suggested that that would account for at least a third of new housing supply in England over the next five years, so it is a very important component. However, because, as I understand it, that is for intermediate let, can the Minister say where the investment into homes for social rent will come from?

Faced with those huge challenges, what have the Government alighted on as a key policy? The extension of the right to buy to housing association tenants, which most noble Lords have commented on today, is a policy that was highlighted in the general election campaign, no doubt in an attempt to recapture the political benefits of the 1979 announcements. Frankly, it is a cynical way to develop policy in such a crucial area. It drew questions from a number of noble Lords today: my noble friend Lord Campbell-Savours, who described the crucial issues in Keswick; the noble Lords, Lord Horam and Lord Palmer of Childs Hill; the noble Lord, Lord Best, who took us back to the debate in 1983; and my noble friend Lord Hanworth.

Many unanswered questions surrounding the issue have been raised, both today and before. Foremost among those are the concerns that it could lead to fewer affordable homes, not more, and could impair the ability of housing associations to build. The funding that is supposed to come from the sale of the most expensive council houses is supposed to stretch to compensate housing associations for the discount, to enable replacement of the housing association and council houses sold and to contribute to the brownfield fund. How on earth is that all going to fit together?

Have the Government come to a conclusion on the matter of how the most expensive one-third of council houses are to be identified? Will there be separate calculations for properties of different sizes? Will the most expensive properties be identified on a national, regional or some other basis? What assurances will be given that smaller properties needed for those wishing to downsize to escape the bedroom tax will not be forcibly sold, or properties in rural areas? Just what is the legal position of the Government in imposing these sales on independent charities?

Are we not possessed of enough information and advice to deal with this housing crisis? The point made by my noble friend Lord Haskel and other noble Lords about a long-term consensus must be right. As Sir Michael Lyons put it, this needs long-term leadership, which can be achieved by making housing a national priority. We should give powers to local authorities to assemble land and commission development, as well as powers of “use it or lose it” over developers that hoard land. We are certainly for garden cities and engaging the energy and vision of housing associations, but we need to address capacity constraints in the building sector and sort out funding—how we can redirect the enormous funds spent on housing benefit.

Why does all this matter? Because substandard, inadequate and insufficient housing inevitably sits at the centre of deprivation, disadvantage and disillusion. We know that the major influences on a child’s life—family income, effective parenting and a secure environment—are all directly or indirectly influenced by a family’s housing conditions. I agree with the noble Baroness, Lady Bakewell, that everyone should have a decent home.

My Lords, I thank all noble Lords who have taken part in this debate and thank the noble Lord, Lord Whitty, for introducing it.

I will start by casting noble Lords’ minds back to 2010, to a situation in which the banks were not lending, the builders were not building—as the noble Lord, Lord Stoneham, said, and of course that led to a loss of skills in that sector—and working people were denied the opportunity of home ownership. At that time there was a top-down planning system with regional spatial strategies which produced not houses but the lowest peacetime rates of housebuilding since the 1920s. The regional strategies and the guidance that accompanied them ran to thousands of pages. However, apart from breaking the bookshelves of planning officials across the country, they were notable for building resentment rather than homes for working people. Crucially, the stock of social rented homes had fallen by 420,000 since 1997, with 1.4 million families languishing on social housing waiting lists. Now, we are meeting people’s aspirations to own their own home by expanding on improvements in housebuilding and providing support for those who aspire to own their own home.

The noble Lord, Lord Whitty, and many other noble Lords, including the noble Lord, Lord Kerslake, said that we are not building enough homes. It is clear that if we do not supply the homes, there will be a problem. More than 260,000 affordable homes have been delivered in England since April 2010. The Government’s 2011 to 2015 affordable homes programme has exceeded expectations by delivering nearly 186,000 affordable homes since April 2011—16,000 more than originally planned. In all, 570,000 new homes have been built since April 2010, and there are now nearly 800,000 more homes than in 2009. The starts on new homes in the year to March 2015 totalled 140,500—the highest level since 2007. Homelessness is now at less than half of its peak level under the Labour Government in 2003.

We have wasted no time unveiling an important set of measures, including a new housing Bill announced in the Queen’s Speech which will increase housing supply, support home ownership and give housing association tenants the chance to own their own home.

On that point, I wonder whether the noble Baroness will answer my question. Why should Quaker Housing Trust—another interdenominational- sponsored housing trust—be forced to sell off its assets when it is run by volunteers and linked to all the churches?

My Lords, I say at this point that we intend not to seize anyone’s assets but to enable people who aspire to own their own home to do so. I will come later to the noble Lord’s specific point concerning Keswick, if that is okay.

The housing Bill will help more tenants of housing associations to buy a home of their own. It will increase the supply of starter homes, help those wishing to build their own home and ensure more control over planning. I can confirm to the noble Lord, Lord Kerslake, that we will deliver 275,000 affordable homes with £38 billion of public and private investment, achieving the fastest build rate for 20 years. I can also confirm to the noble Lord that the Minister in the other place, Brandon Lewis, is already engaging across the sector, because, as he has said, that is very important. On the 10-year rent policy settlement, the Budget will be on 8 July. As the noble Lord will know, the settlement will then follow, so I cannot give any commitments at this stage.

The noble Lord, Lord Whitty, talked about the lack of affordability for first-time buyers. I can confirm to both him and the noble Baroness, Lady Warwick of Undercliffe, that, in addition, during this Parliament we will be committing to build 200,000 starter homes, to be exclusively offered to first-time buyers under the age of 40 at a 20% discount on the open market value. The starter homes will also help those in their 20s and 30s to have the opportunity to gain the benefits of home ownership which their parents’ generation enjoyed. We have introduced a new planning policy to encourage developers to build starter homes, and we will shortly set out a further package of reforms to support the delivery of these 200,000 starter homes.

The noble Baroness, Lady Warwick, passed me a note saying that she omitted to ask whether she could have a meeting with me. I assume that it would be to discuss housing. I shall be very happy to meet her, although I should add “in due course”, as at the moment I am quite busy.

The noble Lord, Lord Haskel, referred to supply constraints. Many noble Lords talked about lack of supply driving up house prices. As I have started to outline, we are increasing supply. We have granted planning permission for 261,000 new homes in the past year. House prices are affected by the economic cycle and we have a strong economy.

The noble Lord, Lord Stoneham, referred to the lack of discussion on Help to Buy. Forty-nine thousand people have been helped to buy, and more than 225,000 households have been helped to buy a home of their own by government schemes such as Help to Buy. Our manifesto committed us to extend the Help to Buy equity loan until 2020. We will introduce a Help to Buy ISA in the autumn to help aspiring home owners save for a deposit on their first home with contributions from government. For every £200 that someone saves through the scheme, the Government will contribute £50.

The noble Lord, Lord Whitty, and the noble Baroness, Lady Valentine, talked about borrowing without caps. The Government have no plans to remove the borrowing caps. They are necessary while we tackle the national deficit inherited from the previous Labour Administration. Local authorities have £3.13 billion of borrowing already.

The noble Lord, Lord Whitty, spoke of the need for a White Paper on a whole new approach to housing and suggested a target of 250,000 new homes—of which a proportion should be social housing—with clearer local responsibilities. As I have said, housing starts are at their highest annual level since 2007. Under Labour, despite the targets, housebuilding fell to its lowest peacetime rate since the 1920s. We are focusing on building more homes.

The noble Lord talked also about the cost of housing benefit rising in the private rented sector. Housing benefit cost rose by 50% in real terms in the 10 years to 2010. In 2013-14, welfare spending fell for the first time in 16 years. Some £470 million in discretionary housing payments has been made available for the period 2013-16 to help vulnerable households during welfare reform transition.

I think that it was the noble Baroness, Lady Bakewell of Hardington Mandeville, who talked about the right to build and neighbourhood planning. Councils will identify and provide land and a right to build for people who want to build or commission their own home. Already, 1,500 communities have started the process of neighbourhood planning, with more than 11% of the population of England living in one or more of the 1,300 designated neighbourhood areas. We will further simplify neighbourhood planning to make it even easier for communities to have more control over housing. The number of homes planned for locally has risen substantially and we saw planning permissions granted to 253,000 homes last year.

Many noble Lords talked about right to buy. As I outlined earlier, we believe in helping people in their aspiration to buy their own home. We will offer more than 1 million housing associations tenants the option to buy their own home in the same way as generations of local authority tenants. Until now, 1.3 million tenants in housing association properties have received little or no assistance in this area, which is clearly unfair. Aspiration should not be determined by the organisation that manages your home nor be limited by it, especially if it is funded ultimately by the taxpayer. That is why we will ensure that housing association tenants have the same opportunities for the right to buy a home at a higher discount level as council tenants. Revenue from sales will be invested in more affordable housing, and for every home sold a new home will be built, which relates to the point raised by the noble Lord, Lord Whitty, about addressing the lack of supply. Through the right to buy refresh scheme, 33,000 homes have been built, with 40,000 since 2010.

The noble Lord, Lord Best, talked about affordable homes being lost for ever because of the extended right to buy. We have been very clear that every home sold will be replaced by another one.

My Lords, that is a policy announcement to be made later. Given the amount of time left, I am happy to write to the noble Lord in due course, but I am aware that the clock is ticking and I still have a pile of questions to get through.

Pension funds were mentioned by one noble Lord, which brought to mind what is happening in Manchester. Greater Manchester, which has a healthy pension fund, and the city council have signed up to a £30 million joint venture that will see new homes for rent managed by Places for People.

The noble Lord, Lord Haskel, and my noble friend Lord Horam talked about foreign investors in London. The former Government also took action to tackle tax avoidance and to ensure that those individuals who envelope UK residential properties by owning or purchasing them through corporate structures without a commercial purpose pay a fair share of tax. We are also levelling the playing field by introducing capital gains tax on future gains made by non-residents disposing of UK residential property.

The noble Baroness, Lady Bakewell, also asked why thresholds for exemptions on Section 106 were set at 10 houses and asked why local authorities could not set their own thresholds. Ten homes represents a major development in planning terms and this is accepted across the country. The thresholds policy states that affordable housing contributions should not be sought from sites of 10 units or fewer and 1,000 square metres or less, and a lower threshold of five units applies in national parks, areas of outstanding national beauty and designated rural areas as a direct result of concerns raised. New developments tend to be predominately smaller scale in rural areas.

The noble Baroness, Lady Bakewell, also said that there should be more targeted funding for rural affordable housing through the HCA. The HCA looks at a range of factors, including local circumstances, when allocating funding. There is no set amount of grant funding. Higher costs that can occur in rural areas are taken into account.

The noble Lord, Lord Campbell-Savours, talked about the impact on community housing trusts of the extension of right to buy. To some extent, I have already started to address that point. The development of that policy is ongoing and we are engaging with that sector.

I will certainly write to the noble Lord, but I am not in a position to make policy announcements at the Dispatch Box.

The noble Lord alluded to Keswick, so I will outline how we are supporting housing in Allerdale council. There have been 460 affordable homes delivered in the Allerdale local authority area between 2010 and 2015. In terms of help to buy, there have been 80 equity loan sales to March 2015, 58 mortgage guarantee loans, 158 homes supported by 20 new-buy mortgage loans and, up to 2014, the new homes bonus for Allerdale has been £791,455.

The noble Lord, Lord Best, said that the current right to buy has become more generous with increased discounts and shorter qualifying periods. The qualifying period was reduced from five years to three years under the Deregulation Act 2015, returning to the original qualifying period set in the 1980s, and the right to buy discount has increased to realistic levels after years of stagnation when the discounts became irrelevant.

A question was raised about making land available. We want to make brownfield land available because people want new homes to be built near existing residences while the green belt and the local countryside are protected. They might even want to build their own home. We will ensure that brownfield land is used as much as possible for new development. We will require local authorities to keep a register of what is available and ensure that 90% of suitable brownfield sites have planning permission for housing. I mentioned in this House the other day that we will create a brownfield fund to unlock land. There will also be a new London land commission to identify and release all surplus brownfield land owned by the public sector and fund housing zones to transform brownfield sites into new housing, creating 95,000 new homes.

The noble Lord, Lord Haskel, made the point that no one believes that one-for-one replacement will work, especially in London. There is inevitably a lag between sale and replacement in order to assemble land, get planning permission and so on. That is why in 2012 councils asked for three years to deliver the one-for-one figures that we have published today. They show that 3,053 additional homes were sold in 2012-13, and 3,337 have been started or acquired. The numbers have doubled in the last year, so councils are delivering the one-for-one replacement to date. However, we cannot expect to see the figures on that replacement immediately.

Two noble Lords talked about the definition of affordable housing. It is set out in the National Planning Policy Framework and in the Housing and Regeneration Act 2008. The definitions are as follows. The National Planning Policy Framework defines it as:

“Social rented, affordable rented and intermediate housing, provided to eligible households whose needs are not met by the market. Eligibility is determined with regard to local incomes and local house prices”.

I hope that the noble Baroness will forgive me for interrupting, but using those definitions, on the affordable programme that the noble Baroness has talked about today, of the 55,000 houses each year, how many of those are social rented homes and how many are intermediate homes?

Perhaps I may get back to the noble Lord on that particular figure. He always asks specific and detailed questions, so I shall get back to him on that.

I shall carry on with the definition:

“Affordable housing should include provisions to remain at an affordable price for future eligible households or for the subsidy to be recycled for alternative affordable housing provision”.

The Housing and Regeneration Act 2008 defines social housing as,

“low cost rental accommodation and low cost home ownership accommodation”.

“Low cost rent” is simply defined in the Act as “below the market rate”, while “low cost home ownership” is defined by its availability for occupation on a shared ownership or equity percentage basis.

I note that time has run out and there is a host of questions that I have not managed to get through. I will write to noble Lords whose questions I have not addressed, and I thank all noble Lords who have taken part in the debate.

My Lords, I thank the Minister for that comprehensive reply. Although comprehensive, it was not entirely comprehensible because when I add up all the figures and work it out, I am not sure what the degree of ambition of the Conservative Government now is in terms of overall delivery. The means of that delivery, despite all the various schemes to which the Minister referred, do not add up to the step change in the delivery of housing supply that we clearly need.

When the Minister looks back she is right to say that the council waiting list was 1.4 million when the coalition Government came to power, but of course, the figure is exactly the same now. All the interventions during that period, which the noble Baroness was praising, made no difference: at the end of the line, there were still a huge number of families who were entitled to affordable housing but did not get it, and far more still never got on the housing list in the first place.

The debate has been characterised by a lot of knowledgeable contributions from people such as the noble Lords, Lord Best and Lord Kerslake, and my noble friend Lady Warwick, who know about housing associations. Housing associations will be required to deliver a large part of whatever targets the Government eventually come up with. It is therefore particularly unfortunate that they are being hobbled by what I referred to earlier as a cack-handed intervention, in terms of the right to buy, in their finances, borrowing credibility and business plans, a point that has been underlined by many speakers.

We have had a good lesson in economics from my noble friends Lord Desai and Lord Haskel. The economics of housing are distorted by two things: first, by the fact that, as my noble friend Lord Desai said, housing is not just a home but an investment. That is a distortion of the British economy to a degree that does not apply everywhere else in the world, and it is probably something we ought to be able to get over, but probably not in the next five years. That benefits home owners—a decreasing proportion of the population. The next generation will not have it as easy as my generation and the previous generation in getting on to the housing ladder.

I thank all noble Lords who took part in the debate. Rural housing and the housing situation in London are important matters for the Government to take on board. The right-to-buy initiative in housing associations is a difficult issue, to which we will return. I say to the noble Lord, Lord Palmer, that my support for the principle of the right to buy is based on the fact that a lot of people have benefited who would otherwise not have been able to get on the housing ladder. However, he is absolutely right that the basic flaw in successive right-to-buy policies has been that we have not replaced the housing stock that they displaced. I do not believe that there are the means of doing so in this policy, either. One-for-one replacement has been impossible in the previous phase of selling council properties, and it will be equally difficult to make the economics and finances work out for housing associations. That is therefore a major hole in the Government’s policy.

I was also surprised, given her background, that the noble Baroness did not emphasise more the role of local authorities. The reality is that if we look back over the period to which my noble friends Lord Hamworth and Lady Wilkins referred—after the war—it was largely the local authorities, with government backing, that delivered. I do not believe that we can get back to that level of housebuilding without the major involvement of the larger local authorities. I hope, therefore, that the Government’s plans for devolution and the enhancement of the role of London will play a central role in dealing with the housing gap that we need to address.

I thank all my noble friends on this side of the House. I notice that the noble Baroness did not have huge numbers on the Conservative Benches showing an interest, which is a problem for the Government. I am very glad that the noble Lord, Lord Horam, is here, and I agree with much if not all of what he said. It almost reminded me that he was not always a Tory.

This has been a good and very important debate, to which we will undoubtedly return on many occasions when considering the relevant legislation, and I thank everybody who has participated in it. If the Government fall short, millions and millions of our fellow citizens will suffer.

Motion agreed.