Report (2nd Day)
Relevant documents: 20th, 21st and 26th Reports from the Delegated Powers Committee
Clause 55: Recovering abandoned premises
39: Clause 55, page 26, line 11, leave out “neither the tenant nor a named occupier” and insert “no tenant, named occupier or deposit payer”
My Lords, I shall speak to all the amendments in this group that are in my name and that of the noble Lord, Lord Kennedy of Southwark. The amendments are designed to ensure that vulnerable tenants are protected under this new legislation on abandonment. I raised concerns about vulnerable tenants in the context of this policy change in Committee.
My Lords, I am sure that those noble Lords who are participating in the Bill will want to hear the noble Baroness, Lady Grender, so we will allow a little time for noble Lords to leave the Chamber. I urge noble Lords to be as quiet as possible in their exit so that we do not take up unnecessary time waiting for them to depart. I think that now is a good time for the noble Baroness to restart the introduction to her amendment.
I thank the noble Baroness for that mini-filibuster to help me. I raised concerns about vulnerable tenants in the context of this policy change in Committee. The amendments would ensure that, in addition to contacting the tenant, where there was a person, a charity or a housing authority that had paid or contributed to the deposit, they would be contacted, too. So the amendments are aimed in particular at those tenants who are vulnerable and already known to charities or local authorities. This is critical because, as we all know—especially those of us who have debated the Bill for several hours—the end of a private tenancy is now the most common cause of statutory homelessness, accounting for 31% of all households accepted as homeless in England and 42% in London.
In the majority of cases where the landlord requires a deposit from the tenant, they will have paid the deposit themselves—but that will not always be the case. Sometimes the deposit will have been paid by a relative or an employer, but in many cases, in order to ensure that vulnerable people have access to the private rented sector, local housing authorities and charities will pay the deposit on behalf of the tenant. These amendments would ensure that, where the deposit had been paid by a third party and the landlord had commenced the abandonment proceedings, when they sent written notices to the tenant they would also have to notify the deposit payer. The deposit payer could therefore stop the process by confirming in writing to the landlord that the property had not been abandoned or by making a contribution towards the rent, which could be a nominal sum.
The amendments would provide additional protection to a vulnerable tenant who, for any reason, was unable to respond directly to the landlord. An example, which we discussed in Committee, is someone with mental health issues who is known to a charity, which has paid or contributed to that tenant’s deposit. The charity would be able to get involved at an early stage and, if necessary, put a stop to the abandonment process. In effect, if the local authority, charity or any other person who had paid the deposit confirmed that the property had not been abandoned, that would bring the abandonment process to an end.
The amendments were tabled as a result of an extremely helpful meeting with the Minister and I thank her for that. She showed clear understanding of and compassion for the vulnerable tenants I have described and an understanding of the need to ensure that a third party is involved in the process. I also thank the Minister’s officials for engaging in discussions about the best way to deal with abandonment while protecting the most vulnerable.
We on these Benches are not able to support Amendment 40 in this group because we believe that it would add a layer of bureaucracy without swiftly ending the abandonment procedure, which a third party could do under all the other amendments in this group.
Shelter and Citizens Advice originally highlighted the potential problems for vulnerable tenants in this part of the legislation. While they continue to have one or two misgivings about the clause, they are both very happy with this change. I beg to move.
My Lords, I shall speak briefly in support of the amendments but will also take the opportunity to raise a drafting point which I do not think has been addressed in the Bill following Committee; nor indeed is it addressed by this amendment. In short, I am unconvinced that the legislation as it stands always supports the warning notice timetable set out by the Government. I, like the noble Baroness, Lady Grender, thank the Minister for the opportunity to discuss this matter with officials and for her follow-up letter of 4 April with the attached flow chart, but I fear that my concern has been inadequately expressed and continues to fall on stony ground.
The issue is in fact very straightforward and relates to when the unpaid rent condition is met—particularly, say, where rent is payable monthly in advance. For the purposes of the Bill, when no rent at all has been paid since the end of, say, month three, is the unpaid rent condition met on day two of month five or only at the end of that month? If the latter, I have no issue with the Government’s analysis. However, I took from our meeting with officials that the former was the case, and in those circumstances the second warning notice could be given in a little over 31 days from the start of month four in this example, and the first warning notice from day five of that month, which would enable the notice bringing the tenancy to an end to be served at just after eight weeks rather than the suggested 12 weeks.
I am not seeking to be difficult on this matter but, if it is agreed that there is a lack of clarity, it would seem to make sense to put matters beyond doubt either by a simple amendment from the Government at Third Reading or at least in some guidance.
My Lords, as this is my first contribution today, I refer Members to my interests and declare that I am an elected councillor in the London Borough of Lewisham. At Second Reading and in Committee I expressed concern about the abandonment proposals. Taking the courts out of the process leaves tenants, especially vulnerable tenants, in a potentially very difficult situation. We are creating a court-free process to enable landlords—again, we are talking about rogue landlords—to potentially get rid of tenants they do not like. Noble Lords on these Benches, like many noble Lords on all sides of the House, are not fans of large parts of this Bill. However, one point that is generally welcomed are the provisions for the private rented sector. Often, we would like to go further, but we will keep at it and progress has been made. The abandonment clauses, however, are not good for tenants and could even be seen as a rogue’s charter.
The amendments in this group include Amendment 40, proposed by myself and my noble friend Lord Beecham, which is the same amendment that we proposed in Committee. I am sure that the noble Baroness, Lady Evans of Bowes Park, will shortly tell us that anyone who is illegally evicted can seek redress in the courts afterwards. I would respond by saying that, with all your possessions on the pavement and no legal aid available, the chances of actually doing that are probably next to nothing.
The other argument deployed is that with limited resources a local authority may not be in a position to pass judgment in these cases. I see that point very well. However, I would say that the lack of resources and lack of ability for the council to act is the reason we brought the “homes fit for human habitation” amendment to your Lordships’ House on Monday. In opposing that, the Minister said that local authorities have the powers but with no recognition that a lack of resources was undermining the ability of local authorities to carry out this duty. The inconsistency in the Minister’s argument is there for all to see.
The other amendments in this group are proposed by the noble Baroness, Lady Grender, and me. These amendments seek to add an additional protection for tenants by including the deposit payer as someone who can respond to a notice from a landlord to confirm that the property is not abandoned. This is a step in the right direction and gives additional protection where a deposit has been paid by a different person or organisation. In some cases there will not be another person, but where there is, this is welcome, and we on these Benches are very happy to support these amendments, as have been outlined by the noble Baroness, Lady Grender. I hope the Minister will accept these amendments. I will not be pressing Amendment 40.
My Lords, it is not often that I get to say this, and indeed I am stealing my noble friend’s thunder, but I am delighted to confirm that the Government welcome and support Amendments 39 and 41 to 50, moved by the noble Baroness, Lady Grender, and the noble Lord, Lord Kennedy. As the noble Baroness said, these amendments require a landlord who has received a deposit for the tenancy paid by someone other than the tenant to serve the written warning notices under Clause 57 on that person, as well as the tenant and any named occupier. This is an important change as it enables the deposit payer to respond to the warning notices to advise the landlord that the property has not been abandoned, and by doing so that will end the process. As the noble Baroness said, this is particularly relevant where the tenant is a vulnerable person. The noble Baroness has championed the interests of vulnerable tenants during Committee, and her helpful amendment, supported by the noble Lord, Lord Kennedy, will go a long way in mitigating any potential adverse impacts on them. I thank her for working with us.
Often, a vulnerable tenant would have received assistance and financial support, including through payment of a tenancy deposit, from the local authority or a charitable organisation to secure accommodation in the private rented sector. Through these amendments the deposit payer will be able to respond, instead of the vulnerable tenant, to the landlord to confirm that the property is not abandoned or make a payment to stop the process from continuing, pending, perhaps, further enquiries as to the whereabouts of the tenant. There is a real stake in a local authority, or for that matter any other deposit payer, acting quickly to confirm that the property is not abandoned or in making a payment pending further enquiries as to the whereabouts of the tenant, since they will lose all or most of the deposit if the unpaid rent condition is met. It is also likely, therefore, that a deposit payer—indeed, any deposit payer—will want to be absolutely satisfied that the unpaid rent condition is met, the property has been abandoned and the landlord has followed the correct procedure.
The requirement to send the notices to the deposit payer improves the provisions further and builds on changes we made in the other place to ensure that payment of any rent would halt the abandonment process; that is, the requirement that the written notices be sent also to the address of any guarantor and that a third notice be affixed to the property so that the procedure is not open to abuse and vulnerable tenants are adequately protected.
Amendment 40, tabled by the noble Lords, Lord Kennedy and Lord Beecham, would require the landlord to seek confirmation from the local authority that it suspects that the property has been abandoned. This would apply in all cases and not be limited to those where the local authority had paid a deposit. However, on the face of it, there is no obligation on the local authority to respond to that inquiry, but the landlord cannot end the tenancy until such a response is received. Unlike where the authority is the deposit payer, there is no direct incentive or reason for it to respond to the request quickly, so the amendment would simply cause further delay in recovering the abandoned property as the arrears continued to accrue. I hope that noble Lords can appreciate that. Although the amendment would not require the authority to respond to the notice, the landlord would have a legitimate expectation that it did so and within a reasonable timeframe. That could leave local authorities exposed to legal challenges where they incorrectly responded or failed to respond promptly.
In response to the drafting points raised by the noble Lord, Lord McKenzie, I will write to him, but I can confirm that we will bring forward clear guidance setting out the procedure and timescale.
So while we support Amendment 39 and Amendments 41 to 50, we do not think that Amendment 40 would achieve the same assurance that the deposit payer would respond at pace, if at all. Subsequently, it would place undue burdens and risks on local authorities. I therefore ask the noble Lords, Lord Kennedy and Lord Beecham, not to press that amendment.
Amendment 39 agreed.
Amendment 40 not moved.
Clause 57: Warning notices
Amendments 41 to 45
41: Clause 57, page 26, line 30, leave out “the tenant and any named occupier” and insert “the following”
42: Clause 57, page 26, line 31, at end insert “—
(a) the tenant,(b) any named occupiers, and(c) any deposit payers.”
43: Clause 57, page 26, line 36, leave out “or a named occupier” and insert “, a named occupier or a deposit payer”
44: Clause 57, page 26, line 38, leave out “neither the tenant nor a named occupier” and insert “no tenant, named occupier or deposit payer”
45: Clause 57, page 27, line 14, after “Part” insert “—
“deposit payer” means a person who the landlord knows paid a tenancy deposit in relation to the tenancy on behalf of the tenant;”
Amendments 41 to 45 agreed.
Clause 59: Methods for giving notices under sections 55 and 57
Amendments 46 to 49
46: Clause 59, page 27, line 30, leave out “or named occupier” and insert “, named occupier or deposit payer”
47: Clause 59, page 27, line 32, leave out “or named occupier” and insert “, named occupier or deposit payer”
48: Clause 59, page 27, line 36, leave out “or named occupier” and insert “, named occupier or deposit payer”
49: Clause 59, page 27, line 38, leave out “or named occupier” and insert “, named occupier or deposit payer”
Amendments 46 to 49 agreed.
Clause 60: Interpretation of Part
50: Clause 60, page 28, line 10, at end insert—
““tenancy deposit”, in relation to a tenancy, means any money intended to be held (by the landlord or otherwise) as security for—(a) the performance of any obligations of the tenant arising under or in connection with the tenancy, or(b) the discharge of any liability of the tenant arising under or in connection with the tenancy;”
Amendment 50 agreed.
Clause 62: Grants by Secretary of State
51: Clause 62, page 28, line 28, at end insert—
“( ) he Secretary of State must set as a condition under subsection (2) that money equivalent to the market value (disregarding any discount) of a dwelling sold under right to buy and to which the grant applies is spent by the private registered provider on the provision of affordable housing in the same local authority area or London borough, including at least one new home replacing that sold which is—(a) of the same tenure,(b) located in the same local authority area or London borough, and(c) in accordance with assessed local housing need.”
My Lords, the amendments in this group relate to the extension of the right to buy to housing association tenants, for the time being under a so-called voluntary scheme entered into by the sector with the Government. On several occasions I have expressed my scepticism about how long the agreement will remain voluntary. I pointed out in Committee that the Bill’s impact assessment states explicitly, in somewhat minatory fashion:
“Primary legislation is also required to monitor how these opportunities are being adopted so potential homeowners can hold their housing association to account, if necessary”.
The nostrum of Theodore Roosevelt comes to mind:
“Speak softly and carry a big stick”—
a view reinforced by the fact that the agreement contains a “presumption” that associations will agree to tenants’ applications to exercise their right. The very word, it might be thought, gives the game away.
So I ask the Minister whether the monitoring process applies not just to sales but to the number, type and location of the replacement housing which is supposed to be built. How often will the monitoring take place and by whom will it be performed? Will it really be possible to replicate as a result of this policy developments such as the famous Bournville village, still flourishing as a distinctive community 125 years since its conception?
In Committee, I went on to point out that the so-called impact assessment did not contain any estimate of the number of homes which might be sold, over what period, how much is expected to be realised and what the cost of discounts would be and how they would be met. Is the Minister able to enlighten us as to these rather critical factors in terms of the operation of the scheme?
There is no requirement to replace any houses sold in the local authority area where they are situated, nor need the replacements be of the same tenure. In some cases that might prove difficult, which serves only to emphasise the way in which the current mix within communities is likely to change, a factor which is the special concern raised in Amendment 52 in the names of the right reverend Prelate the Bishop of St Albans and my noble friend Lady Royall.
The long-term effects are likely to reflect the experience of the forced sale of council housing, where now something like 40% of houses which were sold under right to buy are owned by private landlords, with rents which have soared—increases which, in turn, have been reflected in an increasing cost to the Government through housing benefit.
Even allowing for the unspoken threat of compulsion—which, with a bigger Conservative majority, I suspect, would have already resulted in a compulsory scheme—there is a marked contrast with the cavalier approach towards local housing authorities. They not only have to offer ever-larger discounts to their tenants but also, adding injury to insult, have to pay for the scheme by the sale of high-value homes, the subject of amendments in later groups.
In Committee, the noble Baroness, Lady Williams, in replying to the noble Lord, Lord Young of Cookham, said that the Government were discussing with the sector the issue of the application of the agreement to properties constructed under Section 106 agreements and whether or not they would be included. Perhaps the noble Baroness can update us on that position.
The noble Baroness also responded to an amendment from this Front Bench seeking to exclude properties specifically designed for elderly or disabled residents of the scheme by saying that it would be “wholly unequal”—I think she meant inequitable—to prevent such residents having the opportunity to share in the benefits of home ownership, and that a property which had been adapted specifically for a tenant and selling it,
“and freeing the capital to build a new unit for the next person in need is the best outcome”.—[Official Report, 8/3/16; col. 1228.]
It might be, but there is no requirement to do so. Nor does the purchase have to be by elderly or disabled people.
The term “purpose-built bungalows” in developments such as, I say modestly again, Beecham Close—built in Newcastle in my ward—could easily over time be occupied by people for whom they were not designed. They are perfectly accessible properties specifically designed for elderly people but they could go to anyone after resale, let alone preserve the character of a group specifically designed to bring people with similar needs together.
Amendment 51 seeks to ensure that the full market value of properties sold by associations under right to buy is invested by the association in the same local authority area to provide affordable housing of at least one new replacement home of the same tenure and in accordance with assessed housing need. It therefore prescribes this in addition to any conditions which the Secretary of State considers appropriate under existing Clause 62(2). I beg to move.
My Lords, I am not an expert on housing but in the previous coalition Government I spent three years speaking in this House for charities, and I am concerned about the implications of this aspect of the Bill for charity law. In the past two or three weeks I have spoken to a number of charity lawyers and people concerned with charities and it was suggested that we might wish to table an amendment to exempt charities from this. However, at this stage, I ask the Government for some reassurance that they have considered the potential impact on charities of this development and that they would be willing to meet with and discuss further with representatives of the Almshouse Association, the Charities’ Property Association and the Charity Law Association to think through the implications of the Bill and, incidentally, the plans to make all schools, some of which have charitable property, into academies, which also raises large questions about the future of charity law.
There are questions of public benefit—and private benefit if one is selling off properties—which again raise some large issues and which, potentially, drive a coach and horses through the underlying principles of charity law. As the noble Lord, Lord Beecham, has hinted, this is particularly relevant to almshouses, which are specifically built and permanently endowed for old people. The idea that they should be sold off and then perhaps diverted to different uses raises some fundamental issues.
I apologise if that is the case. If almshouses are exempted that is helpful; nevertheless, the issues which the noble Lord, Lord Beecham, raised about houses specifically adapted for particular purposes remains true and very much part of the case.
The question of permanent endowment of property, which also relates to housing associations, many of which are charitable, remains at stake. There are issues here about the potential move from voluntary to a little less than voluntary, which is implied in the suggestion that the noble Lord talked about, when providing guidance. The lawyers with whom I have discussed this tell me that so long as it remains entirely voluntary, we will remain on the right side of the law. But if the guidance issued by the Government after passing the Act moved towards the border between voluntary and non-voluntary, we would indeed be risking some of the underlying principles of charitable law. My simple request to the Minister is that, in order to provide reassurance to this extremely important sector—I am sure that all Conservatives are committed to the future flourishing of the charitable third sector—she be willing to ensure that the relevant officials and Ministers meet with representatives of the expert associations so that such reassurances can be given.
My Lords, perhaps I may intervene briefly on these two amendments. I have some sympathy with Amendment 52. As a former Member for a rural constituency, I know how important housing association properties for rent are in small villages. They contribute to the balanced communities that we want to retain, so I understand the concerns here. However, the amendment is entirely unnecessary because under the voluntary agreement there is absolutely no obligation on rural housing associations to sell their properties. Indeed, they are closer to the problem than almost anyone else, so it is most unlikely that, given the nature of the voluntary agreement, they would want to sell these properties.
The voluntary agreement specifically refers to properties in rural areas as examples of circumstances where housing associations may exercise discretion over sales, so in a sense the amendment is redundant. Also, if a housing association actually wanted to sell a property in these areas, the amendment would not prevent it doing so. All the amendment would do is stop the Secretary of State giving the housing association a grant to replace the property. I shall go back to the first point I made: certainly, the housing associations that were active in my former constituency would not, given the nature of the voluntary agreement, dispose of a property for rent in a rural area because they are more aware than almost anyone else of how valuable these properties are.
Amendment 51 is much more serious. It invites the Government to break the voluntary agreement they have entered into with the housing associations. It states:
“The Secretary of State must set as a condition under subsection (2) that money equivalent”,
must be spent in a particular way. Chapter 2 of the voluntary agreement makes it absolutely clear that the Government want housing associations to have flexibility:
“Housing associations would have flexibility to use receipts so they can respond to market pressures and local housing need. In order to facilitate this, the definition of a replacement home would be broad and include the development of Starter Homes, shared ownership homes and other part buy and part rent models”,
excluded by the amendment. The agreement goes on to say that,
“in some limited circumstances, it may not be appropriate or desirable for a housing association to build a new home to replace the one sold”,
since it may be easier to buy another one or bring an empty home back into use to replace the home that has been sold. I very much hope that my noble friend the Minister is not going to break the voluntary agreement, endorsed by the Prime Minister, that the Government have entered into by lending any support to Amendment 51.
My Lords, I rise to speak to Amendment 52, which is in my name and has the support of the noble Baroness, Lady Royall. I am grateful to the noble Lord, Lord Young, for his comments. I also want to note my support for Amendment 51, tabled by the noble Lords, Lord Kennedy and Lord Beecham, which would serve to better protect areas of high value, such as St Albans city and district in my own diocese, from a potential loss of social housing to other parts of the country.
The purpose of my amendment is to ensure that any home sold by housing associations under right to buy in rural areas is replaced in the same or an adjoining parish. This would shift the terms of the current right-to-buy deal from one in which housing associations have discretion over the sale of assets under right to buy in rural areas to one in which they are unable to take advantage of right-to-buy funding in rural areas unless they guarantee replacement housing in the same or an adjoining rural area. Such an amendment is widely supported by coalitions of rural landowners such as the CLA, the Campaign to Protect Rural England and rural housing associations such as Hastoe Housing Association.
I recognise that many Peers have a legitimate concern about preserving the status of housing associations as independent providers of social housing, and that this would lead them to support increased individual choice for housing associations wherever possible. However, I have to agree with the noble Lord, Lord Taylor of Goss Moor, who pointed out in Committee that,
“the circumstances of rural communities and villages are exceptional”.—[Official Report, 8/3/16; col. 1209.]
As has been repeatedly stated in this House, just one in 10 homes in rural areas is classed as affordable housing, compared with one in five in urban areas, despite the fact that in 90% of rural authorities, the average home costs eight times the average salary. That leaves a large proportion of rural communities struggling to make ends meet in the private rental market, desperately waiting for affordable rents to become available, or forced to leave their communities altogether. The Government’s facilitating the sale of what little affordable housing exists in rural communities seems to me to be a failure of policy, particularly given the immense difficulties associated with securing new or replacement rural affordable housing. In many rural communities it is virtually impossible to build more social housing.
Along with other noble Lords, I have raised this issue several times in the House already, and every time it has been pointed out that under the terms of the voluntary agreement, housing associations are exempt from the requirement to sell in rural areas. I am well aware of that. My concern is what happens when housing associations do choose to sell rural properties, given that there is currently no requirement for them to build replacements in the same area.
In Committee, several Peers indicated that we need simply to take it on trust that housing associations, because they are close to the actual situation on the ground, will not sell rural homes in areas where they cannot or will not be able to replace them. That seems highly questionable to me. Most housing associations, unless they have a specific rural focus in the very nature of what they have set out to do, have a duty to the vulnerable that transcends rural and urban boundaries. It would not be for me to criticise a housing association which, in selling off one rural affordable home—it will probably be an extremely valuable property, or certainly a more costly property—was able to provide affordable housing for two families in an urban area.
That sounds an eminently sensible thing to do for the overall good of everybody. However, for the individual housing association, it could make perfect financial and charitable sense to consolidate the housing stock in, say, quite a limited urban area—a town or a city—where the costs of development tend to be cheaper and where it can support more families. But for the rural communities in question, that would be devastating: not just for the individual families who are unable to live in the local village and perhaps where many generations of their family have lived in the past, but for the sustainability and the future of the wider community. Without people of all incomes living and working in the local area, no rural community can sustain flourishing schools, shops, pubs and churches. Rural communities need hope for a sustainable and secure future. This is particularly true when it comes to the development of rural exception sites, which are a crucial route to securing affordable housing for rural communities.
Speaking personally on my own area of interest, many dioceses in the Church of England, including my own, are committed to using glebe land to provide for rural exception sites where possible, but the extension of right to buy will make the provision of such sites much more difficult for us as a charitable body, given that charitable assets might be transferred to individual ownership, where they could be used for profit. I know that the CLA has spoken to many landowning members who have similar reservations about providing land for rural exceptions sites without strong guarantees that the resultant affordable housing will remain available to the local community in perpetuity. I welcome the concession the Government have already made on rural exception sites regarding starter homes, and can only hope that today might find the Minister in a similarly understanding mood—I smile at her hopefully.
The sale of vital and scarce affordable housing should not receive government subsidies in rural areas unless local replacement is guaranteed. This cannot be left to the discretion of housing associations, which will face immense pressure on their resources in the coming years. Securing the sustainability of rural communities is the duty of government, and I hope the Government will make the necessary amendments to the Bill.
My Lords, I support Amendment 51. This new, reinvigorated right to buy will certainly help housing associations to retain their independence, and will, I am sure, bring about a new era for building and bring an end to the housing crisis. Associations are a vital piece of the housing predicament jigsaw and together, working closely with government, will help to bridge the generation gap and give that boost to those Britons whose overwhelming ambition is to become home owners.
Housing associations are professional organisations that have sound commercial and social principles and manage their estates extremely well. The important fact to emphasise is that they are well established, intuitively know what type of housing is best suited for their area, and know where their new build is in greatest need.
Another part of the jigsaw is job opportunities—a possibility that turns people’s ambition into reality for the very first time. That is why it is so important for tenure to be taken locally. A voluntary agreement with the National Housing Federation and the housing association sector gives the flexibility to replace nationally, since housing associations know their customers’ needs best. Because of that, it is particularly important that an agreement also gives them flexibility and discretion over sales of properties in rural locations.
My noble friend Lord Young alluded to housing associations having the inner knowledge and expertise where local demand is required. As we know, different parts of the country have unique demands. Therefore, government should not be instructing them where to build replacement homes; rather, it should recognise the importance of ensuring that rural communities are protected, but believe that the best way of doing that is not by preserving them exactly as they are now. Instead, we should be supporting living, working and sustainable rural communities, with tenants having real choices about where and how they live. Allowing rural tenants the same opportunities to access home ownership as other tenants is a good thing.
My Lords, the comments of the noble Lord, Lord Young, confused me. Will the Minister very briefly clarify them in her response? The right reverend Prelate the Bishop of St Albans mentioned in particular the situation of a housing association such as Hastoe, which is well known as a rural housing association that did not sign up to the voluntary deal, is opposed to it and did not want to participate in it. Now what will happen? We may or may not get rural exception sites and so on, but even there my understanding is that the Government proposed that any tenant in such a position would port a discount to somewhere else where they would be able to buy. However, if an entirely rural housing association that is opposed to the voluntary deal and may wish to exercise its discretion not to engage in it has no property that is non-rural, can the Minister clarify what is then the situation? If a housing association is opposed to the voluntary deal, who will ensure that, if the Government deem that this is the right course forward, none the less sales will go ahead? Secondly, if it is entirely rural, with no property to which a tenant can port the discount, what happens then?
I would be glad of some reassurance because the description given by the noble Lord, Lord Young, of what goes on in rural areas bore no resemblance at all to my experience as a former chair of a housing association that was largely rural.
My Lords, I will make a brief point about Amendment 51. The amendment might theoretically look attractive but I noted the comments of the noble Lord, Lord Young, and they seem relevant to this. In addition, despite the support of the noble Lord, Lord Beecham, and the noble Baroness, Lady Redfern, Amendment 51 could end up being very restrictive by requiring a housing association to build replacement property within the local authority area in which the original house was sold. The consequence is that that would deny the association the right to build outside its area. I would like to think that housing associations would talk with their local authorities about this, but in urban areas where boundaries between local authorities can be difficult for neighbourhoods to adjust to, it seems there is a benefit in enabling housing associations to cross local authority boundaries. When the noble Lord, Lord Beecham, responds to the debate, will he explain whether he believes that it should be possible for a housing association to build outside its local authority area and not be constrained by the terms of this amendment?
My Lords, I support Amendment 51 and declare my interest as a rural landowner and landlord. Many members of the rural housing group expressed concerns over some aspects of the Bill and, like myself, seek reassurances on the replacement policy for right to buy.
First, there does not appear to be any current requirement for houses that are sold to be replaced locally. I hear what the noble Lord, Lord Young, said but it is still vital for small communities to retain affordable housing for key rural workers, who are often in the low-paid sector. They need to service their jobs on the basis that they can pop in and out. If you look after animals, it is not a nine-to-five job but a matter of going back when the need is there. It is little help to provide these houses miles away on the edge of a larger settlement or market town. Yet it is quite possible that housing associations, if they sell, are tempted to build their replacements on the edge of such towns. As we heard, building in the countryside is more expensive and also more constrained. The same remarks apply to trying to replace in AONBs and national parks.
Secondly, I feel strongly that there should be a requirement to replace locally, on a one-to-one basis, especially in rural areas. No one wants a reduction in the total amount of affordable housing. We heard—with a different statistic but it comes to the same thing—that there is only 8% of such stock in small, local communities. This is what we have defined in Amendment 52. We cannot afford any further losses. History shows that similar policies failed in this respect and it is hard not to suspect that there will be the same result from this attempt as the Bill is currently drafted.
Thirdly, there is the question of whether replacement should be of the same tenure. Although this was largely resolved in our debate on Tuesday, when the Government accepted the exclusion of starter homes from small rural sites, other types of tenure can be involved. I look forward to hearing the Minister’s response to the noble Lord, Lord Beecham, on this point.
Finally, and crucially, we must consider the likely future state of rural social housing without this amendment. It appears to me that there will be a threat to the social and economic cohesion of the countryside. This amendment would help to prevent the disappearance of any assisted housing from such communities. Therefore, I strongly support it.
My Lords, I keenly support Amendment 52, in the name of the right reverend Prelate the Bishop of St Albans, and emphasise some of the points he made about replacing properties within the same parish or within one parish. Some housing associations in the south-west cover the whole of Cornwall. The distance from Sennen to Bude is some 83 miles. That is the sort of distance covered by housing associations in Cornwall. Some cover Cornwall and Devon. Indeed, the distance between Land’s End and the Dorset border just the other side of Honiton is some 150 miles and involves more than four hours’ travel time. There are great differences even between local communities in rural areas. Each has specific characteristics and great local pride. This amendment is incredibly important to maintain the fabric of rural communities. The way that it is drafted provides an important assurance that housing associations would be able to replace properties on a like-for-like basis in terms of not just tenure in other areas but the ability of people who live in these communities to continue their work, education and hobbies in the same area.
My Lords, I speak to Amendment 52, in the names of the right reverend Prelate the Bishop of St Albans and the noble Baroness, Lady Royall of Blaisdon. In so doing, I declare my interest as the chair of the National Community Land Trust Network.
I spoke on this subject at length in Committee and have no need to rehearse the arguments again, as the right reverend Prelate the Bishop of St Albans has once more laid out the case very clearly and the noble Duke, the Duke of Somerset, and my noble friend Lord Teverson have added to those arguments.
We have heard that the Minister and the Secretary of State will bring forward amendments at Third Reading which will satisfy those of us in this House who are very concerned at the Bill’s impact on rural settlements. Like others in this House, I wait to be convinced at Third Reading but for now am content to support the arguments already made.
I thank all noble Lords who have contributed to this debate. I fully understand the desire of the noble Lords, Lord Kennedy and Lord Beecham, and others to ensure that affordable housing is not lost to an area, and the concerns raised by the right reverend Prelate and others relating to rural issues.
Extending right-to-buy discounts to housing association tenants was a manifesto commitment taken forward through a voluntary agreement with the sector. This is about opportunity—social tenants having equal access to the opportunities for home ownership. I am sure that noble Lords agree with that. The other place was supportive of the agreement. The National Housing Federation and the housing association sector came to government with this offer. It is entirely voluntary and represents 96% of stock.
Under the terms of the agreement, housing associations will deliver an additional home through new supply nationally for every home sold under the voluntary right to buy. This will increase overall supply and housing associations will have discretion not to sell particular properties, including where those properties would be difficult to replace. As a number of noble Lords said in Committee, to legislate would go against the voluntary nature of the agreement and introducing controls would present a classification risk.
While I appreciate the strength of feeling on this issue, the Government cannot accept Amendment 51. Placing restrictions on housing associations in implementing the voluntary right-to-buy agreement by requiring replacements to be of the same tenure and in the same area would, we believe, fetter their ability to deliver housing in accordance with local need. Under the terms of the voluntary agreement, housing associations will have the flexibility to build replacement properties where they are needed. Governments should not instruct them where to build replacement homes, nor specify what tenure the replacement should be. I pay tribute to housing associations, which have a history of delivering new housing supply that this country needs. Setting arbitrary rules without any reference to local conditions is likely to hinder not help them in delivering new affordable homes. They are best placed to determine what type of housing is best suited to a community and it is only right that decisions on tenure be taken locally.
The noble Lord, Lord Beecham, raised the issue of Section 106 properties. We are engaging with the sector on the implementation of the voluntary right to buy, including what is provided under Section 106 agreements. He also asked about monitoring. Regular statistics are published about property sales by councils under the existing right-to-buy scheme. Clause 64 allows for the monitoring of housing association sales under the voluntary agreement and I can confirm that replacements will also be monitored.
The noble Lord, Lord Wallace, asked about engagement with charities. I can confirm that officials and the National Housing Federation have held working groups with charities to work through the issues that he raised. My noble friend the Minister and I would be very happy to meet further on this matter. I can also confirm that almshouses are exempt from the right to buy.
Amendment 52 relates specifically to rural areas and would require at least one replacement property in the same or an adjoining parish as the property sold. I completely agree that we should support strong and sustainable rural communities. As my noble friend Lord Young rightly said, the voluntary agreement, as well as giving housing associations the flexibility to build replacement properties where they are needed, already gives them discretion over sales of properties in rural locations. My noble friend Lady Williams will shortly talk in more detail about rural needs. It is clear from our engagement with the sector that associations are intending to exercise their discretion not to sell properties in rural areas where they would be difficult to replace. These are organisations that have well established and supportive relationships with the local communities that they serve and, as the noble Lord said, often have charitable status that ensures that they will deliver housing that the community needs. However, they also have to operate within the confines of what is practicable—for instance, in terms of land assembly and planning permission. They need the freedom to find the best opportunity available for delivering for local housing needs.
The noble Baroness, Lady Hollis, asked what happens when a housing association has not signed up to the agreement and all its properties are in a rural area. As I have said, the deal is voluntary; housing associations, whether signed up to the agreement or not, do not have to sell any home, whether rural or not, where this is not in the interests of the area. She also asked about exercising discretion and the portable discount. Where a housing association exercises its discretion not to sell a home, the housing association will provide an alternative from its own stock or that of another housing association. Housing associations would work together to develop joint arrangements to enable this to happen.
I thank the noble Baroness for her comments and for allowing me to intervene. I am still puzzled. If a housing association is entirely rural, is not signed up to the deal and therefore does not wish or feel it is appropriate to lose or sell any of its stock, has no property to which it can attach a portable discount for one of its existing tenants to move to, and does not necessarily have a collaborative arrangement with another housing association—why would it?—what happens then?
As I have said—and I am afraid I can go no further than what I have said—properties in rural areas, or indeed any other area, do not have to be sold where this is not in the best interests of the area. However, it is right that this should be a local decision.
Our manifesto commitment to extend right-to-buy discounts to housing association tenants is being taken forward through a voluntary agreement. As the noble Lord, Lord Kerslake, said in Committee:
“It is in the nature of a voluntary agreement that it is very hard to build in statutory protections without taking yourself straight back to the issue of regulation. That is the problem: in a sense, we are trying to put statutory protections into a voluntary agreement. In the end, this is a voluntary agreement that is going to have to rely on a great deal of trust”.—[Official Report, 8/3/16; col. 1212.]
I think that noble Lords would trust housing associations to have the best interests of their tenants and local communities at heart and to build replacement properties where they are needed. To legislate would go against the voluntary nature of the agreement and restrict housing association decision-making on what is best for its organisation and local communities.
To introduce controls and restrictions in legislation would also present a classification risk. The noble Lord, Lord Best, raised this concern in Committee, when he said that,
“we are not out of the woods entirely on this aspect of the reclassification issue. The case still has to be made to the ONS that housing associations are genuinely independent of government control over the sale of their homes. The ONS must not be faced with a statutory right in all but name. Therefore the more that is left to the boards of housing associations to decide, and the less that is set out in statute, the better”.—[Official Report, 8/3/16; col. 1203.]
On the basis of the comments that I have made, I ask that the noble Lord withdraws his amendment.
I am grateful to all noble Lords who have spoken in the debate and to the Minister for her reply. I am particularly grateful to the noble Lord, Lord Shipley, for detecting an error of judgment in the amendment in my name and that of my noble friend Lord Kennedy. He is absolutely right that it would be a mistake to require the replacement homes to be built in the same locality. Were this a matter that the Government were going to take back and consider, I would invite them to take that into account. Clearly, however, they are not going to take it back to be considered.
The noble Lord, Lord Young, rather airily dismissed concerns about the nature of this process on the grounds that it is, after all, voluntary. On paper, it looks as though it is voluntary; however, I return to the issues which I raised. In that event, why is it necessary to create a presumption as to the process, which the Bill does? Why is it necessary to declare that primary legislation is required to monitor how those opportunities are being adopted? The Minister talked about figures being available but this is a legislative provision. If it is simply a question of collating material, it would hardly be necessary to include it in legislation. Nevertheless, it is to be included and there is this worrying presumption that housing associations will agree to tenants’ applications and monitoring will take place to see that those associations are held to account by potential home owners. That is a rather threatening background to what is allegedly an entirely voluntary scheme. I hope that the noble Baroness, Lady Evans, will forgive me but I remain sceptical about the long-term nature of that voluntary claim. I hope to be disproved on that.
I would be tempted to test the opinion of the House, were it not for the fact that the sector has largely accepted the agreement—mistakenly, in my view, but nevertheless it has. In those circumstances, I hope that I am proved wrong but I will not seek to press the amendment and I beg leave to withdraw it.
Amendment 51 withdrawn.
Amendment 52 not moved.
Clause 67: Payments to Secretary of State
53: Clause 67, page 30, line 5, after “may” insert “by regulations”
My Lords, Clause 67(1) gives power to the Secretary of State to make a determination requiring a local housing authority to make a payment to him in respect of vacant high-value housing—or, if later government amendments are agreed to, higher-value housing. The vehicle of a determination has been well described by the distinguished legislative draftsman Daniel Greenberg, who is also the editor of Craies on Legislation, as “quasi-legislation”. It nevertheless has the force of law and as such it can, for example, modify, dilute or remove rights. Clauses 67 to 71 set out some undemanding parameters for the Secretary of State in making his determination, although the Government regard it as,
“setting out clearly the scope of the determination-making power”.
But in essence, in the Bill as reported, the Secretary of State would have extensive freedom of action in an area which may be the subject of considerable contention.
Amendment 53, in my name and those of my noble friend Lord Kerslake and the noble Lord, Lord Beecham, would require any determination made by the Secretary of State to be by regulations. Taken together with Amendment 132, any determination that affected more than one authority would be subject to the affirmative procedure. Amendment 132 would additionally apply the affirmative procedure to regulations that contained more than one determination. It would also make the definition of high-value—or higher-value—housing subject to parliamentary approval.
Parliamentary approval and authority is at the heart of this issue. This is not about the threshold between primary and secondary legislation—much in our minds in the Strathclyde context—although those issues will be very much to the fore in the very last group on the Marshalled List. Instead, this is about what Ministers may do without seeking the approval of Parliament. The Delegated Powers and Regulatory Reform Committee, of which I am a member, under the exemplary chairmanship of the noble Baroness, Lady Fookes, reported on this proposed delegation in its 20th Report of this Session. The committee concluded that it was,
“inappropriate to delegate to the Secretary of State a power to determine the amount of the payment to be made by local housing authorities without any form of Parliamentary scrutiny, particularly in view of the paucity of detail on the face of the Bill to guide how the power is to be exercised”.
The Minister responded to that report and to the following one dealing with the second half of the Bill on 23 March. Although I am speaking in an understandably critical vein, at this point I pay tribute to the noble Baroness for the care and courtesy with which she has handled proceedings on the Bill and for her readiness to engage with noble Lords in all parts of the House. However, I have to take issue with her on what she said in her reply to the Select Committee. She said:
“The nature and amount of information that will be contained in the determination … means that it is appropriate to use a determination rather than a statutory instrument. The determination will contain the formula, the assumptions and the payments for … each of the 165 local housing authorities … including, amongst other things, the authority’s vacancy rate, the value of its high value housing, the number of high value properties and amounts in respect of transaction costs and attributable debt … In setting out such a large and complex set of data there is the potential for errors to creep in, which would only be noticed by the relevant local authority. We therefore want to ensure that there is flexibility to amend the determination very quickly to correct any such errors”.
There is a syllogism here which I hope the noble Baroness will acknowledge. She is in effect saying: first, there is a huge amount of information; secondly, all that information must be in the determination; thirdly, it is too much information to put into an SI, especially if correction might be needed; and fourthly, ergo, the determination cannot be in an SI. But that is not so, and I hope that I can help the noble Baroness out of this particular cul-de-sac. The sharp end, as it were—the formula, the assumptions, the payments for each authority—can be in an SI subject to the approval of Parliament. The extensive supporting working can of course be published at the same time, but it does not have to be in a form which is formally subject to the approval of Parliament in an SI.
The distinction in Amendment 132, applying the affirmative procedure to a determination which is of general application and the negative procedure to any which has specific application to an individual authority, would deal very neatly with the Minister’s concern about needing to correct mistakes which could be noticed only by the relevant local authority. A correction of that sort could be done very quickly by a negative SI without needing explicit parliamentary approval—which of course I agree would take time. On the other hand, a systemic error, or a major change in assumptions, would attract the affirmative procedure and Ministers would have to explain themselves to Parliament. That is as it should be and as I hope it will be. I beg to move.
My Lords, I will speak very briefly on this issue because it is almost impossible to follow that advocacy. I learned more in that particular bit about the process of dealing with these issues than I have over a long period.
During the Bill’s passage, there has been a great deal of concern about the things we do not know and cannot see at this point in its progress. We will come on to the question of secondary legislation, as the noble Lord, Lord Lisvane, said, but here and now we have an opportunity to get this issue right between regulation and determination. Any technical issues that might flow from that were amply addressed by the noble Lord. I commend the amendment to the House as a practical and sensible way to address a continuing strand of debate throughout the whole passage of the Bill.
My Lords, some years ago, I was a member of the Delegated Powers Committee. Determinations are almost always undesirable. They are arrived at and presented as an option of last resort because, as the noble Lord, Lord Lisvane, said, the matter being considered has become very complicated and detailed. Determinations are a sort of escape clause, as I see it. In a parliamentary democracy, they are inherently undesirable, and I therefore support the amendment.
My Lords, the House is indeed fortunate to have such an expert in parliamentary procedure as the noble Lord, Lord Lisvane. I have listened to him and learned a great deal in a very short time; I am sure that other noble Lords will feel the same. It is interesting that the noble Viscount, Lord Eccles, has effectively confirmed that he approves the noble Lord’s approach to dealing with these matters. Otherwise, Parliament in effect will be being asked once again to sign a blank cheque covering matters of considerable importance and complexity which will simply proceed under ministerial fiat. That cannot be healthy, given the nature and importance of the topic we are discussing.
I hope that the Minister, who has today written to some Members of the House about aspects of this matter—I am sure that the document will be in the Library as well, although somewhat belatedly—will acknowledge that the noble Lord has made a very powerful case for adopting a more conventional procedure than that of delegating determinative powers which will be exercised without any oversight at all. Nothing in what the noble Lord suggested would substantially obstruct the carrying out of the Government’s policy; they would just have to explain and seek parliamentary approval in what is, after all, a pretty normal way. I hope that the Government will react positively to the amendment. If, having regard to apparently moving circumstances as reflected in her letter, the noble Baroness is unable to accept the amendment today, if she could undertake to come back on it at Third Reading, that might suffice. Otherwise, I suspect that the noble Lord will be tempted to test the opinion of the House. In that event, the Opposition will certainly support him.
My Lords, I, too, have served on the Delegated Powers and Regulatory Reform Committee for at least two sessions of three years each. What concerns me is the word “regulations”. Does it mean that this will be another regulation that will come to us in a pre-formed state and we will not have any opportunity to consider its implications? I find it very worrying that we are doing more and more by secondary legislation and less by primary legislation, and I should like the Minister to cover that point in her reply.
My point refers more to what the noble Lord, Lord Beecham, said, although I very much sympathise with what has just been said, because I have been criticising the use of Henry VIII clauses, among other things. I am instinctively resistant to the idea of too many regulations, but there are occasions when a ministerial determination may be more protected if it has parliamentary approval—I am thinking of the risk of judicial review. I do not know enough about the field that we are dealing with to see how real the danger is, but it might be worth the Minister considering whether that element of protection would be of value. There is no doubt that, if it comes in the form of regulation, no judge will question its authority or consider whether it is proportionate or whatever else it is, whereas a determination by a Minister is open to review. It is a point that is worth considering, if the Minister is considering the issue at all, as one of the factors that it would be worth our bringing into play to decide whether it would be right to accept the amendment being proposed.
I am sure my noble friend has noted during our debates that there is an undercurrent of concern about the question of secondary legislation and regulation, and the difficulty that this House has in carrying out its constitutional responsibility to be, in detail, the House that seeks to ensure that legislation is as it ought to be and performs the purpose for which it is designed. In considering this particular occasion, would my noble friend accept that we need, one way or another, to allay that concern and fear? My noble friend Lady Gardner was careful in her choice of words, but we should all recognise that unhappiness and that perhaps this is one occasion on which it might be allayed.
My Lords, first, I welcome the noble Lord, Lord Lisvane, to his first outing on the Housing and Planning Bill and pay tribute to his constitutional expertise in the other place, which he now brings to this House. It may help him if I say that I have listened very carefully to what he and other noble Lords have said on whether regulations on the definition of “high value” should be made under affirmative resolution. I also pay tribute to him for his work on the Delegated Powers and Regulatory Reform Committee. As a direct result of the committee’s work, I have considered further its point about delegated powers in this chapter. I shall go into a bit more detail in a few moments, but I believe that the House should have the opportunity to scrutinise the detail before the regulations come into force, so I shall return to this at Third Reading.
On the specific amendments tabled by the noble Lords, Lord Lisvane, Lord Kerslake and Lord Beecham, I understand that Amendments 53 and 132 reflect the recommendations made by the DPRRC in its report on Parts 1 to 5 of the Bill, published on 5 February. As I have announced, we will bring forward an amendment to make the high-value regulations affirmative. I shall focus on Amendment 53 and the corresponding part of Amendment 132, which would require determinations to be made through regulations and, under certain circumstances, subject to the affirmative procedure. I know that the noble Lord, Lord Lisvane, is a member of the DPRRC and will have seen my letter of 23 March to my noble friend Lady Fookes, the chairman of that committee, where I set out the reasons why we considered that we should not accept the recommendation to put the determination into regulations. If the noble Lord will forgive me, for the benefit of your Lordships’ House, I shall now repeat some of my reasoning here.
Our view is that the determination is the most appropriate way of setting out the information of what payment a local authority will make to the Secretary of State. The key elements of the calculation are set out in the Bill, including the housing to be taken into account and the definition of vacancy. Other elements, such as the definition of high value and the types of properties which are to be excluded will be set out in regulations and therefore subject to further parliamentary scrutiny. Indeed, my announcement that the definition of high value is to be made through an affirmative procedure has, I hope, demonstrated my willingness to listen to the House. As I explained in my response to the committee, we also think that the nature and amount of information contained in the determination means that it is appropriate to use a determination rather than a statutory instrument. The determination will contain the formula, the underlying assumptions and the payment for each authority, as the noble Lord pointed out, but it will also include the figures to determine the payments for each of the 165 local authorities, including, among other things, each authority’s vacancy rate, the number of its high-value properties and the level of its attributable debt.
Such a large and complex set of data creates the potential for errors to creep in, which will be noticed only by the relevant local authority. We therefore want to ensure that there is flexibility to amend the determination very quickly to correct any such errors. We of course welcome scrutiny of the formula and other elements of the determination. That is why Clause 69(2) requires the Government to consult all affected authorities, the LGA and relevant professional bodies before making a determination. On this basis, and with the amendment that I have announced on high-value regulations, I urge the noble Lord to withdraw the amendment.
My Lords, I am extremely grateful to the Minister. With her customary diplomacy and courtesy, she has given us about a quarter of a loaf. It may tend towards a third of a loaf, but not more than that. In effect, she has accepted the second element of Amendment 132. However, the issue of the determination being in regulations subject to parliamentary approval is serious. I was much fortified by the remark of the noble and learned Lord, Lord Hope of Craighead, who has immense experience and knowledge, about the possibility of protecting what was done from judicial review in a way that would happen if there were parliamentary approval. I hope the Minister will acquit me of any churlishness, but the remaining elements of Amendments 53 and 132 are important enough for us to test the opinion of the House on Amendment 53.
54: Clause 67, page 30, line 9, leave out “high” and insert “higher”
My Lords, many of your Lordships have spoken passionately both here in the Chamber and to me in private about how we plan to implement the manifesto commitment to pay for the voluntary right-to-buy agreement through the sale of high-value assets.
The role of your Lordships’ House is to revise and to improve, to make sure that we consider how our policies affect not just those in London but those in communities across the country, and to bring to our attention the questions raised by community groups and housing associations. Noble Lords often spend time declaring their interests as members of local authorities and of the boards of housing associations, and those interests mean that the Bill is scrutinised by those directly affected. I have met many noble Lords since we introduced the Bill and I have been struck by many of the arguments eloquently made at Second Reading and in Committee. Indeed, I have been struck by the level of expertise across this House. Earlier today I sent noble Lords a letter which set out how those arguments have shaped our thinking. I have placed a copy of that in the Printed Paper Office and the Library, and I hope that most noble Lords have got hold of it.
If I may, I would like to set out my thinking on the level of detail in the Bill and the ability of your Lordships’ House to scrutinise how the sale of high-value vacant housing will work in practice. What constitutes “high” or “higher”, to which I will return in a moment, is a matter which, upon reflection, I agree that Parliament should consider and approve before regulations come into force—the arguments here have been persuasive. Later today we will debate whether to remove clauses from the Bill altogether. I hope that affirmative regulations will give assurances that noble Lords will get to see and approve the details.
I know that some noble Lords will argue, as the noble Lord, Lord Beecham, did on his blog yesterday, that regulations cannot be changed. However, I would say that this debate, alongside other conversations that we can have outside it in the coming months, will help ensure that we get them right the first time. We have the best of both worlds here: Parliament approving the detail and your Lordships sending an improved clause implementing a manifesto commitment back to the other place.
At the heart of this policy is a desire to build more homes that meet the needs of local communities. I am clear that we should be building at least one new affordable home for each dwelling that is sold. That has always been our policy, and it is a point that has been reinforced by compelling arguments made by noble Lords from across the Chamber. I would like to consider further how best we can reflect this in the Bill.
What has also come across strongly in our debates has been the valuable point that different areas have very different needs. This is a statement of the obvious. Noble Lords such as the noble Lord, Lord Kerslake, have argued that local communities led by local authorities are best placed to set out those needs. He has pointed out a number of times that this is a Government who champion localism. I want to make sure that this policy both reflects the diversity of housing markets nationwide and respects the views of local people and local leaders. There is a powerful argument, therefore, about the important role of local authorities in making the case for the right balance of housing in their area and the importance of government taking that into account when making agreements to deliver new homes. I say from the outset that that is something that I will consider reflecting on the face of the Bill at a later stage.
A strong case has also been made for looking carefully at the potential impact of the clauses in rural areas where the pressure on housing is exceptionally high. I shall go into more detail later on, but I intend explicitly to state in regulations that homes in areas of outstanding natural beauty and national parks are excluded and are not to be taken into account when calculating authorities’ payments. I hope that this is a helpful frame for our debate today.
I wrote last week to give some background on what I am about to move, but I am aware that noble Lords raised their eyebrows at the thought of an amendment which would change “high” to “higher”. I hope that I can provide some reassurance. The change is a direct result of concerns expressed in your Lordships’ House about the potential impact of these clauses in areas of very high housing pressure, where a very high proportion of local authority homes can be considered as “high value” under the current definition. I shall go into further detail on that later, but for now turn to the amendments that we are about to debate.
I am grateful to noble Lords who contributed in Committee, because the Bill has a central role in delivering the Government’s housing objectives and the commitments that we made on home ownership which formed a significant part of our manifesto. It has the potential to improve the lives of hundreds of thousands of citizens, more than 85% of whom have home ownership as an aspiration. It is important that we work together to make this legislation as good as possible, and I am grateful to noble Lords for their careful contributions.
Later, we will discuss other important amendments, including the amendment on one-for-one replacements, but I want to speak now to government Amendments 54, 57, 58, 59, 60, 61 67, 69, 70 and 71, which replace all the references to “high value” throughout Chapter 2 of Part 4 with “higher value”. In Committee, noble Lords, including the noble Lords, Lord Best and Lord Kerslake, voiced their concern about the impact in some areas of setting the threshold for high-value properties on a regional or national basis. As the noble Lord, Lord Tope, pointed out, even within London there is a huge variance in property values, with outer London boroughs such as Sutton, Barking and Dagenham having very different housing markets from those in inner boroughs such as Westminster, Kensington and Chelsea, Camden and Islington. The point was echoed by my noble friend Lord Carrington. Other noble Lords have cited concerns about the possible impact of the policy in London, as well as in other areas of high housing demand where there is a significant concentration of high-value properties.
I have listened carefully to all the points that noble Lords made in Committee, just as Members did in the other place. In addition, there have been many fruitful discussions outside the Chamber between the noble Lords, Lord Best and Lord Kerslake, myself, the Minister for Housing and Planning, and the Secretary of State. In response, we have reflected carefully on the “high value” definition and how it could be applied in practice. The effect of the provisions in their current form is to require a definition of high-value housing which relates to wider housing market values. As I have said, those values vary hugely, even within quite small areas.
We recognise that in areas of highest housing pressure, such as the inner London boroughs, the provisions could apply to a high number of dwellings. If we choose to look at high value for each region, the same issue would apply to those areas within a region which experience a high level of housing demand in comparison with their neighbours. For example, places such as Harrogate, Oxford and Cambridge could all have a high proportion of their stock defined as high value.
We have therefore brought forward a significant amendment to redefine “high value” as “higher value”—a small linguistic change but one with profound legislative impact. I hope that these amendments will reassure those noble Lords who have expressed concern that some authorities could have all their housing stock defined as high value. The amendments are intrinsically linked to furthering our commitments on the one-for-one and for a package to deliver the homes that we all agree we need.
By making this change to the definition we could set a threshold for a local authority as a proportion of that local authority’s housing stock which would define “higher value” in an authority-specific manner. In this way, “higher value” could be defined in relation to a local authority’s own homes. For example, within an inner London borough only a proportion of its homes could be defined as higher value, even if all houses of any type in the borough were objectively high value when compared with national or regional house prices. Again, I hope that these amendments will reassure noble Lords who expressed concern that some authorities could have all their housing stock defined as high value.
Amendment 60 would make express provision to ensure that “higher value” represented a localist approach, as it could be defined differently for different local authorities and different types of housing, as well as for different geographical areas, as is currently provided for in Clause 67(9). Linked to this, Amendment 61 gives the Secretary of State the ability to define higher value by using any class of housing as a comparator and makes clear that other appropriate factors may be taken into account when setting that definition.
Amendment 66 involves a minor drafting change. It makes no changes of substance but simply provides greater clarity to the provisions dealing with agreements. Government Amendments 58 and 71 are small drafting changes which clarify that this higher value definition is in relation to housing. These amendments, if accepted, will enable the Government to define higher value in regulations in the best way possible having carefully considered local authority data.
As I have previously committed to your Lordships’ House, we will publish the data we have collected, which will help noble Lords, local authorities and any other interested parties to understand the decisions that are taken. As I confirmed earlier in the debate, we will be making the higher value regulations affirmative, which will provide this House and the other place with additional assurances about how we intend to use these powers. I beg to move.
My Lords, Amendment 61A seeks to leave out Clause 67. However, before I speak to it, I thank the Minister for demonstrating once again her willingness to listen to the views of noble Lords on all sides of the House. I thank her for the amendments she has just brought forward. As she acknowledged, they are small amendments but will have a profound effect. However, I have continued grave concerns about many aspects of Clause 67, which is why I have brought forward this amendment.
As noble Lords are aware, under the clause councils that have high-value—or, now, higher-value—properties will be required to sell them and hand over at least some of the receipts. If they choose not to sell them, they will still have to hand over a formula-based sum of money to the Secretary of State. The money accrued from this mechanism will be used to fund replacement council homes, the right-to-buy discount for housing association properties and the brownfield regeneration fund.
This will have a huge impact on councils that did not choose to transfer their council houses to housing associations through the large-scale voluntary transfer procedure. The 165 affected councils are the ones that believe that they are best placed to manage their housing stock for the benefit of their local residents, and although in later groupings we will discuss a variety of proposals to mitigate the impact of Clause 67, we on these Benches believe that it is entirely wrong for government policy to be funded by imposing such a huge burden on a limited number of councils, and we are not alone in that view. In its report published just two months ago, the all-party CLG Committee in another place states that,
“we believe in the principle that public policy should usually be funded by central government rather than through a levy on local authorities, especially as the impact of this levy will fall only on some local authorities, yet will be applied nationally”.
That last point is important. The Minister, Brandon Lewis, made it clear when he was giving evidence to the committee that this would be a national scheme and that the income from council house sales would not be ring-fenced locally. To quote the noble Lord, Lord Best, in a different context, it is a further example of robbing Peter to pay Paul.
There are many reasons why I believe that your Lordships’ House should be extremely wary about allowing Clause 67 to remain in the Bill, and I have no doubt that they will be discussed in great detail later when we discuss amendments in other groupings. There are issues around, for example, the Government’s complete failure—a little has been given today, and I welcome that—or their significant failure to provide any detail of how the proposals will work. We do not yet have a definition of “high or higher value”, and it is interesting to note that the indicative figures that appeared before the general election have now been removed from the Conservative Party’s website. Again, that is a little bit of progress, which I welcome.
We do not know which circumstances will determine whether a high-value property is deemed vacant. We have not seen the draft regulations in relation to the method of calculating the payment that councils must make to the Secretary of State. We do not know if the calculation will take into account regional and area variations in property prices. We do not know what deductions will be permitted and what exceptions will be made. We do not know how councils in areas where suitable land is scarce are expected to build replacement homes. The Government cannot even provide any estimate of the likely income from the scheme or the amount they need to receive to fund their policies. When asked by the Commons CLG Committee how much income it was anticipated would be needed to cover right-to-buy discounts, building replacement homes and brownfield regeneration funds, the Minister, Brandon Lewis, replied:
“I am not at the moment in a position to give you those kinds of figures”.
Perhaps the noble Baroness the Minister, two months further down the track, is in a better position than her colleague to tell us how much the Government expect is needed to fulfil their policies. Further, perhaps she can explain to us something that Brandon Lewis was unable to do: how right-to-buy discounts will be funded if and when the funding source, which is the sale of high-value or higher-value local authority homes, dries up. Are we to be in a situation where the replacement houses for those which councils are forced to sell are themselves required to be put up for sale immediately after the first tenants move out?
Many questions are unanswered and will remain so before the Bill leaves your Lordships’ House. They should have been answered at a much earlier stage in our deliberations. My central contention is that there may well be a case for the sale of high-value and higher-value council homes to meet our housing shortfall, but in the words of the CLG Committee:
“Local authorities are best placed to understand their communities and know where specific pressures exist, and they must have the ability to act in the interests of their residents”.
Earlier today the Minister sent a letter, to which she has referred. It came out at 2.54 this afternoon. In it, she writes, very encouragingly:
“Reflecting this diversity and respecting the views of local people and local leaders is at the heart of Government’s drive for localism”.
Surely the best way to support the drive for localism is to drop the imposition and restrictions on local councils in Clause 67. That clause would hinder local authorities from being able to proactively manage their assets. For that reason, I believe that it should be left out of the Bill.
My Lords, I rise to speak to Amendment 54 and the other amendments that would add those two letters, “er”, to the word “high” in the clause. Noble Lords will already appreciate my lack of a grasp of the English language, but even I could see how dangerous those two small letters would have been in the wrong hands. I thank my noble friend the Minister for clarifying the Government’s intent to add those and where they will be applied. I ask her to confirm in her closing remarks that this will be used not as an attempt to raise additional income, but as purely a means to spread the burden across more authorities.
Had my noble friend not agreed in the letter she sent earlier and in her remarks on the manifesto commitment that councils would be allowed to retain sufficient receipts to build one-for-one replacement of the same tenure, I would probably have been speaking against these amendments. I should explain to noble Lords why I am prepared to move purely on that basis, and properly in response to the noble Lord, Lord Foster.
In councils such as mine, where we are able to retain sufficient receipts to build a council house out of the sale of a high or higher value, I would probably volunteer to sell all my council houses to anybody who would buy them on the open market, on the basis that the cost of building a replacement unit would probably be about 30% cheaper than the value received on the sale of that unit. I would be quite happy to replace my beautifully maintained 1,600 homes for 1,600 brand new homes in the immediate future, thus doubling the number of affordable homes in my district. On that basis, I earnestly thank the Minister and the Secretary of State in the other place for listening to our proper arguments and the case we made, and for responding appropriately.
I had not intended to speak in this debate until the noble Lord, Lord Foster, spoke. The House ought to remember that the idea that we cannot do anything here and should leave it to the local authorities to make all these decisions runs up against the problem that we have not built the houses we have needed to build over a long period. The people who have had all these opportunities to do so and who know their localities and their needs so well do not seem to have noticed that the big need in most localities is to build some houses. I am a bit suspicious of the Foster doctrine. The truth is that many local authorities need a kick up the backside on housing. That is obvious and real.
I cannot let that remark go unchallenged. The problem of the housing shortage in this country is not the fault of any local authority; it is the fault of successive Governments of all colours. They have gone out of their way to stifle the ability of local councils to build houses. I am pleased that the current Government and, to some extent, the coalition Government moved towards that. I am pleased that the current Government are fully encouraging local councils to build houses. It is not the councils’ fault.
If my noble friend had let me finish what I had to say he might have found that we rather agreed. I was going on to say that the second lot of people who have not done what they ought to have done in building houses are successive Governments. When I hear some of the speeches from the Front Bench over there, and realise the appalling history of Labour Governments and housing—
I will give way to the noble Lord but I want to tell him a personal fact. When I was the Secretary of State responsible and worked out the lowest number of houses we needed, what did the Labour Party do? It denied that that was the number needed. Indeed, when the noble Lord, Lord Prescott, came in, he reorganised the figures to cover up the fact that I was right; we did need those houses. I do not think that the Labour Party, the Conservative Party or indeed the Liberal Democrats had anything to trumpet about in the past. We now have a Government who are actually trying to do something about it.
I do not think that I was entering into a discussion on how it was spent and where it went—although I could, I do not want to get into that. I just want to say that we should all be ashamed of the fact that, over many years, we have not delivered what we ought to in housing—not council housing: housing. In one of the earliest moments of my political life, I remember listening to Harold Macmillan say that he was going to build houses, and that it did not matter where you built them in terms of the levels, because there were so few that people would move into one and up to another. What you really needed was numbers of houses, and that is what the figure of 300,000 houses a year was about.
Every time anybody produces a way of doing something better, there is always somebody who gets up and sounds like one of my civil servants, saying, “Better not, Minister. It might go wrong, something might be wrong”. It is about time we said, “Let’s try to make this work”. There are lots of things about this Bill that I am not happy about, particularly not knowing the regulations in advance. That is a constitutional issue, not a housing issue, but we have to give the Government the chance to do something, given that no one has a good argument to say that they have come up with anything much better than the radical proposals before us.
My Lords, I wonder whether the Minister can help me understand a little more what she proposes with this swap from “high” to “higher”. I quite understand that going for “higher” rather than “high” will protect some authorities—largely London, but maybe Oxford, Cambridge, Winchester and so on—from seeing most of their stock disappear because, on the national level, they have a “disproportionate” number of high-value properties. We all understand what “higher” means: possibly the top decile or the top 20% of house prices in this country. Obviously, they would then respond to a redistribution across the country, which the Minister, if she wished, could control by having local, district, regional or county controls on that redistribution.
I have a worry, which I hope the Minister can allay, that “higher” will be anything above the median, which effectively means that every local authority in the country will have some high-value stock above the median and some lower-value stock below the median, even though that area may be very poor. Does this mean that the Minister and her officials will determine for each local authority what proportion of housing it must be expected to sell because it is higher than the median? We can tell her now that that will be some 49% in Oldham or Great Yarmouth.
I can see why the Minister is trying to move away from a situation where she redistributes from a few very high-value authorities across the country, but she can address that issue by containing the area within which that redistribution occurs. Instead, by going for “higher”, at the moment, based on my understanding of the English language, she opens up the potential for every local authority to lose up to 49% of its stock because it is “higher”—not “high”, but “higher”—and therefore above the median. That would be utterly perverse.
I follow that point with a very brief intervention. Does it mean that a local authority will be told by the Government what percentage of its stock should be sold off—in other words, that there will be a target cap beyond which there is no expectation, but below which the local authority will be allowed to sell up to that cap? In other words, Westminster might be told that 60% of its stock is the cap, Camden might be told 50%, or Cambridge 20%. Is that how this will work in practice?
My Lords, in making a brief contribution, I remind the House of my interest as chair of the Cambridgeshire Development Forum. In that context I will refer specifically to Cambridge. There was a concern in Cambridge that, if there was to be a definition of “high value” by means of comparison across the country as a whole, a very high proportion of the properties in Cambridge and South Cambridgeshire in particular would be likely to be treated as “high value”. I very much welcome the amendments that my noble friend the Minister has tabled in this group. They will enable the calculations to be undertaken and the agreement to be reached for a determination in each authority, taking account of all individual circumstances.
Of course, the measure is not mechanistic. Trying to argue that “higher” becomes mechanistic is simply trying to introduce rigidity where that is not necessary. The provision as amended would allow a determination to be made in relation to each authority, specific categories of housing or different comparators. It is deliberately flexible. I listened to the noble Lord, Lord Foster, on all the questions that he said need to be answered in order to proceed. But the point is that if one began to answer all those questions, one would take away from the Government and local authorities, working together, any flexibility to adapt to individual circumstances. In doing so, his proposed Amendment 61A—I cannot find it on the Marshalled List but I interpret from his remarks that it would leave out Clause 67—would take away the opportunity to realise value from the stock of higher-value housing and unlock new build for affordable housing in local authorities, support the right to buy and, by extension through the right to buy in housing associations, offer the additional opportunities for them to undertake new building.
A Select Committee in another place might well think that everything the Government want to do must be funded out of some taxpayer subsidy but the reality is, as we all know, that there is no such magic money tree that we can continue to shake to deliver all the objectives we want. I entirely agree with my noble friend Lord Deben that we want to build more houses. Frankly, realising value out of the higher-value housing stock that becomes vacant in local authorities is precisely the mechanism for this. That realised value can then be deployed with a multiplier effect to enable local authorities and housing associations, as a result, to build more houses. I thoroughly support that.
My Lords, before the Minister replies, I would like to be really clear about what is being said—in part, following what the noble Lord, Lord Porter, said a little while ago. I understand from what the Minister told us that there will be a further amendment at Third Reading on the matter of high-value homes. I would appreciate confirmation of that when she replies. Will the Government leave with local authorities enough money from the sale of higher-value homes to build replacement homes? That is what I heard the noble Lord, Lord Porter, say but that is not explicitly stated in the letter we received just before 3 o’clock this afternoon. I would just like to be really clear about that one-for-one replacement. One of our concerns in Committee was that there was to be a two-for-one replacement in London but not—in the Bill—a one-for-one replacement in the rest of England. I think the House would find it helpful to know exactly what the Government propose here.
My Lords, I will briefly intervene as a member of the London Councils Leaders’ Committee. I will not follow my noble friend Lord Deben, who occasionally joins us for our deliberations on this Bill to launch an attack on local authorities. Perhaps he could bring a different 1990s LP next time he comes to us, as we have heard that little speech before.
I am very grateful to my noble friend on the Front Bench and to the Secretary of State. They have listened—I want to address this in a positive way—and are seeking to deal with a very real problem within the context of a clear manifesto commitment. In Committee, we teased out significant issues that needed to be addressed. This is manifest evidence that the Government wish to address some of those problems. The noble Baroness, Lady Hollis, put the worst construction on it and said that 51% or, in some cases, 100% of the relevant property might have to go. In all generosity, I do not think that is what my noble friend intends or is what she said. She said in her letter that she was “clear” that she wished to see,
“at least one new affordable home for each dwelling that is sold”.
I accept what she said in writing.
There will still be things that we have to consider as we go forward—for example, whether in some large boroughs the social housing in one ward could be more expensive than that in another ward not too far away, so a local element will be needed if we are to sustain mixed tenure and mixed communities, which is important. The drafting of the regulations is not a question on which to detain your Lordships today but we could look at the implications of higher value within local authority areas. However, I unequivocally welcome what my noble friend has laid before us and I know that many people in many parts of London—local authority leaders of all parties—also welcome it. I am very grateful to her.
My Lords, it is good that we all agree that we should build more homes and have more housing. We often fire at each other the records of previous Governments as regards what Governments are or are not doing, who built the most houses when, and what type of houses were built. I am sure that we will carry on doing that in future debates, but it is good that we all agree that we need to build more houses.
As I have told the House before, I grew up on a council estate in Southwark in south London. I have always been very grateful to the council that gave us a house that was clean, warm, safe and dry. Our family was very happy there and we kids were able to do our homework and not do too badly in the world—I hope. However, I have some concerns when we talk about affordable housing. I want to see more social housing built, such as council housing and housing association housing. I worry sometimes that we get into debates about affordable housing when homes at 80% of the market rate in some parts of London do not seem very affordable to me. That is a worry I have and I will come back to it. I also think that communities, whether in rural areas, small towns or villages or big cities, need homes for people on modest incomes, low incomes or high incomes to live side by side to make sure that our communities work. Whatever side of the House we are on, we should ensure that we work to do that.
Some of the government amendments in this group seek to replace the word “high” with “higher”. I am sure the noble Baroness knows that this concept initially caused alarm and that people wondered what was going on. It will be no great surprise to her to hear that some people were a bit suspicious about what the Government were up to and why they wanted to insert the word “higher”. So her clarification is very welcome and I thank her very much for it.
Her general comments were also very helpful and useful. As the noble Lord, Lord Porter, outlined, no one knows better than he and his colleagues in South Holland the needs of South Holland—as is the case with my noble friend Lord Beecham in Newcastle, and other noble Lords in relation to their areas. It is important that we ensure that local councils, councillors and council leaders are fully involved in whatever measures we bring forward as they are aware of the needs of their area. It will be helpful to do that at Third Reading. It would also be helpful if the noble Baroness would clarify again what she intends to bring back at Third Reading—but generally I very much welcome her comments.
My Lords, I thank the noble Lord, Lord Foster, for explaining why he tabled Amendment 61A. I also thank the noble Lords, Lord Kennedy and Lord Beecham, for tabling Amendment 56. While I always respect the views of former Ministers in my department, I will first address the concerns of noble Lords opposite as they are not seeking to remove a manifesto commitment from the Bill.
I turn first to Amendment 56. The changes proposed through this amendment would transfer the onus of defining “high” or “higher” value from the Government on to local authorities. This would lead to local authorities coming up with different methodologies, which would undermine fairness, consistency and transparency. Instead, by using the local authority data that we have collected to set the threshold, we can ensure that a consistent methodology is used to apply the definition across all local authorities. Rather than rushing to set a threshold for higher value, we need to ensure that we fully analyse the 16 million pieces of data that local authorities have provided, so that we set a definition that is fair and equitable. As I have said, the definition will be set out in regulations which will be subject to further parliamentary scrutiny.
The noble Baroness, Lady Hollis, is worried that the “higher” value will be anything above the median. I want to put on the record that this is not at all the intention. This approach would spread the cost of the policy more widely, as the noble Baroness recognised, but we are still working through the detail. Noble Lords will have a chance to debate the threshold now that we have committed to making the regulations affirmative. One noble Lord—I think it was either the noble Lord, Lord Foster, or the noble Lord, Lord Shipley—asked me to confirm that it will not be used to raise more income. There was some worry in the media and elsewhere that that was the case, but I can confirm absolutely that this is not the case.
I would like some clarification on the Minister’s answer about the difference between “higher” and “high”. If as a result of the Minister setting the percentage at “higher” the property is sold, what is to stop the Government—not necessarily herself; it could be a subsequent Minister—coming back and using the regulations to say that the band below that is now the higher-value property, so that there is a continuous accretion of cuts on local authority stock in order to continue to produce more and more money for housing association discounts?
I think the noble Baroness will understand, reasonably, that as a Minister I cannot hold the will of future Governments to account at this Dispatch Box. I can set out only what this Government intend to do and I hope she will take it in good faith. I have confirmed that it will not be used to raise additional income.
The noble Lord, Lord Shipley, and other noble Lords have asked what I am bringing back at Third Reading. If noble Lords look ahead to Amendment 64A, I will indicate my intention to return to the issue of one-for-one replacements at Third Reading. I will give more detail on that when we get to that amendment, if noble Lords will indulge me. I am sure we will debate it fully in due course.
A number of noble Lords have made the valid point that not enough houses have been built in this country. I do not think we will get into who it is attributable to this afternoon, but the fact stands: we have not built enough houses and we are now at a critical point. I think all noble Lords will support the intention of producing more houses of different tenures for this country’s residents to live in.
I turn to Amendment 61A, which would remove Clause 67 from the Bill. This clause will require councils to make a payment to the Secretary of State that represents an estimate of the market value of a local authority’s higher value houses that are expected to become vacant. Needless to say, it is a clause that is vital for us to deliver the policy. I have already explained to your Lordships’ House how the payments will work and I will not test your Lordships’ patience by repeating myself.
It is right that local authorities should sell their higher-value vacant housing so that value locked up in these properties can be released and used to fund right-to-buy discounts for housing association tenants and to fund the delivery of additional homes. The clause’s principles are clear and in line with commitments made in the Government’s manifesto. Should this amendment be accepted, I think the other place will be likely to overturn that decision. With this in mind, I hope the noble Lord, Lord Foster of Bath, will feel free to withdraw his amendment.
My Lords, before the Minister sits down, may I press her on the letter she issued just before 3 pm today? The letter is about high-value assets and therefore the sale of local authority homes. The statement does not say that those homes, in the form of that tenure, will be replaced one for one. It simply says:
“I am clear that we should be building at least one new affordable home for each dwelling that is sold”.
Because a starter home is defined earlier in the Bill as an affordable home, on the sale of a high-value council home that was for rent it could be replaced by a starter home for sale. That is the issue I tried to get at when I followed the comment of the noble Lord, Lord Porter. If I interpreted correctly what he said, he thought that local authorities were to be allowed to keep the money to build a one-for-one replacement. What the Minister is now saying in this letter, as I interpret it, is that starter homes are in fact being counted as an affordable home replacement for the high-value sale, which means that there is a loss to the social rented sector. I heard the Minister say that we will look at this further on Amendment 64A but I hope she understands that there is a major issue of principle here because a number of us in your Lordships’ House believe that we have to defend social housing for rent.
I hope I can reassure the noble Lord. The noble Lord, Lord Kerslake, and I had a discussion about this and I hope he will be reassured when we get to Amendment 64A that we as a Government understand that there are different types of tenure required in different local authorities. The demographics and the need might change and we totally recognise this. That is what I intend to work towards for Third Reading, so I hope noble Lords are reassured by that.
Amendment 54 agreed.
55: Clause 67, page 30, line 11, at end insert “, such deductions to include the cost of replacing the high value properties in the same area with affordable homes (as defined in the National Planning Policy Framework up until May 2015) on a one-for-one basis”
My Lords, I shall also support Amendment 64A in the name of the noble Lord, Lord Kerslake. I realise I am in the way of having the debate about Amendment 64A, on which I hope the Minister wishes to make a statement. However, I will continue.
For the Secretary of State to require local authorities to hand over money on the basis of the number of high or higher-value properties that may become vacant in any given year is, to me, iniquitous. However, I accept that a formula has been agreed with local authorities, which will be based on the assumed number of high or higher-value properties that will become vacant in any given year. In whichever way the formula is calculated, local authorities will be required to pay to the Secretary of State a sum of money that will cover the cost of the 20% discount on the starter homes and the right-to-buy scheme. In the current economic climate, local authorities do not have spare capital at their disposal and have never done so. They are particularly good at making every pound count for the benefit of their residents. The vast majority will therefore have to sell assets of some sort to fund the Government’s levy. The sale of capital assets involves costs and it is only logical for local authorities not to be out of pocket as a result of this measure.
Amendment 55 would allow local authorities to replace on a one-for-one basis with affordable homes in the same area. I refer your Lordships to the Conservatives’ press release of 14 April 2015, which gave details of how the right to buy will be funded. We have had discussions about this. The sale of high-value council homes is referred to in the last paragraph and I will bore your Lordships by reading it. It said:
“A Conservative government will legislate to require local authorities to manage their housing assets more efficiently, by selling off expensive properties—only when they become vacant—which will then be replaced with normal affordable housing. Local authority properties that rank among the most expensive third of all properties of that type in their area—including private housing—will be sold off and replaced with new affordable housing on a one for one basis. But this will only happen as they fall vacant. Nobody will be forced to move”.
I thank the Minister for her amendments so far and look forward to what she has to say further on this issue. In the mean time, I beg to move.
My Lords, I first declare my interests as chair of Peabody and president of the Local Government Association. The purpose of Amendment 64A, which I have tabled, is to do two things. First, it is to put one-for-one replacements in the Bill so this issue is beyond doubt. Given that this was quite clearly in the manifesto, it seemed right and proper that it should be in the Bill. The second part of the amendment was to give the opportunity for a local authority, where it could demonstrate the need, to put the case to government and seek their agreement for a like-for-like policy—that is, the replacement of a social rented property with a social rented property. So there are two parts to this, which I would call one-for-one and like-for-like. They are drafted very differently to allow for local flexibility and initiative.
As has already been made clear today, the Minister has signalled a willingness to compromise on the issues involved in my amendment. She will say more about this in a minute and I do not wish to steal her thunder but, having had a chance to have an informal conversation with her, I am very grateful to her and the Secretary of State for their willingness to listen genuinely to the concerns of this House and those affected outside, and to respond to these concerns. It reflects well on them both and I am grateful for it.
It is worth rehearsing briefly why this part of the Bill has caused such concern. The first and most significant concern has been that of basic fairness. Local government is being expected to foot the bill for a central government policy: to extend the right to buy to housing associations. This is a central government policy funded by local government. To do this authorities are having to sell off, as we now know, higher-value properties as they become vacant, thus reducing the opportunities for those who are in most need. As the letter to the Guardian from the four LGA leaders put it,
“selling council homes will hamper councils’ ability to invest in new affordable council housing”,
and it is,
“likely to have the unintended consequence of increasing homelessness and pushing more families into the more expensive private rented sector”.
That is the view of all the parties in the Local Government Association. In short, those who are better off and have the means to purchase their housing association property will gain a large cash discount. Those on the lowest incomes who are in most need of housing will lose out. That is a basic issue of fairness that cannot be avoided in this proposal.
The second major concern, which we have debated a lot this afternoon, is that the proposal as previously drafted was highly centralised and “one size fits all” in its effect. As we have already heard, we do not have the proposed formula for top-slicing local authority receipts, which will come later. However, as the Minister expressed very well, in some areas there was the prospect under the previous construction that the social housing in those areas would, over time, be effectively wiped out, utterly changing their character and working completely against locally assessed need.
I recognise and absolutely accept the Government’s intent in the proposed change from “high” to “higher”. It will allow more flexibility and a recognition of the diverse and different needs of different areas. To that extent, I welcome it, but of course, as noble Lords have pointed out, the devil will be in the detail and we need to carefully scrutinise that detail when it becomes available.
The third and final concern is a real one about the workability of the proposals. At the most basic level, there has been real doubt whether the sums add up. Indeed, the Chartered Institute of Housing’s analysis was that they clearly would not. We also await the Government’s response on this issue with interest, although we are, again, unlikely to see it until after the Bill has been passed.
Going beyond funding, there has also been concern about whether it is possible to deliver one for one in practice. The experience from the reinvigorated right-to-buy policy suggests that this is very challenging to achieve. Even if one for one—one new property for each sold—can be delivered, there remains the vital issue we have just rehearsed of like for like and whether we are replacing a social rented property with a social rented property in the same authority or with a different starter home property in a totally different place. These remain big and difficult issues, and it was this issue that I sought to address in my amendment.
I have not rehearsed these issues to reopen the arguments that we had in Committee, particularly when Ministers have signalled a willingness to compromise, but it is important to be clear that, notwithstanding the compromise, considerable and significant questions remain about the policy. Given a choice, I would have much preferred a different approach, involving equity loans to cover the right-to-buy discount rather than a grant. But in the end I recognise that, however flawed I think the policy is, it was in the Conservative Party manifesto—both the offer to the electorate and the mechanism to fund it. It is the role of this House to review and to seek to revise legislation, but it is not the role of this House to block legislation when it is clearly part of a manifesto commitment.
For this reason, I signal my intention to accept the Government’s welcome offer and will not press my amendment. In doing that, I emphasise the importance of what comes forward at Third Reading, particularly the need for it to address both the one-for-one and the like-for-like issues—both must be part of the response. I look forward to working with the Minister on this matter between now and Third Reading.
My Lords, I rise to support, briefly, the double-headed Amendment 64A and to comment on the late news delivered by the Minister, of which more may follow, to the effect that the Government have broadly accepted the amendment in the name of the noble Lords, Lord Kerslake and Lord Kennedy, and the noble Baroness, Lady Bakewell.
The key underlying theme of the Bill has been the desire to build more homes and to see a reversal in the decline of owner-occupation, to be accomplished, principally, by building starter homes sold at discounted prices and by enabling housing association tenants to exercise a new right to buy under this part of the Bill. The key underlying objection to both these measures has been that the very substantial cost involved—some £8.6 billion for discounts for those buying starter homes and probably a rather higher sum over the next five years for the discounts to housing association tenants who buy—is all to come through taking away resources from social housing for poorer households, including by selling the most valuable council houses. This cunning plan to spend billions promoting home ownership without the Government needing to find any new money sadly has unfortunate consequences: ultimately, someone has to bear the cost and that someone is the family in overcrowded accommodation, the elderly person, the household in desperate circumstances who would have got an affordable home to rent but will not now do.
However, damage limitation is possible. This amendment seeks to ensure that where vacant council houses must be sold, before the proceeds are dispatched to central government to pay for discounts elsewhere, funds from the sold homes are used to replace those lost on a one-for-one basis—one new home for every old one sold. The amendment adds that, where appropriate, the replacement should be like for like—a rented family home replaced by a rented family home, not a one-bed starter home. The Minister, thanks to the Secretary of State approaching this issue in a very open and helpful manner, has I think been able, first, to accept that one-for-one replacement should be in the Bill and, secondly, to go a long way to accepting that like-for-like replacement can be agreed wherever the local authority makes a convincing case for it. We need to see the actual wording of the Government’s alternative amendment but I hope that, if not tonight then at Third Reading, we will all be sufficiently satisfied with this. If so, I am grateful to the Minister and to Greg Clark, the Secretary of State, for listening to your Lordships and—I think and I hope—for acting accordingly.
My Lords, the amendments in this group are concerned with the payments to the Secretary of State and the deductions from those payments of sums of money to build replacement properties on a one-for-one basis. I am supportive of both the amendments in this group. As I said in Committee, the clauses concerning the high-value levy and the sale of high-value council properties are a very damaging mechanism to deliver government policy. They make local councils foot the bill and risk having a devastating effect on council housing stocks. Both these amendments seek to put in the Bill that the payments to government must be made after the deduction of the costs of replacement on a one-for-one basis.
Amendment 64A, in the name of the noble Lord, Lord Kerslake, to which I and the noble Baroness, Lady Bakewell of Hardington Mandeville, signed up, would add a further clause giving the local authority the ability to set out to government what specific types of local housing are needed in their area. Again, this seems to be within the principle of localism and should not really cause the Government any problems at all. I understand we will hear from the Minister that they understand the issue and are sympathetic to the points raised by the amendments. I am very pleased to hear that: it is very positive news and very welcome. I will not say much more than that, but I am delighted that the Minister and other colleagues have listened. Until we see the text of the amendment concerned, we of course reserve our position, and may bring our amendment back at Third Reading, but from what I have heard I am very pleased and I thank her very much.
My Lords, I thank the noble Lords, Lord Kerslake and Lord Kennedy of Southwark, and the noble Baroness, Lady Bakewell, who have all made powerful arguments about the importance of delivering new homes and meeting the needs of local communities, which is so important.
I agree with the noble Lord, Lord Kerslake, that when government makes agreements with local authorities outside London about building new homes, we should ensure that at least one new affordable home is provided for each old dwelling that is sold. That has always been our intention, but today I am very happy to work to make that intention clear in the Bill. As I said earlier, I would like to consider further how we can best reflect that in the Bill, and I look forward to working with the noble Lord and others on it. The noble Lord makes powerful arguments about the different needs of different areas. Many noble Lords in the House—certainly many of those in the Chamber today—have, at some point or other, represented very different areas with very different needs. Reflecting this diversity and respecting the views of local people and local leaders is at the heart of the Government’s drive for localism, as several noble Lords have pointed out. I totally agree that in our dialogue with local communities, local authorities should be empowered to make the case for the right balance of housing in their area, and that there should be a strong expectation that the Government will listen. That is absolutely our intention; indeed, it reflects our broader approach.
The Bill enables dialogue through the provisions of Clause 72, which enables agreements to be made about the delivery of replacement homes. As I said, I am very happy to work with the noble Lord, Lord Kerslake, to give local authorities with particular housing needs in their areas the opportunity to reach bespoke agreements with the Government about the delivery of different types of new homes in their areas.
With those assurances, I hope that the noble Lords, Lord Kerslake and Lord Kennedy, will agree not to press their amendments. I hope that this commitment will also enable the noble Baroness, Lady Bakewell, not to press her amendment, as we bring forward a proposal that ensures the delivery of housing in a way that specifies the cost of replacement, as a deduction to payments would not.
Before the Minister sits down, just to clarify, the amendment with which she indicates sympathy and which she will come back to, which is very welcome, is based on the premise that a property will have been sold and the money handed over. However, the Bill provides for payment in advance of the sale of any property, so the Government might have received money but no property has been sold. Will the Minister come back on Third Reading with a position on that? Otherwise, presumably, the money could simply stay in Whitehall; there would be no property to be replaced because no property may have been sold, yet money will have been paid over.
In the spirit of the discussion that we are having, I am very happy to seek clarification on the issue raised by the noble Lord. In fact, we will be working through many issues for Third Reading. I am sure that noble Lords will tell me if I have got it wrong—I am sure that the noble Lord, Lord Kerslake, will.
My Lords, I thank the Minister for bringing forward the amendment that we have all been asking for—that there should be one new affordable home for each one that is sold, and that that will be in the Bill—and for responding to the debate in Committee and on Report. I urge her to let us see the detail of it before we get to Third Reading, which I understand will be a fortnight today. I am really pleased that local authorities will be able to make the case for the type of housing that is needed in their area. On that basis, I beg leave to withdraw my amendment.
Amendment 55 withdrawn.
Amendment 56 not moved.
Amendments 57 to 61
57: Clause 67, page 30, line 22, leave out “high” and insert “higher”
58: Clause 67, page 30, line 22, after “value”” insert “, in relation to housing,”
59: Clause 67, page 30, line 24, leave out “high” and insert “higher”
60: Clause 67, page 30, line 24, after “for” insert “different kinds of housing, different local housing authorities or”
61: Clause 67, page 30, line 25, at end insert—
“( ) In determining how to define “higher value”, in relation to housing, the Secretary of State may—(a) use any category of housing that the Secretary of State considers appropriate as a comparator (for example, housing in which a local housing authority has an interest or housing in a particular area);(b) take into account any other factors that the Secretary of State considers appropriate.”
Amendments 57 to 61 agreed.
Amendment 61A not moved.
Clause 68: Housing to be taken into account
62: Clause 68, page 30, line 31, at end insert—
“( ) In making a determination under section 67, the Secretary of State must exclude housing in rural areas.”
My Lords, once again, I am very pleased to report that I am aware that, after discussions, as the Minister has already hinted, the Government are minded to accept the case for the amendment, with a view to bringing forward their own at Third Reading, which I hope will go most of the way to catering for the problem that we are trying to resolve—we being me and the noble Lords, Lord Best and Lord Beecham, and the noble Baroness, Lady Bakewell, for whose support for the amendment I am very grateful.
First, let me spell out the problem as I see it. There are two issues. The first is that we are desperately short of affordable housing in rural areas. As has already been said, our rural England affordable housing stock consists of about 8% of overall housing, compared with 19% in urban areas. Our villages need far more affordable housing, not less, if they are to remain as vital, vibrant communities, with all the self-supporting social fabric that many of us have already described in debate on the Bill. We absolutely do not need to be selling one set of rural affordable homes from the public sector to pay for the replacement of mostly urban affordable homes belonging to the charitable sector.
The second issue is that, in terms of market value and attractiveness, rural council houses will be at the top of the list. They will be the first to go. Equally, they will be at the bottom of the list in terms of their affordability to locals. In my part of the world, very few young families or working locals could afford to buy a village house. That means that most of the houses for sale get snapped up, largely by retiring couples who have sold a house in London on which they paid off the mortgage many years ago, and who are seeking to fulfil their rural dream in retirement. Any legislation involving the compulsory sell-off of rural council houses where no replacement is possible would be one more nail in the coffin of sustainable rural communities. That was the problem.
As we have just heard, the Government are happy that local authorities should have the obligation and the means to replace the high-value council houses that are sold. The trouble with that replacement policy, as we discussed in Committee on the same amendment, is that it is almost impossible to find the necessary sites in many villages, particularly those in national parks or AONBs and their equivalent. So I am pleased that, after discussion, the Government are minded to exclude local authority housing in those special areas from the calculations referred to in Clause 67. The further point that I made to them is that exclusion should not be only for houses in special areas. Even in the ordinary rural village in our universally attractive countryside, it is often hard to find appropriate sites, which is why I have said that, before I can give my agreement to any government Third Reading amendment, it should include villages with a population under 3,000, where the local authority can prove to the Secretary of State that it is impossible to find any alternative site to build a replacement.
Of course there are many villages where a replacement site or even sites will not be hard to find, but where that is impossible, the local authority should be able to make a case to the Secretary of State and to have him or her acknowledge that those houses should not be included in the Clause 67 calculations. That is the key: we must always refer back to the Clause 67 calculations.
As I have said before, we have so few affordable houses in rural England and such overwhelming need that it is only right that there should be an exemption for rural communities. I am pleased that, in our discussions, the Government have recognised our case. Although we will obviously be carefully scrutinising the exact wording of their amendment before Third Reading, I am very grateful to and thank the Minister and, in particular, the Secretary of State, for their willingness to negotiate on this and for their recognition of the exceptional case we have made. I beg to move.
My Lords, my name is attached to both Amendment 62, in the name of the noble Lord, Lord Cameron of Dillington, which is concerned with the sale of vacant council houses in rural areas and Amendment 63 in the name of the noble Lord, Lord Kennedy of Southwark, which is concerned with the sale of vacant council houses where a tenant transfers from one social housing tenancy to another.
The amendments do not wipe out the Government’s intention that more expensive council homes be sold when they become vacant to pay, principally, for discounts to housing association tenants given the right to buy. Although a large number of us in this Chamber remain unhappy about that approach, the amendments are simply about moderating the effects of this policy.
First, in respect of rural areas, it seems that the Government recognise that the remaining, much-depleted stock of council houses in villages deserves special attention in those many localities where it will simply not be possible to replace properties that are sold. Sales of council housing under the right to buy have been roughly twice as high, proportionately, in rural settings than in urban areas. The trouble is that these rural properties in due course are sold on to commuters and retirees, for second homes and holiday cottages. So although it is harder for local people to buy a home in their village than it is for their urban counterparts, because prices are higher and earnings are lower, the amount of affordable housing for rent from councils or housing associations is roughly half the level in rural communities than the national average. It is really important, therefore, to hang on to the precious resource of the remaining council housing in rural areas. Instead of selling the council house that becomes vacant, it is really important that it can be let to a household with a local claim.
I was very pleased that Ministers agreed, on the first day of this Bill’s Report stage, to exclude rural exception sites—land for developments specifically to help local people—from the requirement to build starter homes, which would so often be much too expensive for local families. I am equally delighted that Ministers are agreeable in principle to enabling councils to hold on to their remaining housing stock in rural areas when this is clearly essential to meet local needs. Of course, we need to study the small print of the Government’s approach to achieving this outcome, but we know—or we believe at any rate, as the noble Lord, Lord Cameron, noted—that housing in national parks and areas of outstanding natural beauty is to be automatically excluded from the pressures to sell council houses, and the Secretary of State will be willing to exclude homes in any rural community when the council can make a case that sold homes cannot be replaced. Accepting these reassurances, I appreciate, involves trusting the Department for Communities and Local Government to use its discretion wisely to act in accordance with this promise. But I guess that we have gone as far as we can reasonably expect in protecting much-needed council housing in our rural communities.
Secondly, on Amendment 63, I think the Minister will be able to put our minds to rest in respect of the requirements on councils to sell vacant homes where tenants are transferring within the stock of council and housing association properties. The problem that we identified earlier was that there are very good reasons to encourage existing tenants to transfer from their current home to another property—for example, for an elderly person to downsize from a family house to a bungalow or sheltered housing flat, making way for a young family; or for a widow to downsize to escape having to pay the dreadful bedroom tax, because she is deemed to have a spare room at present; or for a family to move out of overcrowded premises to somewhere bigger. But since these moves could be said to create a vacancy, it could trigger the requirement to sell a higher-value home to raise funds principally, of course, for the discounts to housing association tenants. What is needed is for vacancies created by transfers to be excluded from the pressures on councils to sell their higher-value vacant homes.
The Minister explained to us in Committee that mutual exchanges will not fall within the scope of the policy. Even though theoretically two vacancies are created when two households swap homes, in reality there are no properties becoming vacant, so this is entirely right. I pressed the Minister, however, also to exclude vacancies created by someone transferring to another home in the social rented sector. I said that I thought that the Minister had indicated that transfers would probably be treated in the same way as exchanges and she responded:
“I think that the noble Lord is right”.—[Official Report, 10/3/16; col. 1518.]
We just need confirmation that this is indeed so or we would have the unfortunate, unintended consequence of greatly inhibiting opportunities for tenants to transfer to more suitable accommodation in future.
I endorse the noble Lord’s last plea, and I think that it is one that the Minister will feel able to agree—or I hope that she will, because it would certainly make a great deal of sense. I very much welcome the Government’s more flexible approach to these matters, and congratulate the noble Lord, Lord Cameron, who is doing rather better than his namesake in many respects at the moment, on achieving two substantial concessions from the Government. They are not perfect, perhaps, but go a long way towards meeting the particular requirements of communities that are in many ways very hard-pressed and would undoubtedly have suffered significant difficulties if the Government had stuck to their original proposals. In that spirit of collaboration, I look forward to the Minister dotting the last “i” and crossing the last “t” in relation to the transfer from one property to another not requiring a sale.
My Lords, I support the amendment in the names of the noble Lords, Lord Cameron of Dillington, Lord Best and Lord Beecham, to which I have added my name. We debated rural housing at length in Committee and I remain concerned that we will see a radical change in housing in rural areas as a result of the implementation of this Bill, if it remains unamended. I welcome the comments from the noble Lord, Lord Cameron, with which I completely agree, as well as those of the noble Lords, Lord Best and Lord Beecham.
I have seen and read the Minister’s letter—not the one that came today—on this subject, and I am afraid that I do not believe that tenants in rural areas will be disadvantaged in the way that she indicates, or be treated differently from other tenants in more urban areas. I regret to say that it often appears that the Government do not always understand the countryside and rural areas. I have found from personal experience, when working in the Palace of Westminster in the past, that it was often extremely difficult to get people to understand the impact of their policies on residents in Greater London, outside Westminster, and completely hopeless to get any understanding of the impact on those further afield. That is especially true if one lived in an area that was considered as somewhere where one went for a holiday and did not actually live your life there. I therefore fully support the amendment and welcome the assurances from the Minister so far on safeguards and exclusions from rural communities, and I wait to hear what she has to say.
I would press the Minister for some help on this. We have not yet had the details of what seems to be proposed in the Minister’s reply—and we are on Report, which is very difficult, because we cannot behave as though we were in Committee and press her further for elucidations. So we have difficulties, although obviously we welcome the concessions that she might propose to bring forward. However, as I understand it, local authorities, which know their areas, will have to persuade the DCLG, presumably on a case-by-case basis, not that there should be a one-for-one but there should be a like-for-like. I have no doubt at all that the Minister and her Secretary of State have good intentions and will not seek to use this inappropriately, but why should civil servants recommend to a Minister, who has possibly not even visited a particular county, to tell a local authority that they know better than the local authority whether it is appropriate to have not just a one-for-one but a like-for-like replacement? In the name of localism, are we really going to see local authorities argue with the Secretary of State’s officials on a particular property or five properties in a village in some deeper part of the country, whether it be Somerset, Norfolk, Cumbria or wherever? That seems an extraordinary amount of Whitehall power over local government decision-making. I hope that it will be operated in good faith, but what happens when there is a disagreement? The Secretary of State is presumably always not only judge but jury and has the last word in this.
I would have liked to see more confidence expressed in local authorities, perhaps because it is monitored through the local plan—or, alternatively, perhaps the Minister will respond with the proposal that we will have a report back to Parliament two years after the Bill takes effect to see what exactly has been the response of local authorities and to what extent central government has been able to respond positively to local authorities’ description and assertion of their local need.
I shall start with the noble Baroness’s point because I think it probably refers to the previous group in terms of local authorities and agreements with the Secretary of State. The Secretary of State and I, on behalf of the Government, absolutely acknowledge that local authorities know their own local communities. In the spirit of the approach that this House has taken, that is what I am trying to articulate today. Rather than it being central government’s suspicion of local government, we are head-on acknowledging that local authorities and local leaders best know the needs of their communities. I know the Secretary of State respects that.
I now move on to Amendments 62 and 63. I thank the noble Lords, Lord Kennedy, Lord Best and Lord Cameron. No, the noble Lord, Lord Kennedy, did not make any points on these amendments. He is so good that I think he has spoken. I have been particularly struck by the points that have been made about housing that is located in national parks and areas of outstanding natural beauty by the noble Lords, Lord Cameron and Lord Best. Greater planning constraints apply in these areas, which would make it more challenging to replace homes that are sold off with new housing. The Government want affordable housing in rural areas to continue to provide for those who need it the most, and in certain cases I agree that we should be clearer about how we can best protect it. Therefore, I hope the noble Lords will be pleased to hear that I am making a commitment—although the noble Lord kind of preceded me—to exclude local authority housing that is located in national parks and areas of outstanding natural beauty from the housing to be taken into account under this chapter. Housing in these areas will be excluded under regulations.
More broadly, throughout the passage of the Bill I have heard many powerful arguments about the need to protect rural housing. Amendment 119, tabled by the noble Lord, Lord Best, the right reverend Prelate the Bishop of St Albans and the noble Baroness, Lady Royall of Blaisdon, who is not in her place, emphasises the need to protect rural areas more widely. I commit to look at the detailed points that have been raised about housing in rural areas during the remainder of the passage of the Bill to consider how we might use existing powers to make further exclusions to ensure that we reach a reasonable balance. I hope noble Lords will agree that these two commitments go a long way to meeting their concerns. In light of these undertakings, I hope the noble Lord, Lord Cameron, will withdraw his amendment.
Turning to Amendment 63, I agree that local authorities should make the best use of housing stock to meet people’s needs. This includes transferring tenants to alternative vacant social accommodation when it suits their circumstances—for example, if they are underoccupying or overoccupying a property. That is good stock management. However, I am concerned that Amendment 63 could open the door to local authorities seeking to reduce or minimise their payment. This would mean that there would be a lower level of receipts to build additional homes and fewer housing association tenants would realise their dream of home ownership. That said, I am not in a position to make a decision about whether to exclude transfers from the types of definition of vacancy using the regulation-making powers in Clause 77(2) until we have concluded our data analysis and understood the impact of such an exclusion. I assure noble Lords that we will use the views expressed to help inform decisions regarding situations when housing would not be considered as becoming vacant. With these assurances, I hope the noble Lord, Lord Cameron, will withdraw his amendment.
I thank all Members of the House who have supported the amendment. I again thank the Minister and, indeed, her Secretary of State for the compromise position that they have offered. I look forward to discussing the details of the government amendment that will be provided at Third Reading. It is quite clear that the process in national parks, AONBs, the Norfolk Broads and other special areas is quite a simple matter to deal with. Housing in communities of fewer than 3,000 people where it is impossible to replace sold housing due to planning regulations, either as spelled out in the National Planning Policy Framework or where they have been interpreted by a local plan, will be the key to whether the government amendment will be acceptable. I look forward to the discussion and, in the mean time, I beg leave to withdraw the amendment.
Amendment 62 withdrawn.
Amendment 63 not moved.
Amendment 64 had been withdrawn from the Marshalled List.
Clause 72: Reduction of payment by agreement
Amendment 64A not moved.
Amendment 65 had been withdrawn from the Marshalled List.
66: Clause 72, page 32, line 33, leave out from beginning to the first “to” in line 34 and insert “in the definition of “old dwelling” in subsection (7) the reference”
Amendment 66 agreed.
Clause 73: Set off against repayments under section 67
Amendment 66A not moved.
Clause 74: Duty to consider selling vacant high value housing
67: Clause 74, page 33, line 4, leave out “high” and insert “higher”
Amendment 67 agreed.
68: Clause 74, page 33, line 5, at end insert—
“( ) A local housing authority which does sell its interest in any high value vacant housing must retain the revenue from the sale and use this to provide replacement affordable housing for rent in the local authority area.”
My Lords, this amendment would provide that revenue from high-value sales should be retained by the local housing authority rather than be transmitted, as required by the Bill, to the Secretary of State, and should be used to provide replacement affordable housing for rent in the same local authority area.
I shall begin by referring to the position in my local authority, Newcastle, which will be pretty much echoed up and down the country. Shelter conducted an estimate of the number of high-value council properties. Of course, we do not quite know what the definition of “high value” will be, particularly in the light of today’s government amendment but, as a working position, it estimated that Newcastle’s housing stock, which is something in the low 20,000s, would contain about 1,650 high-value properties. On that basis, and on the Government’s approach, it would look as though 82 properties a year might become vacant. I do not know quite what high value in Newcastle would come to, but if it were something over £100,000, at the least we would be looking at something like £10 million a year for several years being paid over to the Government. It might be higher than that, but I do not think it would be much lower. That would be replicated across the country, so the question arises of how this scheme would work and what its impact would be.
I turn for some guidance on that to the impact assessment—so called—which deals with Clauses 67 to 77 on this issue. It defines the problem under consideration as something that will require the Government to “determine high value”, about which we have heard something today,
“and a formula which will be used to calculate the payment each stock owning local authority is required to pay”.
There is a footnote at the bottom of the page in very small print, which states:
“We are engaging with local authorities and are currently in the process of updating data that will be used to help inform the high value threshold, which will determine how much individual councils will need to pay”.
That document was issued in January, and we are now in April. I wonder whether the Minister could give us any indication of how much progress has been made in updating that data and whether and how soon the Government will be able to indicate even a sample of what “high value” would be and how many houses might be affected.
The rationale for intervention is given in the mantra:
“Councils should effectively and efficiently use their resources … it makes sense to sell high value vacant houses to release the value locked up in them”.
The document point outs that:
“165 local authorities own a total of around 1.6 million council homes”.
Then the impact of the intervention is described:
“The main impact will be on stock holding local authorities as they will be required to make a payment to the Secretary of State based on the value of the high value vacant homes they own. By managing their stock more efficiently, and selling vacant housing”,
they can release the value. Of course, it is not just when the property is sold that councils will be required to make a payment; they will be required to do so in advance of any sale, which one might have thought was a somewhat peculiar process.
There is a summary of benefits and costs, and it is a pretty minimal description. The document says:
“Local authorities are not benefitting from their high value vacant assets”.
They have already said that in the report. It goes on:
“This policy will release the value of such assets to use in providing more housing”,
but without any indication of how much would be released, how much new housing would be provided and what kind of housing that would be. It goes on to say:
“The process also provides some flexibility for local authorities to decide which vacant properties they sell … Data will be used to inform the setting of the high value threshold”—
we await indications of what those data will be—
“and the assumptions underlying the calculations in the determination … The policy requires the sale of high value assets which may have some impact on the total stock that a local authority holds”.
By definition, that is going to be the case. This is hardly a detailed analysis of the impact of the Bill. Then it says:
“Local authorities are likely to incur some costs associated with the sale of vacant property”.
Again, that is a pretty massive understatement with no figures attached to it. It continues:
“Consideration will be given to the deductions that should be made from the payment”.
How very kind, but there is no indication of what consideration the Government are likely to give or at least what its outcome is likely to be. It then says, and remember that this is an impact assessment:
“A portion of the receipts will be used to provide more housing, reflecting housing need”.
There is no indication of what portion, or indeed any definition of “housing need”.
Then the impact assessment makes the one specific reference, which of course is timely in view of the impending election of a London mayor, that in London the provision must require that,
“at least two new affordable homes are provided for each vacant high value home that is expected to be sold in the relevant year”.
It may be purely coincidence that London has been chosen for this definition, but a cynic might point out that it is the only firm commitment revealed in the whole impact assessment.
So it is pretty deplorable after all this time, unless the Minister has some information that she can convey to us either today or before Third Reading, that we do not know what the impact is going to be, how much money or how many homes are involved, how many councils will be affected and what a “high value” is. It is a case of Parliament, and in particular your Lordships’ House, being asked to sign a blank cheque to the Government and, frankly, one written in invisible ink. It is highly unsatisfactory, and unless the Minister can produce some assurances about when we are going to get information, we will be left enacting legislation without any clear idea of what will be involved in terms of costs or, crucially, the numbers of replacement houses and where they might be built. In my submission, that is not a satisfactory outcome of a process that we have been engaged in for some months now in both Houses. I beg to move.
My Lords, I thank the noble Lord for his amendment, although I am not sure that I should. I appreciate the considered thoughts from your Lordships’ House on ways in which we can improve the Bill but I fear that the amendment would compromise the ability of the Government to meet our manifesto commitment, which clearly states that receipts from the sale of local authority housing will be used to fund right-to-buy discounts for housing association tenants, as well as supporting the delivery of additional homes. The amendment would prevent us from meeting this clear manifesto commitment, and as a result housing association tenants would be unable to realise their dream of owning their own home.
We know that there is £200 billion of value locked up in housing in this country. We also know that some of that could be used to increase housing supply, something that noble Lords from across the House have expressed a wish to do. We also know that in many places the value has not been used for that purpose. That is why this Government are bringing forward this legislation. I make it clear that we also want to increase housing supply with these receipts and through the voluntary deal with housing associations that will see more homes built for each right-to-buy sale.
We have already discussed the suggestion from the noble Lord, Lord Kerslake, for an amendment to reflect the need for one-for-one in the Bill, and the commitment that I gave in that respect. That seems the right approach when considering the provision of additional homes.
The noble Lord asked when we might see some of the data. There are a lot of data from 165 local authorities, and I made it clear at the beginning that it would take some time to analyse them. I assure noble Lords that we will take decisions on this as soon as possible, but I do not want to rush into those decisions. I hope that on that basis the noble Lord will feel able to withdraw his amendment.
My Lords, I shall reluctantly withdraw the amendment. I do not blame the Minister for the situation that we are in, but we are enacting legislation the outcome of which is utterly unclear, in terms of both the physical reality of houses that are to be sold and replaced and the costs. It really is not good enough that we should be placed in this position. I would be tempted to press the matter to a vote were it not for the fact that, as the Minister has pointed out, there is an arrangement, although I am not at all happy with it, under which the housing association right to buy is to be partly funded. As we have not voted against that, it would be illogical to press this decision to a vote.
Still, I hope that the Minister will be able as soon as possible to come up with some facts, figures and details about how the provision here is going to work in practice. It should be possible for the Government to give such an indication, not for every council but certainly for a few. They could take a London borough, a district council or a metropolitan council, for example, just so that we could see what is likely to be achieved. Whether it is possible to do that before Third Reading is, I guess, somewhat problematic, but that is a criticism of the process as a whole and certainly not a criticism of the Minister. Having said all that, I beg leave to withdraw the amendment.
Amendment 68 withdrawn.
Clause 75: Local authority disposal of housing: consent requirements
Amendments 69 and 70
69: Clause 75, page 33, line 21, leave out “high” and insert “higher”
70: Clause 75, page 33, line 27, leave out “high” and insert “higher”
Amendments 69 and 70 agreed.
Clause 76: Set off under section 11 of Local Government Act 2003
Amendment 70A not moved.
Clause 77: Interpretation of Chapter
71: Clause 77, page 34, line 8, leave out “high value”” and insert ““higher value”, in relation to housing,”
Amendment 71 agreed.
71A: Clause 77, page 34, line 17, leave out “may” and insert “must”
My Lords, these amendments are quite limited. They relate to the way in which the interpretation of the question of vacancy is determined. They seek to require the Secretary of State to specify what that interpretation should be by regulation rather than simply having the option of so doing. Amendment 71A would translate “may” into “must” in Clause 77, such that the Secretary of State must specify by regulations the circumstances in which housing is to be treated as not becoming vacant for the purpose of a high-value sales policy, while Amendment 71B would require those regulations to be affirmative. It is a fairly straightforward matter but it is important that the procedure should follow the route of secondary legislation rather than, as we heard earlier in another context, a matter simply for ministerial determination. I beg to move.
My Lords, I thank the noble Lord for his amendment. It would replace the discretionary power of the Secretary of State to make regulations on specifying circumstances in which housing is not treated as being vacant for the purposes of this part of the Bill by replacing “may” with “must”. The amendments in this group would also require these regulations to be made as affirmative.
As many noble Lords will recall, and as many have made reference to, the DPRRC considered the powers that we proposed to take through this Bill. I am happy to report that it did not seek to change the proposal for this power to be made through a negative resolution. It accepted our arguments that it is appropriate to use the negative procedure for these regulations, as this approach will provide flexibility to ensure that if circumstances change over time or if a need for further exclusions is identified in the future, this can be easily addressed by adding, amending or removing exclusions.
Given my earlier concession on making the regulations setting out the definition of “higher value” through affirmative resolution, and given that the DPRRC agreed with our proposal, I urge the noble Lord to withdraw his amendment.
Amendment 71B not moved.
71C: After Clause 77, insert the following new Clause—
“Composition of housing stock
(1) Three years after this Chapter comes into force, the Secretary of State must undertake a review and publish a report on the composition of local authority and housing association stock.(2) The report under subsection (1) must examine the tenure and affordability of any existing dwellings and any new dwellings which are, or are expected to be, built after this chapter comes into force.(3) The report must be laid before both Houses of Parliament.”
My Lords, I rise to speak to Amendment 71C in my name and that of my noble friend Lord Beecham. I think we can all agree, no matter what position you take on this Bill—whether you think it is right, positive and a great Bill or think it is wrong, negative and not a good Bill—that the proposals are controversial and not universally welcomed. That is because of the lack of regulation—I am not going to start a regulation speech, I promise—and the fact that it is a skeleton Bill with, it has been suggested, not all the bits of the skeleton in place. So I have begun to think that the Bill is just not right. There must be a mechanism in it to enable the Government and Parliament to understand fully the effects of the provisions that have been brought into law.
When we discussed the right-to-buy provisions in Committee, there were many contributions from across the House. I recall the contribution from my noble friend Lord Campbell-Savours, who told us about a council estate quite close to this House that had almost entirely been sold under the right to buy but, now, almost entirely entered the private rented sector. In fact, many rooms in many of the council flats are now being rented out. He said that there are door numbers on the rooms within flats, and people are paying hundreds of pounds a week to live there. I am confident that when the original right-to-buy proposals were introduced by the first Conservative Government after the 1979 election victory, that was never their intention. The intention was to increase home ownership—a perfectly understandable intention. Of course, its effects today can be seen in the situation up the road.
My amendment provides for a report to be compiled in three years’ time. Three years seems to me a sensible length of time. We will see what has happened with the proposals in the Bill and it will enable the Government—unless there is some unforeseen event, this Government will still be in office when we get the report, with one more year to go—to look at them and understand their effects. That is a sensible thing to do and on that basis, I beg to move the amendment.
My Lords, I rise to support Amendment 71C. As has been said many times during the passage of this Bill, its implications will have very wide ranging consequences. It is therefore necessary to monitor those consequences adequately and consistently, and not leave it to hearsay and conjecture. The Secretary of State should conduct a proper review of the composition of the housing stock of local authorities and housing associations after three years. By then, it should be possible to ascertain exactly how many new homes have been produced, the state of the affordable rented sector, and what measures will be needed to redress any gaps in the market or enhancements needed to fulfil the Government’s aim of addressing the current housing crisis.
My Lords, I also would like to support this amendment. I do not mean to be impertinent to the Minister, but I think that she owes us this—and I will say why, if I may. There have been considerable worries around the House as to just how “skeleton” this Bill is. We have been promised regulations which, although they may now be affirmative thanks to the good efforts of our colleagues on the Cross Benches, will none the less come in after the Bill has become law because the consultation exercises on which they are based started two-thirds of the way through the parliamentary process. We all know that they should have been concluded before the parliamentary process, so that they could have shaped the form of the Bill and thus been amended in an appropriate way.
In area after area we do not know what is going to happen. We do not know what is going to happen with starter homes, with the potential take-up or with the priority order of the money from local authority sales. We do not know what number of properties will have to be sold and levied to meet that, or how the sums are going to add up. We could make a shopping list of the things we should know and the Government should know, but that we have not been told. I think that that is because the Government do not know. All this work should have been done, in my view, long before this Bill took shape. This is the result of having, in the first year of a Government, a Bill that should have been delayed, as a Member of the Benches opposite said, for at least a year while some of this evidence was collected. We could then have had a more informed and sensible debate in the long hours of Committee and now at Report.
At Report, the Minister and the Secretary of State are beginning to respond to a lot of the arguments raised in Committee, and we are very appreciative of that. However, the Government could and should have foreseen those arguments at the Commons stages; they could and should have foreseen them at Second Reading; and they could and should have had answers in Committee. What we are now getting are promises at Report. We will come to Third Reading and, if those responses are not adequate, we will have to go into questions and the consideration of ping-pong, which will then put a question mark over the whole timetable of the Bill.
Through no fault of the Minister, the department has failed to put in the preliminary work on this Bill. There are many people in this House who have been Ministers and taken Bills through it who know how much preparation is needed to have a Bill that is informed with the proposed regulations in draft. The LegCo committee, as was, would not have allowed this Bill to go forward in my day with the regulations as vague as they now appear to be because we are still awaiting the results of the consultation exercise.
At the very least, therefore, we need a proper, evidence-based, data-collected report three years down the line on whether all these offerings, suggestions, proposals and possibilities that we all see and argue for in this Bill actually come to pass or whether, as a result of skeletal scrutiny of a very skeletal Bill, we have missed out major issues which then bear heavily on people who can ill afford to see their housing need pushed ever further back in the queue. I therefore suggest to the Minister in all gentleness that she owes us this amendment.
My Lords, I, too, think that this amendment is important and I hope that the Minister will be able to accept it. My view is that this Bill is littered with unintended consequences. However, I may be wrong about that; they may be intended consequences. The answer is that we simply do not know, because so much of the Bill has not been brought forward in a way that allows us see what exactly is intended; we do not know what will be in regulations and so on. So we do not know what the consequences will be, whether they are intended or not. That is not a sensible position to be in.
If one takes at face value the objectives the Government have enunciated—what they want to do to address the housing problems that affect many parts of this country—there has to be the opportunity to take stock of the way the changes included in the Bill will work through the system. My noble friend’s amendment would at least enable that to be done. It would of course have been much better if the Bill had been properly produced in the first place after a proper assessment of all the evidence, and if it had been made clear to Parliament what all its various components would be. But given that we are not there, if this amendment is accepted, we could before the next general election have some of that information before Parliament and before government. The Government might even decide that they want to unpick some of what they are trying to do here, or they might recognise that remedial measures are necessary; but in any event there would be a generally and publicly available report so that, near the time of that general election, there could be an understanding of the Bill’s consequences and of how we need to move forward to achieve balanced and adequate housing provision in all parts of the country. I am pretty certain that this Bill, with all its consequences, whether intended or unintended, will not provide us with that; we need the evidence and the information. Indeed, I would have thought that good government, of whatever colour, requires that such data be collected and made available.
My Lords, I begin by agreeing with the noble Lord, Lord Kennedy, about the intention of government in providing housing, and about people—not usually the tenants themselves, and subsequently the owners—sometimes trying to profit from housing that is intended for an entirely different purpose. I hope the noble Baroness will recall the undertaking I gave in Committee to get a working group together to look at how such fraud can be eliminated from the system. I feel very committed to that. I also take on board her point about the detail perhaps not being ready when noble Lords might want it. I hope that noble Lords will at least give me credit for trying to do that when I can, and in as much detail as I can.
I assure noble Lords that the Government already publish a significant amount of statistical data on the composition, tenure and affordability of housing through various mechanisms such as housing surveys and data collection exercises. For example, as part of the English housing survey, we publish an annual report on households. For 2013-14, this included information about tenure in the social rented sector, the private rented sector and owner-occupation. It compared each of these tenures and looked at how the relative size of each has changed. The report also examined measures of the affordability of social rented accommodation and movements into and out of the social rented sector.
Additionally, the Government publish various housing statistics, giving up-to-date data on a range of issues such as affordable housing supply, dwelling stock estimates, net supply of housing, housebuilding and housing market data. That is very useful information which provides a comprehensive and up-to-date picture of changes in housing stock, tenure and affordability.
With that reassurance about the extensive data—
Yes indeed. I am grateful to the Minister for detailing all the information that is available, but can she answer the question I asked earlier in our deliberations: what is the Government’s estimate of the money they need to receive from the sale of high-value properties to cover the cost of replacement properties for the right-to-buy discount and the brownfield regeneration scheme?
The noble Lord is obviously referring to a previous group of amendments. I am not sure whether he was in his place when I said that this data collection exercise is quite extensive— 60 million pieces of data. We always thought it would be a quite a lengthy process, but we will keep noble Lords up to date as and when we can.
Does the noble Lord, Lord Harris, want to add to that?
I seek clarification on what the Minister just told us. She outlined all the various data which are collected and published at the moment, but this Government are committed to reducing the burdens of data collection and regulation. We keep having various surveys and various other forms of data, the collection of which is then cancelled. Can the Minister give us an absolute undertaking that none of the data sets she has talked about will stop being collected between now and the end of this Parliament? If it was written into legislation that this report would have to be produced, it would obviously then be very difficult for the Government to resile from their obligation to collect the data.
I hope the noble Lord will understand that I do not have telepathy regarding what might happen in various spending reviews et cetera, but as far as I know such data collection exercises will continue. If that is not the case, I will let the House know.
My Lords, as this is the last amendment we will discuss today, I put on record my thanks to the noble Baronesses, Lady Williams of Trafford and Lady Evans of Bowes Park, for the courteous way in which they have responded to questions and comments from Members in all parts of the House. They have been helpful, informative and willing to listen. I know that other noble Lords appreciate that, too.
Having said that, I am disappointed that the Minister has not taken up my very good offer to enable the Government to arm themselves with more information to convince us all what a great policy they are putting forward here. I picked a period of three years because, as I said, barring any unknown factors the Government will still be in office then to deliver their review. I am disappointed that they do not want to take up that offer, and therefore want to test the opinion of the House.
Consideration on Report adjourned.