Housing and Regeneration Bill

This is an important area of debate. As the noble Lord, Lord Greaves, said, there was a serious debate on it in another place. He rightly described it as controversial. It is not something that has simply divided parties; I acknowledge that some people in my own party take a similar view to the one that he took today. I agree that council housing, or social housing as we now know it, has been a fantastic success without which we would never have been able to house the sorts of people who could not have afforded a home of their own. It is a very proud tradition. We must recognise that, but times and aspirations change, as do challenges. The increasing challenge on the Government to enable people to buy their own homes and provide additional social housing has required us to look at things in a different way. I will come on to that. There are a lot of issues in and around the future of social housing and the issues raised by the Hills report and so forth that are worthy of a serious and long debate. They are outside the scope of this Bill but nevertheless relevant. I will address the wider issues raised by the noble Lord before I get on to the amendment. He raised many issues about the funding of the HRA system such as the implications of incomes, transfers, rents and so forth. I would like to put on record that we are presently engaged in a major review of council housing finance as a whole. It is looking at all aspects of this area, including issues around investment. I will write to the Committee with details of that review—its terms of reference and the issues that it is addressing. Without going into a detailed response to those parts of the noble Lord’s speech, I can answer many of the issues or at least address them in the context of what we are doing in that review. The amendment itself needs to be addressed because the notion is that it might clarify the issue or at least prompt a change by making it clear that local housing authorities may be given financial assistance by the HCA. Quite simply, the problem with the amendment is that Clause 22 is drafted broadly so that the HCA may provide financial assistance to any person, in any form, with Secretary of State consent. By ““any form”” we mean grants or loans. If we were to name local authorities and specify them above any other body or organisation, that could lead to the beginning of a list with all sorts of other bodies attempting to add themselves to that privileged position. We all know how we feel about lists in legislation. The broader point of whether local authorities themselves should be eligible for social housing grants, for the reasons given by the noble Lord, goes to the heart of the debate that we have had over the past few years. Because local authorities have not been treated as eligible for social housing grants, the bare numbers are rather dramatic. It is undoubtedly true that the vast majority of new social housing has been built by housing associations, and local authorities have built fewer than 300 new council homes in England in each of the past nine years. Part of the context is that the housing authorities and local authorities themselves have become different sorts of agencies, moving away from providing and managing to becoming place-making organisations where housing policy—the assessment of need and the distribution of resources—has become a more important and clear role. The reason why we have looked to housing associations for investment in social housing has nothing to do with ideology or discrimination. The noble Lord said that we have treated local authorities unfairly, but we have been fair to those people who need homes. The simple fact is that housing associations have been able to deliver 30 per cent more social housing for the same amount of public grant because they have been able to lever in private borrowing and reserves. That is not to do with excluding local authorities from housing, but about getting value for money and getting the maximum output for the people in need. Indeed, that ambitious target of 70,000 more social homes by 2010-11, would be at risk without that leverage. The noble Lord may ask why the Government do not do both. Why do they not enable local authorities to build and at the same time develop the housing association sector in that way? However, with scarce resources and with another major investment in the Decent Homes funding, for example, one has to get as much impact for limited resources as possible. Using the RSL sector in this way has been hugely effective. Things have recently changed. We have changed the bidding rules so that, last year, for the first time, 10 ALMOs and other local authority companies prequalified to bid for social housing grant. Three ALMOs—in Derby, Sheffield and Brent—were among the successful bids announced in February. But we still believe that value for money is critical in these expensive areas of policy. While the rules were changed to allow bids to be made, we did not change the criteria for assessing them. ALMOs and SPVs have to compete on the same value-for-money criteria within the same bidding competition as housing associations. That ensures that we support the best schemes for public money. I have been talking so far about social housing grant, but we need to look wider than that. If council schemes involving housing association partners were to be replaced with in-house schemes, the question that those who oppose this policy have to answer is: where would the additionality come from to get the extra resource that builds the houses that people need? In addition to social housing grant and partly to answer that question, the Bill also removes financial disincentives to local authorities building traditional council housing within the housing revenue account. The noble Lord referred to the Prime Minister's words on that. When we come to Clause 312, I am sure that we will have another lively debate on this. Clause 312 exempts new supply from the HRA subsidy system. It allows councils to keep the rental operating surpluses from these homes that are currently redistributed nationally. We expect that to make a small but significant increase in the number of homes built via this route. It will rise from the low hundreds to perhaps several thousands. We will announce separately plans to consult on those changes to regulations regarding whether councils should also keep the full capital receipts on any subsequent sale of new properties. Because of the explanation that I have given in terms of the resource that we have and the challenges that we face, we are not currently proposing to invite councils to bid for social housing grant in their own right. We need to consider the question of additionality, but we also need to evaluate how some of the reforms that we are proposing will impact and we need to see how they might be promoted and assessed. By setting out the simple set of principles that have guided us, I hope that housing associations will continue to play a key role, but that we also see housing authorities playing an important and growing role in helping to deliver the objects of the HCA. It is a question of being pragmatic and of assessing how we can best do this. It is also, genuinely, a reflection of the changing role of local authorities in terms of assessing the housing needs of their local communities and the many roles and challenges that are on them in providing for the various needs of the whole community, not just in housing but in community development. I appreciate the opportunity to put that on record. I do not expect the noble Lord to agree, but I hope that he will be able to withdraw the amendment on the basis of the argument.