My Lords, we return to a local authority’s freedom to borrow for the purposes of its housing revenue account, an issue that was spoken to powerfully by the noble Lords, Lord Shipley, Lord Tope and Lord Jenkin of Roding, my noble friend Lord Smith and, of course, the noble Lord, Lord Best.
We have by any measure what we must call a housing crisis in the UK. According to the Government’s own figures, the growth in households in England is expected to mean an additional 232,000 households per year for the next 20 years. Last year, 2011-12, there were just 118,000 completions, which is 31% below the peak under the previous Labour Government. Thus completions are woefully short of coping with new households, let alone the backlog, the pent-up need.
We should acknowledge that the inadequacy of new provision is not confined to this Government, but matters seem to be getting worse. Last year, there was a decrease in the number of affordable homes created compared to the previous year, a pattern replicated in the decrease in the number of affordable homes provided for social rent.
These issues are of special importance at this juncture, because the need for new homes for individuals and families, so that they can have a decent life, is matched by the need to inject some economic stimulus which will give a spur to growth and help employment. As pretty much every noble Lord who has spoken has said, we need more homes, to buy and to rent, we need more jobs, and we certainly need more growth. Rather than imposing the draconian bedroom tax, one way of dealing with underoccupation is, as my noble friend Lord Smith said, to build more homes.
The availability of finance is obviously key. We have seen a plethora of initiatives from this coalition Government but their early decision to chop some £4 billion of funding for affordable homes has undermined their efforts to make progress. Switching to an intermediate rent model at a time when housing benefit support is under attack has not improved the situation. The Chartered Institute of Housing, Shelter and the National Housing Federation provide regular updates on coalition Government progress and their November 2012 report states:
“After two-and-a-half-years, it is extremely worrying that house building remains so low and that the Government’s record warrants no better verdict than ‘no progress’ towards improving the dire state of housing supply”.
We need to look at how this failure can be addressed on a comprehensive basis, and that is what we as a party are engaged upon. Our deliberations and policy conclusions will obviously be announced in due course.
What of the role of local authorities? It is more than 20 years since local authorities were able to make any significant contribution to new build. Where small progress has been made in recent years it is Labour councils which are leading the charge. We should not
overlook the very substantial improvement to the quality of local authority housing stock over the past decade. However, if we believe in localism we must believe in the role of local authorities in addressing the housing needs of their areas as enablers and direct providers.
I acknowledge, as have other noble Lords, the role that local authorities have played in being sensible about prudential borrowing arrangements. The CLG Select Committee produced a focused report on the financing of new housing supply in April 2012 which included a chapter on the role of local authorities. This report had a range of recommendations including the lifting of the cap suggested in this amendment. The Government have—in a sense—already facilitated this by completing the reforms to the housing revenue account system promulgated under the previous Government. The report’s other recommendations covered the sharing and pooling of borrowing headroom, a changed role for ALMOs, a change in the classification of debt, looking to the bond markets as an alternative source of funding for the Public Works Loan Board, doing more to release land and ensuring like-for- like replacement of houses under the right-to-buy provision. We should—and are—looking at these issues comprehensively rather than in the piecemeal fashion suggested in this amendment.
Perhaps the Minister could make it clear where the coalition Government now stand on each of those issues raised by the Select Committee. They set out their original position, but given what has happened to the lack of growth, they may have changed their stance. Like other noble Lords, we would happily support the Chancellor whenever he gets up to make his Budget speech if he sees this as a means of getting some growth.
We certainly see the opportunity for an expanded role for local authorities and the benefit of building on the changed arrangements for the housing revenue account which is the thrust of this amendment.