My Lords, I begin my speech in support of Amendment 63, in my name and that of my noble friend Lord Kennedy, and the other amendments in this group by referring to what passes for the impact assessment of the Bill. Under the rubric of “Problem under consideration”, it states that the provisions of the Bill,
“require councils to make a payment to the Secretary of State based on their high value … housing”,
which is expected to become vacant during the financial year. It does not say how “high value” is to be defined or calculated, which is expressly to be determined—surprise, surprise—by secondary legislation. Nor does it define what would be deemed to constitute “an expectation” and when that is supposed to crystallise. It goes on to state that,
“a formula will be used to calculate the payment each stock owning local authority is … to pay”,
for this will be required of local authorities whether or not the property is sold. As we have heard, the money will go to Her Majesty’s Government for onward transmission to housing associations to finance the right to buy. No formula is proffered in the impact assessment. Graciously, it states that local authorities will have to consider selling their high-value housing when it becomes vacant but will have “some flexibility” to decide which properties are sold. This generous concession is supposed to dampen the impact of the
effective nationalisation and then privatisation of the housing in question. It does not indicate how much flexibility will be allowed.
The Government do, by way of an amazing act of largesse, say that a portion—unspecified—of receipts will be used to build more homes that reflect housing need. Can the Minister tell us how much flexibility will be allowed and in what circumstances? How and when will the Government determine the size of the portion of receipts to be used for building more homes? Will the Government prescribe the cost of such homes, their location or their tenure? If built as new council homes, will they be subject in turn to the right to buy?
The impact assessment asserts that by managing their stock more efficiently, something with which the Bill does not, as such, purport to deal,
“local authorities will release value tied up in such properties and this can be used to fund more homes which reflect the housing need”.
This bald statement does not deal with the destination of the proceeds, which is the Government, nor does it exclude the possibility of the proceeds being used for purposes other than funding homes. Indeed, since the Government would be using their levy on councils in respect of high-value homes to fund right to buy, it is hard to see how the proceeds could be used in any substantial amount for that purpose.
The summary of benefits and costs in the assessment states that:
“The determination process will provide … certainty for local authorities about the level and flow of receipts to be generated”.
Can the Minister provide the House with an example of how the process will work? Do the Government propose to deal with it in regulations? If so—once again, I have to ask—will we see the draft regulations before Report?
The summary in paragraph 4.2.8 goes on to assert:
“Data will be used to inform the setting of the high value threshold and the assumptions underlying the calculations in the determination”.
What data? Whence derived? When made public? Will there be discussions with individual councils about the threshold and any mechanism for appeal? Paragraph 4.2.10 acknowledges:
“Local authorities are likely to incur some costs associated with the sale of vacant property”—
a statement of the blindly obvious—but councils will no doubt be deeply relieved to note that:
“Consideration will be given to the deductions that should be made from the payment to the Secretary of State to reflect transaction costs associated with the sale of vacant properties”.
Have the Government made any estimates of such costs? Will this process involve secondary legislation to clarify the matter?
Paragraph 4.2.11 declares:
“A portion of the receipts will be used to provide more housing, reflecting housing need”.
What sort of housing? Housing for first-time buyers? Housing for rent? If for rent, what levels of rent? Housing in the authority area or perhaps beyond it? Above all, what sized portion? It further states that,
“the Secretary of State and a local authority may enter into an agreement to reduce the amount the authority has to pay so that new housing can be provided”.
Provided by whom? Does the Minister envisage, for example, an annual agreement based on an estimated number of sales at an estimated price? What would be the minimum number and minimum expected yield to make such an arrangement feasible? In similar vein, how feasible is it to require in London, as the same paragraph does, 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”?
That question has been raised more than once in debates thus far. Does not that wording suggest that councils are expected to make provision on the basis of an expectation rather than an actual sale? That sounds rather like a potential leap in the dark given the obvious uncertainty about numbers, price and timing, both in respect of sales and the proposed new building. How many sales and consequent replacements does the Minister believe would be a workable minimum to secure best value in terms of those replacements?
In five and a half years as a Member of this House, I have seen some poor impact assessments, but I do not recall any as utterly useless as this. I do not blame the Minister for a moment for that—she is probably suffering from the effects of an inadequate impact assessment as much as any of us. There is no assessment of the number of properties liable to be affected, no assessment of the possible amounts to be realised, no assessment of the number, type and costs of replacements and no indication of how the scheme might work in metropolitan areas where the housing market crosses local authority boundaries.
Shelter has done some calculations which the DCLG either has not done, which would be grossly negligent, or has done but apparently has failed to publish, which would be tantamount to concealing important evidence. These show for authorities an estimate of the number of houses that might fall into the high-value category. The Shelter study showed that in Newcastle, which in the words of a council officer will be badly hit, 1,611 council homes fall into the Government’s previously released high-value threshold. This will equate to 82 forced sales a year—in fact, the council believes that the Shelter figures are an underestimate. Moreover, even if a council were to transfer its stock to an external housing provider, it could still be issued with an annual charge based on the Secretary of State’s estimate of what would have been the annual turnover of high-value stock. This is yet another example of the Government giving the lie to their claims to be localist. As the Conservative-led Local Government Association has pointed out:
“Councils already consider the best use for their assets and any new duty to sell stock must be balanced against local housing need. Local authorities should retain all receipts from the sale of … high value homes and from council Right to Buy in order to invest locally in building new homes crucial to reducing waiting lists and welfare spending. The Bill should be amended to give councils maximum freedom to manage their own housing stock and to locally retain”—
the LGA’s split infinitive, not mine—
“capital receipts for reinvestment in new and existing housing, as a minimum retaining sufficient receipt to replace every home sold”.
This has been the gist of two or three speeches from the current chair of the association, the noble Lord, Lord Porter.
The LGA does not support the proposals to levy payments on the estimated value of higher-value properties, asserting rightly that the Government could decide,
“how much it would like to ‘tax’ each council with housing stock”,
and no doubt define what constitutes high value for the relevant area.
However, in addition to all these difficulties about principle, process and finance, there are more fundamental concerns. What steps, if any, will the Government take to avoid high-value homes joining the buy-to-let sector? What consideration have they given to the need for larger accommodation for large families or households with a disabled member requiring extra space, such as is currently the subject of litigation in respect of the bedroom tax? There is a case before the courts involving a third room in which necessary equipment has to be provided for a disabled member of the household. Would a household such as that potentially be subject to the treatment of high-value properties? Generally speaking, the larger the accommodation, the higher the value will be. In Newcastle, we have only 83 council properties with five bedrooms, 28 applicants with a housing need for them and a turnover of around only five a year. Will the charge be levied on those irrespective of the impact on available housing for those larger families, even on the relatively small numbers which we have to deal with? There will also be areas where bungalows will in high demand for similar reasons—very often occupied by elderly or disabled people.
Our amendments in this and subsequent groups deal with a wide range of issues arising from the Government’s simplistic and un-thought-through policies designed, in my submission, as electoral bait. Amendment 63 is aimed at the national position and would require the total payment from councils in any financial year to be limited to the total grant to housing associations for right to buy. That very provision underlines one of the most basic flaws in the whole concept: right to buy of itself creates no new homes. To the extent that the exercise of the right raises money, it will do so at the expense of the provision of council housing with no guarantee of local replacement and, inevitably, the eventual transition of a large percentage of properties to buy to let.
Amendment 64 would give a local authority rather than the Secretary of State the right to define what constitutes “high value”, while Amendment 65 would limit the number of high-value properties subject to the provisions of the Bill to 10% of the total local authority stock in a given area, thereby effectively capping the impact of the scheme in localities.
Importantly, Amendment 66 defines “high value”—something which the Government have failed to get round to doing—by excluding properties for which the cost of building a replacement with the same number of bedrooms in the same local authority area is greater than their value. Finally in this group is Clause 67 stand part.
This concept—borne of, at best, ill-conceived populism and, at worst, electoral opportunism—is about buying votes, not about building houses. It is shoddy, ill thought-out and ill-drafted legislation. We are asked by the Government to approve it in the absence of evidence of how it would work and what its impact would be. I urge the Minister to acknowledge its deficiencies and take it back to the ministerial drawing board or to whatever oxymoron of a right-wing think tank thought it up. This is a time not for Policy Exchange but for a change of policy. I beg to move.
3.30 pm