Checking the bill

Originally posted on February 10 on Inside Edge 2, my blog for Inside Housing 

Start with a fundamental change to the funding mechanism for the right to buy, stir in more changes to key elements of the Housing and Planning Bill, then add criticism of the lack of detail and you have a recipe that shoud give ministers indigestion.

The report of the all-party Communities and Local Government Committee does support both the extension of the right to buy to housing association tenants and the voluntary deal between the government and the NHF is ‘the best way forward’.

But that’s as good as it gets for ministers from a committee that has a Labour chair but a Tory majority. Here is the headline recommendation:

‘The Government proposes to fund the right to buy discounts for housing association tenants with the proceeds from the sale of high value council homes. However we believe that public policy should usually be funded by central Government, rather than through a levy on local authorities.’

This would undermine one of the central elements of the Bill and the government’s method of paying for right to buy discounts and the promised replacement homes. And the MPs are not finished.

They also call for all the provisions of the right to buy deal to be spelt out, adding that ‘it remains uncertain…how the voluntary agreement will be enforced for the 261 associations which did not vote in favour of it’. They call for:

  • The government to reaffirm clearly the principle of full reimbursement for right  to buy discounts ‘in the Bill or elsewhere, to safeguard against any future policy changes’. (They don’t say this, but otherwise what’s to stop a future government reducing the grant rate below 100%?)
  • Explicit exemptions for rural area and homes built with charitable funds or with restrictive covenants to avoid confusion or possible legal challenges.
  • Exploration of measures to stop right to buy homes ending up in the private rented sector and increasing the housing benefit bill, including first refusal on resales and restrictive covenants requiring a minimum period of owner-occupation.
  • The government to be clear on how it will be phased in and what the eligibility criteria will be.
  • Greater clarity on the role of the regulator in monitoring the replacement of homes and the appeal process for tenants denied the right to buy.

On the levy on assumed ‘high-value’ council house sales, the MPs say the mechanics ‘currently contain too many unknown and unclear definitions’. Failing direct funding by government, they say the definitions of ‘high value’ must take account of local circumstances.

They attack the plan to make councils pay up before they’ve received the proceeds from any sales because it will leave them ‘exposed to the risk of properties not becoming vacant at the expected rate and of sales income being lower than anticipated’. And they note the CIH’s warning that proceeds will be much lower than the government says, leaving little left after paying for right to buy discounts to pay for replacement council homes and brownfield regeneration.

The MPs also call for steps to ensure that replacement homes ‘meet the needs of local communities and have a tenure mix that reflects local circumstances’. Noting Joseph Rowntree Foundation research showing that just 3% of new social housing tenants can afford shared ownership, and even fewer starter homes, they say ‘the tenure and rent levels of the replacement stock is of fundamental importance’.

Turning to wider elements of the Bill, the MPs say starter homes should not be built at the expense of other forms of tenure under section 106 agreements and that the definition of ‘affordable’ should ‘better reflect individual and local circumstances’. They also raise concerns about the 1% rent cut, the pay to stay income thresholds and fixed-term tenancies and the social mission of housing associations in a more commercial future.

The big question is how much difference the report will make to the final Bill. None of these recommendations will come as any surprise to anyone who has thought about the detail of the Bill for more than five minutes. I’ve blogged extensively before about the missing elements and even a committee of MPs with the power to call witnesses and order civil servants to produce evidence has not been able to fill in the blanks.

In some cases, the plans are even less clear than when we began. The report points out that the only detail that has ever been published on the thresholds that will apply to ‘high-value’ council stock came in a Conservative party briefing to the press during the election campaign. The information has since been removed from the Tory website and the committee had to rely on a report in Inside Housing instead.

However, the lack of detail is the whole point. The Bill is not just written on the back of a fag packet but deliberately left full of blank spaces to be filled in later once it gives the secretary of state the power to do as he/she chooses. The less detail, the harder it is to amend.

The timing of the report could not be better for peers seeking to amend key aspects as the committee stage begins in the House of Lords. The recommendations chime with many of the points made in the second reading debate two weeks ago and a Commons committee with a Tory majority is also making many of the same points as the Tory-controlled Local Government Association. This will strengthen the hand of opponents and there will be inevitable defeats for the government in the next few weeks, some of which will stick and make a difference.

However, any changes would then go back to the Commons, where the government not only has a majority but can also claim financial privilege to overturn amendments. That would presumably apply to any change to the central element of funding the right to buy through a levy on forced sales of council houses – which would leave the attack on council housing intact.

And I can’t help thinking of another Commons committee report in this context. In March 2014 the Work and Pensions Committee called for significant new exemptions to the bedroom tax and benefit cap. By convention the government is meant to respond to committee reports within two months. A year later there was still no response and there are still no new exemptions.

If the DCLG follows the example of the DWP, it could simply ignore this report until the Bill is already an Act. The dismissive DCLG response about the ‘billions locked up’ in council homes and it being ‘only right’ to sell them as they become vacant suggests as much. As the rickety sums behind the whole thing inevitably start to unravel, the committee will be able to say ‘we told you so’ but little more than that.

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