Filling in the blanks in the Housing Bill

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

Key elements of the Housing and Planning Bill have faced serious scrutiny in the last couple of days but we’re still not much nearer to knowing how or if they will work.

The frustration of MPs and peers is palpable as they repeatedly ask for more detail and are just as repeatedly told that it will be available shortly. It was all too much even for a Conservative MP on the Public Accounts Committee (PAC) on Wednesday afternoon. ‘You’re treating the parliamentarians around this table with contempt,’ Stephen Phillips told two senior Department for Communities and Local Government (DCLG) civil servants. ‘You’re asking us to take this on faith. Why not do the work first and then bring the legislation forward?’

The answer is of course that it’s much easier for ministers if it works the other way around. Under current plans, the crucial detail will appear in secondary legislation only after the bill has Royal Assent.

The PAC was investigating the value-for-money aspects of the extension of the Right to Buy to housing associations and the levy on forced sales of council houses that is meant to fund it. But members didn’t get far asking for detail. ‘The timings have yet to be determined,’ ran one senior civil servant answer. ‘The amounts have yet to be determined. The formulae have yet to be determined.’

The National Audit Office (NAO) is not impressed either. Here’s its assessment of the government’s impact assessment of the bill:

That comes from an NAO report for the committee on the extension of the Right to Buy. Given the lack of detail on offer, it looks at the DCLG’s performance on other housing policies (or non-performance: selling public land without bothering to count how many homes are built on it is a highlight) and in particular at the reinvigorated Right to Buy.

The promise of one-for-one replacement is the crucial point here. Meet it and the government can claim the pledge will also stack up under the extended Right to Buy; fail and the whole policy falls apart.

Many critics long ago decided that the stats showing one replacement started for every 10 sold since 2012 are proof of failure. However, the DCLG argues that it is meeting the specific pledge to replace each additional home sold within three years. There were 3,054 additional sales in 2012/13 and 3,387 starts and acquisitions in 2012/13, 2013/14 and 2014/15, so everything is on track.

The NAO report takes all that into account and notes that the DCLG has not yet reported its performance on replacing the much higher number of homes sold in 2013/14 and 2014/15. It concludes that achieving one-for-one replacement over time will require starts to quintuple:

‘To achieve the necessary level of replacements by the end of 2017/18 will require quarterly starts and acquisitions to reach approximately 2,130 in 2017/18. This would be a five-fold increase on the 423 starts and acquisitions recorded in the second quarter of 2015/16, the most recent quarter for which figures are available.’

In response, DCLG director of housing Peter Schofield said the figures did not include starts financed by money returned to the Homes and Communities Agency and Greater London Authority by councils that have been unable to build replacements. He also revealed that there have been 1,104 completions of Right to Buy replacements so far.

However, it still sounds a challenging target. And, as I’ve blogged before, there are other issues with the data on starts too: even after a glitch was fixed, they could still include homes funded from other sources; and the figures for the first two quarters of 2015/16 show that starts were down against the same period in the previous year. That hardly suggests that they are going to quintuple any time soon.

The PAC also heard from a trio of housing witnesses. David Orr pointed out that under the voluntary deal housing association tenants will get a right to a discount rather than the Right to Buy. Terrie Alafat quoted Chartered Institute of Housing estimates that 300,000 social rented homes will be lost by 2020. And Lord Kerslake highlighted the ‘double whammy’ faced by high-value neighbourhoods that could lose both housing association and council stock.

Both Lord Kerslake and the NAO report also featured in the House of Lords on Tuesday night. The peer highlighted the verdict on Right to Buy replacements in support of his amendment to the bill that would give housing association tenants an equity loan rather than a discount. Effectively this would work like Help to Buy rather than Right to Buy but the key point is that it would break the link between housing association discounts and forced council sales:

‘Given a choice, everybody, including perhaps the minister, would want to decouple these two policies that have been put together: the extension and the high-value sales. My amendment would enable that to happen without a huge additional burden on the government deficit.’

Communities minister Baroness Williams rejected that on the basis that it would not meet the government’s manifesto commitment. As other peers pointed out, the current bill does not do that either but she argued that:

‘An equity loan, by its nature, is not a discount and has to be repaid by the tenant. This is a very different offer – more akin to the Help to Buy scheme than to an extension of the Right to Buy scheme. This will inevitably make homeownership less attractive to the very tenants we are trying to reach: those on lower wages who are being priced out of homeownership because of high house prices.’

The minister also gave the most explicit confirmation that I’ve yet seen that the ‘one-for-one’ promise (and ‘two-for-one’ in London) will work very differently under the new policy. Under the reinvigorated Right to Buy, homes for social rent are meant to be replaced by homes for affordable rent, in theory at least they are in the same local authority area.

Under the extended Right to Buy, replacements merely have to be ‘affordable’ (under its new extended meaning) and there is no expectation they will be in the same area. As Baroness Williams put it:

‘Obviously, tonight we are talking about one-for-one replacement but there are all sorts of tenures of housing – for rent, for purchase, for low-cost rent – and housing associations will take all those issues into account when determining what types of houses to build.’

The details may not be available but that statement makes the final destination pretty clear to me. The Lords continues its committee stage scrutiny of the bill on Thursday with momentum building behind a whole series of amendments on the Right to Buy and high-value sales. Starter Homes (the ‘cuckoo in the nest’, according to Lord Best) have also faced relentless criticism from all sides.

The government still hopes it can get away with filling in the blanks after the bill has been given Royal Assent. Given its huge majority under English Votes for English Laws the chances of a Sunday trading-style defeat in the Commons seem remote.

However, the pressure is not confined to the Lords. The frustration of MPs at Wednesday’s PAC hearing follows last month’s report by the Communities and Local Government Committee recommending that the government should pay for discounts itself rather than through high-value sales.

And concessions in Wednesday’s short government response on Pay to Stay indicate that the pressure may yet work. Tenants on housing benefit will be exempt from the move to market rents and tapers will be set so that those with incomes just above the thresholds ‘will see their rent rise by only a few pounds each week’.

However, that immediately begs more questions. Does that just mean tenants currently on housing benefit or does it also include those who would be because they are on a market rent? Does a rent rise of a few pounds a week justify the costs of implementing annual income checks on tenants? That’s off the top of my head and there will be more.

The answers will only emerge when the detail is published. Needless to say, it will be available ‘in due course’.