The Housing Bill: Higher power

Originally published on April 14 on Inside Edge 2, my blog for Inside Housing

Day two of the Lords report stage on the Housing Bill brought concessions on forced sales but there were inevitably more questions too.

Peers reached Part 4 of the Bill covering social housing in England and the main business of the day was the first two chapters: implementation of the voluntary right to buy and the levy on sales of high value council houses to pay for it.

This has always been one of the elements of the legislation that most resembled the back of a fag packet. The only figures ever published on how forced sales would work came in a Conservative party press release during the election campaign. This suggested that the most valuable third of council homes would be sold as they fall vacant, with values assessed against regional thresholds by bedroom size.

That raised many problems but two that stood out in particular. First, setting the values like that would mean local authorities in areas with high house prices would lose virtually all of their stock.

Second, it didn’t stack up: receipts would simply not be enough to cover right to buy discounts, the promised replacement homes and a proposed brownfield regeneration fund. That was clear right at the start and the CIH estimated the shortfall at £2.2bn.

We got an answer on the first of those problems in the Lords on Monday. News that the government wants to replace ‘high value’ with ‘higher value’ throughout this part of the Bill raised fears that this would extend forced sales even further. However, Baroness Williams said she could ‘confirm absolutely’ that it will not be used to raise more money. She explained:

‘We recognise that in areas of highest housing pressure, such as the inner London boroughs, the provisions could apply to a high number of dwellings. If we choose to look at high value for each region, the same issue would apply to those areas within a region which experience a high level of housing demand in comparison with their neighbours. For example, places such as Harrogate, Oxford and Cambridge could all have a high proportion of their stock defined as high value. We have therefore brought forward a significant amendment to redefine “high value” as “higher value”—a small linguistic change but one with profound legislative impact.’

This was spelled out in more detail in a letter from the minister to peers released just before the debate that hinted at further concessions to come.

On the second problem, peers have been concerned all along that they were being asked to vote on something with none of the detail spelled out. That brought a defeat for the government on an amendment making the definition of ‘higher value’ subject to parliamentary approval.

Defeats might have followed on two further amendments as well but for the concessions. Lord Kerslake’s crucial Amendment 64A had two aims. As he put it:

‘First, it is to put one-for-one replacements in the Bill so this issue is beyond doubt. Given that this was quite clearly in the manifesto, it seemed right and proper that it should be in the Bill. The second part of the amendment was to give the opportunity for a local authority, where it could demonstrate the need, to put the case to government and seek their agreement for a like-for-like policy—that is, the replacement of a social rented property with a social rented property.’

The amendment was withdrawn after the minister said she would bring forward changes at Third Reading. On one-for-one, she said:

‘I agree with Lord Kerslake, that when government makes agreements with local authorities outside London about building new homes, we should ensure that at least one new affordable home is provided for each old dwelling that is sold. That has always been our intention, but today I am very happy to work to make that intention clear in the Bill.’

And on like-for-like:

‘I am very happy to work with Lord Kerslake, to give local authorities with particular housing needs in their areas the opportunity to reach bespoke agreements with the Government about the delivery of different types of new homes in their areas.’

The government made a similar concession to a later amendment moved by Lord Cameron of Dillington to exempt rural council housing from forced sales. Baroness Williams made a commitment to exclude local authority housing in national parks and areas of outstanding natural beauty and to consider further exclusions. However, Lord Cameron said that before he could agree to any government amendment at Third Reading ‘it should include villages with a population under 3,000, where the local authority can prove to the Secretary of State that it is impossible to find any alternative site to build a replacement’.

The defeat and the concessions won’t be enough to satisfy critics who argue that the Bill will turbocharge the slow death of social housing. They won’t entirely allay fears that the government amendments at Third Reading could be watered down versions of the ones withdrawn on Monday. And there are also still broader concerns about councils having to pay the levy before they’ve sold the homes and about the impact on the development of new homes.

However, add them together and you have some significant steps towards what Lord Best described as ‘damage limitation’ and the prospect that the detail to come will be scrutinised and voted on by parliament rather than left up to ministers. It also goes some way to addressing the first of my two problems: the impact in expensive areas.

But it also raises further points about the second problem. The more that council homes in expensive urban and rural areas are protected from forced sales, the less money will be raised and the less the overall scheme adds up.

Logically, that shortfall could be met in one of three ways: more forced sales elsewhere to spread the burden; rationing housing association right to buy sales even more than they are already going to be; or direct funding from central government. The scheme didn’t stack up before – and it still doesn’t.

The Lords Report stage continues on Monday and Wednesday next week.