In the bag

Originally posted on June 7 on Inside Edge 2, my blog for Inside Housing

With the Housing and Planning Act safely in the bag, ministers must be feeling pretty pleased with themselves – and it shows.

Complaints about controversial parts of the act were swatted away again and again at Communities and Local Government (CLG) questions on Monday with a mix of barely concealed contempt and dodgy statistics. But there were also some reminders of issues that may prove more intractable than the legislation assumes and of one big problem that is about to come to a head.

First up were Starter Homes. Tory MP Richard Graham asked what happens on brownfield sites in his Gloucester constituency where Starter Homes are not viable? ‘In such circumstances, the local housing association may still be keen to build, but to rent,’ he said.

He was of course reviving the issue about local discretion raised consistently in Lords debates on the act but rejected by the government. Communities secretary Greg Clark gave him an unconnected reassurance that ‘our funding provides housing for rent as well as to purchase’, but insisted that: ‘I hope in his city of Gloucester, there will be Starter Homes on those brownfield sites.’

But if Starter Homes do get built who will be able to buy them? Ealing Central and Acton MP Rupa Huq asked:

‘How can these homes be called Starter Homes when someone would have to be on £90,000-plus to have a shot at even a one-bedroom version in my constituency? They are not starter anything; they are ending the hopes of a generation for whom affordable housing to buy and social housing to rent have all but vanished.’

Clark replied:

‘I do not agree with the Honourable Lady. She will know that the average price that a first-time buyer pays outside London is £181,000 which, with the discount of 20%, is £149,000, and under the very successful Help to Buy scheme, that would require a deposit of £7,500. That is making homeownership possible for the rising generation of young people.’

Now last time I looked, Ealing was definitely inside London, something Clark seems to have missed somehow. But this wasn’t a slip of the tongue. Slightly later, another London Labour MP Ruth Cadbury (Brentford & Isleworth) asked Brandon Lewis how even middle-income earners could afford a Starter Home ‘given that it is estimated that, in London, one needs a household income of £97,000 and a deposit of £20,000 to afford an average Starter Home?’.

The housing minister referred her back to Clark’s comments:

‘In this country, first-time buyers pay £181,000 on average for a new home so with a 20% discount and a 5% deposit, her figures do not quite add up.’

Lewis did not bother even to add the caveat ‘outside London’. In fact, the average first-time buyer price for the UK as a whole is £220,000 and it’s up 9.7% (half of the 20% discount) in the last year.

This wasn’t the end of the ministerial slips of the tongue. Asked by Labour’s Roberta Blackman-Woods how many genuinely affordable homes will ‘not’ be built because of Starter Homes, Clark replied:

‘We are building more homes than have been supported by governments since the 1970s – 400,000 Starter Homes. The Honourable Lady should be delighted to know that £8bn of funding has gone in to providing them.’

Allowing for the hyperbole, he meant ‘affordable’ homes of course, not the 200,000 Starter Homes the government is planning – but then thanks to the changed definition of ‘affordable’ in the Housing and Planning Act they are now the same thing.

The exchanges went on in a similar vein. Concerns about Pay to Stay were swatted away, Lewis insisted that there are one-for-one Right to Buy replacements and there were the usual clashes over the comparisons between the Labour and Tory records on housebuilding. On the EU referendum, it was noticeable that Lewis and Clark (both Remain as far as I’m aware) refused invitations to blame immigration and Europe for housing shortages and fingered Labour’s record instead.

But if most of the exchanges betrayed a certain arrogance of power, their legislation safely in the bag, there is one issue they will not be able to avoid for much longer.

Asked about the rent cut and the ‘Local Housing Allowance cap’ on supported housing, Lewis said:

‘The government has always been clear that the most vulnerable will be protected and supported through our welfare reforms. Following our review of supported housing, which is due to report shortly, we will continue to work with the sector to ensure that appropriate protections are in place.’

Why then, asked Labour MP David Hanson (Delyn), did St Mungo’s, Centrepoint, the Salvation Army and the National Housing Federation all think that the government’s proposals will hit supported housing hard and reduce the number of places available?

Lewis replied:

‘I gently say to the Right Honourable Gentleman that Howard Sinclair, the chief executive of St Mungo’s Broadway, has said: ‘This is a sensible and reasoned decision by the government.’ The chief executive of YMCA England has said that the government ‘has taken appropriate action to protect supported housing.’ We have decided to delay things for a year while we work with the sector to make sure we have a good and well-protected sector in future.’

These are highly selective quotations from St Mungo’s and YMCA press releases welcoming the government’s decision to delay by a year the 1% rent reduction on supported housing. Both went on to express wider concerns about the future, particularly about the cap. When I heard Howard Sinclair speak at a conference shortly after that, he warned that the cap could decimate supported housing and that the Department for Work and Pensions, DCLG and Treasury were all saying different things about it.

But Lewis certainly seemed in less dismissive mode as he answered more questions on the cap. These included one from the SNP’s Alison Thewliss about a potentially ‘devastating impact on the future provision of specialist refuge provision in Scotland’ once the year’s delay is over.

The fact that it affects Scotland too makes the government vulnerable to even a small Tory backbench rebellion on the cap in a way that it wasn’t in the Housing and Planning Act, on which it had a huge majority under English Votes for English Laws.

In this context, a question from Conservative MP David Burrowes (Enfield, Southgate) was significant:

‘I welcome the government’s review of supported housing and their commitment to preventing homelessness, both financially in the Autumn Statement and Budget, and in a likely statutory duty to prevent homelessness. Does that progress not fly in the face of putting a Local Housing Allowance cap on supported housing, which in effect would pull the rug from under very vulnerable tenants who the government are supporting at the moment?’

Lewis responded that the government was putting £400m into delivering 8,000 new specialist affordable homes but must be aware that providers will not build them if they know housing benefit will not cover the rents. And the rest of his reply was carefully phrased:

‘The delay of a year is to work with the sector, and the review that we have commissioned jointly with the Department for Work and Pensions will be published shortly. We have made it clear from the beginning that we will ensure that the most vulnerable people are protected and supported through all the reforms.’

Ministers can metaphorically thumb their noses at critics of Starter Homes and the rest of their plans in the Housing and Planning Act, at least until they begin to unravel.

When it comes to the way housing interacts with housing benefit and Universal Credit, things get much more difficult. Will they find this is a cap too far?