Conservative backbenchers are listening but are ministers?

Originally written as a column for Inside Housing on July 27.

Today’s report from the all-party Housing, Communities and Local Government (HCLG) Committee feels like the political fruit machine has finally come up with three social rented homes in a row.

That a committee with a Conservative majority should come out in full support of 90,000 social rented homes a year is significant enough in itself. That it should give its full backing to the case that such a programme will pay itself back in full to the Exchequer over the long term should feel like a vindication for those who conducted the sometimes lonely campaign for social housing.

That it should do so now, and argue that a social housebuilding programme should be ‘top of the government’s agenda to rebuild the country from the impact of COVID-19’, makes it feel like an idea whose time really has come round again.

All this within the context of it being ‘crucial’ to achieving the government’s overall target of 300,000 new homes a year, a level that has never been achieved without a significant contribution from social housing.

Under the chairmanship of Labour MP Clive Betts, the HCLG Committee has been a positive cross-party force on housing for some time: only last month it called for the government to fully fund fire safety work; and in its previous guise it helped to drive through the Homelessness Reduction Act piloted by Conservative committee member Bob Blackman.

But if you follow the logic of its latest report it not only accepts the ‘compelling evidence’ for a major social housebuilding programme but also endorses a whole series of other reforms to enable it.

For starters, the programme is explicitly for social rent with none of the ‘affordable’ blurring that it chides ministers for continuing to employ.

Next it’s not just more homes but 90,000 ‘net additional social rent homes a year’ to make it consistent with the government’s main target for housebuilding and take account of losses from demolitions and the right to buy.

The committee estimates that the programme will require a £10 billion a year increase in current grant funding but that this could be reduced by two key land reforms.

First, the government should accept the case for land value capture and repeal the 1961 Land Compensation Act. By enabling local authorities and development corporation to compulsorily purchase land at a fairer price, as was done for the post-war new towns, this could reduce the cost of the programme by up to 40 per cent.

Second, the government should scrap its programme of selling off public land to the highest bidder and prioritise it for social housing instead:

‘While we understand the constraints around managing public money, it is nonetheless short-sighted to sell public land to the highest bidder when social housing providers struggle with the cost of land. The programme has not addressed the housing shortage nor the social housing shortage. ‘

Homes England should take a central role in co-ordinating public land as well as purchasing private land suitable for social housing, which would easier and more affordable after that change in the law.

As things stand, the Right to Buy will be a major barrier to achieving that target of ‘net additional’ homes for social rent.

The committee stops short of recommending abolition or major reform, pointing out that the government was elected on a manifesto of maintaining the Right to Buy, but argues instead for changes to mitigate its impact on supply.

That means local authorities should receive 100 per cent of receipts, have an extended period of five years to spend them and be obliged replace social rent homes sold off on a like-for-like basis.

‘Without these changes, Right to Buy will make achieving the development of the desired 90,000 properties per annum unachievable,’ says the committee

The MPs also want to limit the number of ex-Right to Buy homes ending up in hands of private landlords, arguing that: ‘The combination of generous discount repayment rules and no restrictions on the use of the property following its sale has created an inadvertent perversion of Right to Buy’s true goal: to increase access to homeownership.’

They recommend primary legislation to implement a covenant against letting privately for five years after a Right to Buy sale.

And they say the government’s plan to make Shared Ownership Right to Buy a condition of future affordable housing grant funding should wait until these reforms are implemented.

However, that in itself is a reminder if any were needed that convincing a backbench committee of MPs of your case, even when a majority of them are Conservatives, is a very different thing from convincing a majority Conservative government.

Especially one whose stated priorities – Shared Ownership Right to Buy and First Homes – both undermine funding streams for social rent and point towards very different priorities.

As the committee points out, COVID-19 strengthens the arguments for a counter-cyclical social rent programme rather than pro-cyclical homes for sale and an exhausted model of cross-subsidy.

So far, so very good, but the sight of those homes coming up in a row at the top of the fruit machine does not mean that the coins are about to cascade out at the bottom.

The detailed work on the spending review is still being conducted but chancellor Rishi Sunak showed where his priorities lie in the Summer Statement.

The stamp duty holiday will cost a cool £3.8 billion in England, almost half of what would be required for the first year of additional grant for social housing.

This move was justified economically by the need to get the housing market moving (or stop it seizing up) to boost the wider economy and politically by the message it sends about home ownership and aspiration.

If the real beneficiaries turn out to be well-heeled existing home owners, landlords and buyers of second homes, rather than homeless people and families in temporary accommodation or on the waiting list in expensive and insecure private lets, then apparently so be it.

The government may yet surprise us when it eventually publishes the social housing white paper. For the moment, though, the signs are that the government sees planning deregulation, rather than more social housing, as the way to boost housebuilding.