Housing and Regeneration Bill

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New Clause 8

Right to buy for tenants of registered providers of social housing
‘(1) A tenant of a registered provider of social housing has the right to buy the dwelling of which he is a tenant if—
(a) he is a tenant under an assured tenancy, other than an assured shorthold tenancy or a long tenancy, and
(b) he satisfies any further qualifying conditions applicable under Part V of the Housing Act 1985.
(2) The Secretary of State shall, within six months of the commencement of this Act, introduce regulations in respect of the right to buy for registered providers of social housing.
(3) Regulations introduced under subsection (2) shall include provision to ensure that the proceeds of disposal are allocated to the provision of further social housing.
(4) Before making such regulations the Secretary of State shall consult with such bodies as appear to the Secretary of State to be representative of registered providers of social housing.’.—[Grant Shapps.]
Brought up, and read the First time.
Grant Shapps: I beg to move, That the clause be read a Second time.
The Chairman: With this it will be convenient to discuss new clause 22—Right to buy: power for local authorities to vary discount levels
‘(1) For section 129 of the Housing Act 1985 there shall be substituted:
“129 Discount
(1) Subject to the following provisions of this Part, a landlord authority may determine that a person exercising the right to buy shall be entitled to a discount in the purchase price of such amount as the authority may prescribe.
(2) For the purposes of subsection (1), a landlord authority shall by resolution prescribe the amounts of any such discount.
(3) Any discount so prescribed by the authority shall be calculated or set by reference to the period which is to be taken into account in accordance with Schedule 4 (qualifying period for right to buy and discount).
(4) A resolution in accordance with subsection (2) may make different provision with respect to different cases or descriptions of properties.
(5) The Secretary of State may by order provide that, in such cases as may be specified in the order, the maximum discount which may be permitted by a landlord authority under subsection (2).
(6) An order under subsection (4) may make different provision with respect to different authorities or regions, or with respect to different cases or descriptions of properties.
(7) If a landlord authority decides not to exercise its power under subsection (1), nothing in this section shall require it to do so.’.
Grant Shapps: The new clauses are intended to ensure that right to buy is not compromised by the legislation. A tenant of a registered provider of social housing should have the right to buy the dwelling in which he is living.
I am sorry, I need a moment to—
Sir George Young (North-West Hampshire) (Con): As I understand it, the new clause would extend the right to buy to tenants of registered providers of social housing. As my hon. Friend knows, at the moment local authority tenants have the right to buy with all the associated discounts, and there is a preserved right to buy when the housing stock is transferred under large-scale voluntary transfer, but new tenants do not at the moment have that entitlement.
I believe what my hon. Friend was seeking to do when he tabled new clause 8 was to develop the argument that within the social housing sector there is an element of inequality, in that some have the right to buy and others do not. I was looking forward to hearing him develop the argument that the existing right should be extended to tenants of social housing.
Grant Shapps: When I say I am most grateful to my right hon. Friend for intervening, I cannot exaggerate the extent. I think he is entirely right, now that I have found my notes on new clauses 8 and 22.
The right to buy has been one of the most significant elements in the last 50 years in extending social mobility to vast sections of the population. It is a policy that, while controversial, has delivered in a way that almost nothing else, no other sort of social engineering, has been able to do, in mixing communities as it has.
One thing that unites Government and Opposition Members on housing—other than the fact that we all want to end the housing crisis by building more homes—is the idea that communities would perform better, that society would work better, if communities were mixed. Rather than having single-tenure or single types of community there could be a cross-section of society living within the same or similar space. The right to buy has perhaps more than anything else enabled that, creating a situation that is now widespread throughout the country, though, as we are about to discuss, not quite as widespread as it should be.
Mr. Andy Slaughter (Ealing, Acton and Shepherd's Bush) (Lab): If we are all indeed in favour of building more homes—and I think the hon. Gentleman should look round at his colleagues on the Back Benches next time he is in the Chamber to see if they are all nodding in approval—how can that be achieved by disposing of existing social housing without seeing like-for-like replacement?
Grant Shapps: That is an interesting intervention, because it leads on to the next point. The right to buy was tremendously successful in mixing communities but—and I think this is the point the hon. Gentleman is driving at—it did not do enough at the time to create sufficient new social housing, though the record was better than it has been recently. The reasons included a concern that local authorities would not spend the money in the best possible way, so the money was best ring-fenced and left alone.
When this Government came to power they chose not to allow the money from right to buy to be spent on developing new properties. Instead they allowed the money to be used to improve the standards of existing homes. That is welcome, but the problem with that policy is that standards have only improved by about 15 per cent. We have some research coming out soon that will back this point. It has not improved standards as much as it might have done but, worse still—
Mr. Wright: I am following the hon. Gentleman’s argument extremely closely. On the subjects of money and research, will he inform the Committee whether his party has carried out any costings on the financial effects of the new clause?
Grant Shapps: One of the interesting things about getting this right is that allowing people to purchase the properties in which they live and then taking that money to build more housing creates a virtuous circle. The problem that one could characterise easily with the original right to buy was that the money was ring-fenced, for good reasons, because of concerns over the councils at the time. When the Government came in, the money was spent, but it was spent on refurbishment and better home standards. The new clause proposes that money can be spent in ways that would include improving and enlarging the housing stock. As we discussed earlier in the day, that has not happened sufficiently in the past few years.
5 pm
Mr. Love: Does the hon. Gentleman accept that with the significant discounts available under the right to buy using money raised through that process will never replace, on a one-to-one basis, the accommodation that is lost? How does he intend to replace those properties lost under the right to buy through this new clause?
Grant Shapps: The hon. Gentleman should understand that the homes are still there. When a home is sold at or discounted from market rate, quite often, the money is available to not just replace on a one-to-one basis but on a two-to-one basis. I have been looking at a case recently where a housing association has been able to sell one of its properties and with the proceeds they built six residential properties in a housing association setting, thereby, expanding the supply of affordable housing. It is a virtuous circle. It will not always be six, but it was with this particular property. It is a virtuous circle if it means that by moving people into different types of tenancy, by moving them up and along the property ladder and by creating more housing we can help to resolve the housing crisis. It is the Government’s failure to recognise those basic facts that has led to less social housing being built for the past 10 years than for the previous 18.
Alistair Burt: Is it not the case, as he is finding out in Committee and as we have seen in the House, that the hostility to the right to buy from many Members opposite is of serious concern to the Front Bench? Given a free vote on the other side, I wonder how many Members opposite would vote to extinguish the right to buy altogether? That is what they really want to do.
Grant Shapps: We can perhaps put it to the test. My hon. Friend has a strong point, which is that there is almost a psychological dislike of the approach. If that is not the case, I will give way the hon. Lady, who was trying to intervene first, to tell us why.
Margaret Moran: I have just brought to my hon. Friend’s attention that it was this Government who introduced the right to acquire; an issue that he appears to have missed in his debate so far. He also appears to be confusing disposal by RSLs to create more housing with disposal to individuals. Given that the right to buy resulted in the loss of about one third of council housing stock, is on the other side of the coin and arguing that there needs to be an increase of about a third or more—from his arguments—of new building?
Grant Shapps: I respect the hon. Lady’s input as a previous chief executive of a housing association, but I am slightly mystified by the maths. Those houses have not disappeared. They are still there. They have people living in them. The point of expanding our housing stock is to keep the existing houses and to create more.
Andrew George: I am as intrigued as many other Members are. The hon. Gentleman refers to a “virtuous circle”, I wonder whether he should rephrase it as a “magic circle” in which rabbits are pulled out of hats and properties, which are sold at below market value, are replaced by properties that have to be built within the market. Can he illustrate his example, with calculations, of being able to sell properties at a discount and to replace them while meeting all the building and land costs?
Grant Shapps: One thing that I thought we were all agreed on is that it is desirable to prevent housing stock from seizing up, in other words, to enable people to move on and up. Right to buy is one brilliant way of achieving that goal.
The problem with housing is that, while it costs money to build a house, the real cost is of the land itself, which is one of the reasons why umpteen people have come forward to back the idea of a £60,000 home as launched by the former Deputy Prime Minister, but of course finding the land to put that home on is an entirely different matter. That is why community land trusts, for example, should play such a vital role. I am pleased with what is in the Bill about those trusts, but we can go much further. We should make it the norm rather than the exception, so that the cost of the land is stripped out of the equation as soon as it is used for housing, and the property-only part of it is transferred from one tenant to another, or even sold by one person to another.
Mr. Raynsford: Will the hon. Gentleman give way?
Grant Shapps: I just want to ensure that I answer this point in full.
I cannot provide here and now the sums and maths behind the example that I was citing, but I will provide the Committee and the Minister, if they are interested, with the Circle Anglia example, where one property was sold and six were built. If he still then thinks that there is an argument against my proposal, I will be interested to hear it.
Mr. Raynsford: The hon. Gentleman has praised community land trusts. Does he recognise that the right to buy does not apply to them, precisely because it would otherwise deplete the benefit to the community?
Grant Shapps: The right hon. Gentleman will know that, as a result of this legislation and the Committee’s refusal to accept a new clause that we tabled, there is no legal definition of a community land trust, so he has no basis on which to say that they do not do certain things. Some of the trusts—I can show him examples—are considering doing some incredibly innovative things, including allowing shares in the properties to be sold, which in effect—[Hon. Members: “Shares.”] Well, we can have a debate about whether 100 per cent. of the shares means ownership, and I readily concede that it does not include the land itself, which is the key, and answers the intervention from the hon. Member for St. Ives, but it none the less ensures mixed tenure, which is the crucial point.
Going back to the last intervention by my hon. Friend the Member for North-East Bedfordshire, the scale of the dislike on the Government Benches for anything that mentions the words “right to buy” is evident. I can only conclude that that is why there are so many hands in the air right now.
Mr. Slaughter: This is voodoo economics, and the sacrifices tend to be people in housing need. The antipathy on this side is not to the right to buy but to reducing the stock of social housing. The new clause exposes not our problem with the right to buy but the Conservatives’ problem with social housing. It is just another cheap trick to reduce the stock, which is exactly what happened in the Thatcher years, and exactly what my Conservative council is doing now.
Grant Shapps: I could not disagree more. What really betrays those in the greatest housing need is housing waiting lists, which are so much longer than they were 10 years ago, and the failure to build as much social housing as was built when my right hon. Friend the Member for North-West Hampshire was in the Minister's role and during the 18 years before this Government. That is what betrays people on the lowest rung of the ladder who are struggling, without a house, to get housed—the homeless people with whom I have been working in recent months. The idea that building more homes betrays people is simply poppycock, and it is unbelievable to hear it being pressed in this Committee.
The new clauses are designed to ensure that the right to buy is extended in a way that enables more housing, including affordable housing, to be built. I would have thought that that would be roundly welcomed by the Committee.
Mr. Love: I remind the hon. Gentleman that when the issue last came before Parliament—he may not remember it, but I am sure that the right hon. Member for North-West Hampshire will—it was defeated by his own party in the House of Lords. Perhaps he could discuss things further with his colleagues in another place before deciding to press the amendment to a vote.
Grant Shapps: We are going round in circles, on a debate that started at some point in the ’80s and is continuing today. I simply asked the Minister to look at the facts. As I have said many times—during the debate on new clause 8 and previously in Committee—the failure to build social housing is the reason why the people who need social housing do not have it. They can spin this any way that they like, but if they do not build more social houses and do not use the receipts from right to buy to help that happen, they will be forever stuck in the quagmire of failing to build sufficient social housing but wringing their hands and talking about their desire to do so. New clause 8 provides a practical application, a real way to make it happen. I would have thought that that was something the whole Committee ought to be welcoming.
Andrew George: New clause 22 has been tabled by my hon. Friend the Member for Montgomeryshire and me. It would allow individual local authorities to take decisions about the level of discounts that they would wish to offer under right to buy. Setting the level could be operated so as to discourage or restrict purchases, but could also help where the prices are low, and the desire for the available housing was low—setting the level could be used to contribute to the regeneration of that community. That is something that could be decided by the local authority at hand.
Before going into a little more detail, although I will not detain the Committee for an undue length of time in view of the progress we have failed to make so far, I will comment on the hon. Member for Welwyn Hatfield’s contribution to the previous debate. Since 1980 more than 1.7 million properties have been sold under right to buy, yet fewer than half of these have been replaced through social house building. Not even all those will have been funded by the receipts of those property sales—during the Conservative tenure of 18 years, the ability of local authorities to use such receipts was somewhat restricted as well. We also have to consider whether the Conservative legacy was acceptable.
Certainly the calculations of the income generated from the receipt of sales under right to buy have never been sufficient. I am not aware of any local authorities that are champing-at-the-bit keen to sell their properties because, as a result of selling one property, they are able to accrue to themselves or to registered social landlords more than one property—nay, six in one case. The magic circle—rather than a virtuous circle—painted by the hon. Gentleman has to be taken with a severe pinch of salt.
“both over finances and to enable local government to manage local services in response to local needs.”
The local government White Paper in 2006 and its subsequent updates also stated that local flexibility and “devolving more power locally” are key Government priorities for reforming local government.
I would request that the Minister looks again at the affordability index that was used to decide which local authority areas should have restricted discounts applied to those areas. Certainly, we need an update of that index and a provision to allow local authorities to apply the index appropriately, and to guide them in their decisions when apportioning the level of discount that they intend to apply.
5.15 pm
Sir George Young: I am following the hon. Gentleman’s argument closely. I wonder whether the new clause might have a perverse consequence. If a local authority could reduce the discount or eliminate it, the first thing that local authority tenants would do—if they could—if they felt that their local authority was about to use that power, would be to buy their home under the existing regime. Perversely, the new clause could accelerate the loss of social housing.
Andrew George: The manner and speed at which decisions are taken, the implementation and management of those decisions and the forecasting of the decisions that are likely to be taken by a local authority are matters that need to be considered when rolling out such a proposal. In the same way, the Government no doubt took those issues into account when they allocated the 41 local authorities for which there would be a restricted discount of a maximum of £16,000 on each property. Those matters would then exercise the local authorities in the manner in which they applied the discounts. I do not seek to diminish the fact that, just as businesses in the City making decisions over investment try to predict the decisions of the Bank of England over the setting of interest rates, the same would apply to local authorities, so the right hon. Gentleman makes a reasonable point. I would hope that the implementation of this reasonable measure would allow devolved decision-making to reflect the circumstances within each of the local authority areas. That is something that can be overcome and taken into account during implementation.
Mr. Wright: I have thoroughly enjoyed the debate as I think have other hon. Members.
May I say at the start that the Government—and me personally—support the right to buy? It has helped thousands of families, including my own, to realise the aspiration of owning their homes and has helped to create stable, mixed-tenure communities. I want to mention an important point about the right-to-buy discounts. I get letters about this issue on both sides of the argument. Some people think that right-to-buy discounts are already too high and should be reduced whereas others argue that maximum discounts should be raised to reflect rising property prices. We believe that the present limits strike a reasonable balance between helping people into home ownership and helping those who need social housing. We therefore have no plans to change the current right-to-buy discounts.
The Government want to widen access to home ownership as much as possible and help more people, including social tenants, to build up assets. With the greatest of respect to the hon. Member for Welwyn Hatfield, I do not think that the proposals before us are the most sensible way of achieving that.
Seventy per cent. of tenants of registered social landlords already have a right to purchase their home under the right-to-buy and right-to-acquire schemes. The Government introduced the pilot social homebuy scheme to help tenants of RSLs who do not have a right to buy or right to acquire, or who cannot afford it, to buy a share in their rented home. Under social homebuy, tenants may buy from 25 per cent. to 100 per cent. of their home at a discount and landlords can keep the sales proceeds for reinvestment in social and affordable housing.
Grant Shapps: I wonder if the Minister can tell us how many homes have been sold under the much-trumpeted social homebuy scheme?
I intervened on the hon. Gentleman to ask about costing. That is the main theme of my opposition to the new clause. Compelling registered providers of social housing to sell their stock at a discount would be very costly. It would require full consultation. Registered providers faced with large-scale sales might find it more and more difficult to borrow to fund new provision and their repair and maintenance programmes. If the taxpayer, through the Exchequer, was to fund the discount, as is the case for the right-to-acquire scheme for tenants of registered social landlords, we estimate that extending the right to buy to those tenants who currently do not have such a right would cost £268 million a year. I suggest to the Committee that that would have a significant impact on the resources available to provide investment in new social housing.
Mr. Raynsford: My hon. Friend is making a very persuasive case. He said at the outset that he has enjoyed the debate. I enjoyed the debate, but was puzzled by the absence of contributions from the right hon. Member for North-West Hampshire and the hon. Member for North-East Bedfordshire. Had they given a speech, rather than the helpful and kindly intervention that the right hon. Gentleman made to help his Front Bench colleague, the hon. Member for Welwyn Hatfield, they would have had to explain why the Conservative Government in which they both served, accepted the very clear evidence that it was inappropriate to require charities and other voluntary organisations to sell compulsorily, as they are now proposing. That would in effect be expropriating the assets of charities. That was the fundamental reason why the other place rejected the proposition when it was put forward.
Mr. Wright: As ever, my right hon. Friend makes an amazing, fantastic and accurate point. All I would say in response is that, during the debate we all saw the looks on the faces of Opposition Members when the hon. Member for Welwyn Hatfield was on his feet. I will leave it at that.
The amendment is uncosted, which is irresponsible on the part of Her Majesty’s Opposition. The large sum of £268 million a year could be going towards our ambition for 45,000 new social homes per year, as part of our overall target of 3 million homes by 2020. In that respect, I would ask the hon. Member for Welwyn Hatfield to withdraw his amendment.
New clause 22 almost flows in the opposite direction to new clause 8. As the hon. Member for St. Ives quite rightly and eloquently said, it would free local housing authorities to set whatever levels of right-to-buy discount they choose, including no discount at all, subject to a limit specified by the Secretary of State, if she chose to do so.
In a former life, I worked for an accountancy firm where we used to audit ourselves. We audited large-scale voluntary transfers and we would see people become somewhat nervous and apprehensive when changes were introduced. One could chart the spike of right-to-buy applications just before transfer of stock from a local authority took place. Naturally, people felt apprehensive and thought that something might alter in their security of tenure. That would be the unintended consequence of the amendment.
Andrew George: The Minister’s logic is that the currently available discount would be available for all time, and that no decision could be taken, whether at Government or local level, because he fears a perverse incentive and outcome. That logic presupposes that the tenants would know whether the decision would increase or decrease the discount. It could create a perverse incentive that would be acting against the tenants’ best interests if the local authority’s decision was to increase the discount.
Mr. Wright: But, the requirement for consultation would establish the apprehension that would still lead to a rise in the number of right-to-buy applications, which would reduce the discount still further. There would be unintended consequences to the amendment.
The hon. Gentleman mentioned the possibility of no discount, which would be a somewhat radical departure from the principal of the right-to-buy scheme. For most tenants, I would suggest that, in practical terms, it would mean ending any availability of right to buy whatsoever. I cannot support such an extreme measure.
The hon. Gentleman said that the new clause would enable the Secretary of State to specify the maximum discount that a local housing authority may set in its area. I suggest, with gentle joshing, that that is at odds with his approach in an earlier debate on new clauses 24 and 25. I would also suggest to him that it is unnecessary, as the Secretary of State already has the power under section 131(2) of the Housing Act 1985, which states that:
“The discount shall not in any case reduce the price by more than such sum as the Secretary of State may by order prescribe.”
The power is already there.
I know that some who are involved in housing would welcome the kind of local flexibility that we have discussed during consideration of the new clause and earlier clauses. However, there is potential for confusion, perverse incentives, and repercussions, and therefore I hope that the hon. Gentleman will withdraw his amendment.
5.30 pm
Andrew George: Of course the new clause was intended as a probing amendment and I intend to withdraw it in a second. I wish first to make two points to the Minister.
One is on the joshing point that he made. Of course there was a reference to the powers of the Secretary of State. That was because, following the debate on new clauses 24 and 25, I would not want to denude the Secretary of State or the Minister of all their powers. That would be wrong. Hence the reference to giving the Secretary of State some role.
Secondly, the most substantial point that the Minister, backed rather oddly by a former Housing Minister, the right hon. Member for North-West Hampshire, can make is that the new clause would create a perverse incentive for tenants and work against the objects of what a local authority might be seeking to achieve by varying the discount level. However, it would discourage any decision at any level, be it creating a perverse incentive at the local authority level, or across the country if a Secretary of State were to decide or consider deciding to vary the discount level.
I do not accept that argument. I hoped that the Government would consider the provision. After all, they have accepted variations of discount in some circumstances—available in 41 areas, mainly in the south-east. The principle therefore is not one that the Government find unacceptable. I hope that in such circumstances the Minister will consider that the right to buy, the impact that it has and the level at which it is set, has varying impacts in different parts of the country. He should therefore allow local authorities to set and vary the rate. I beg to ask leave to withdraw the new clause.
The Chairman: Order. There is no need to withdraw the new clause as it is being discussed along with new clause 8.
Grant Shapps: It has been an interesting debate and I am sure that most members of the Committee would agree. I remain grateful to my right hon. Friend the Member for North-West Hampshire for giving me the opportunity to make up for the failure of my filing system and get onto the new clause. It revealed some interesting thoughts, attitudes and almost inbuilt reactions to just the three words, “right to buy”.
One of the most interesting aspects is the simple maths involved. The Minister seems to take the approach that simply says: when one sells a house and builds another only one additional house has been created. One has to recognise that somebody is living in the original house and therefore the housing stock has been expanded. We may have gone a long way to understand why there has been such difficulty in building the required number of homes in the past 10 years and why as a nation we will probably end up building fewer homes this year than last year. That basic misunderstanding of mathematics has led to confusion within the Government about the best way to go about building more homes. All the facts and statistics are on our side. We built more homes, in particular more social homes. New clause 8 proposed a way of building even more. I hope that the Minister will reflect on that and give it further consideration on Report.
If nothing else, the debate was worth having because it gave the Minister the opportunity to say to my right hon. Friend the Member for North-West Hampshire—to paraphrase—“I thank you and Mrs. Thatcher for the right to buy”, which he revealed has helped his family, as well as millions of others.
I beg to ask leave to withdraw the motion.
Motion and clause, by leave, withdrawn.
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