On Thursday 11th January 2018 the House of Lords debated a motion from Lord Best, “That this House takes note of the performance of the United Kingdom’s major housebuilders.” The Bishop of Newcastle, Rt Revd Christine Hardman, spoke in the debate:
The Lord Bishop of Newcastle: My Lords, it may be no coincidence of timing that as we debate the performance of the major housebuilders, every day this week in the financial press we have seen the trading results of many of these major companies, the latest being Barratt this morning, the country’s largest housebuilder. There is a consistent picture of extraordinarily high levels of profit and cash being returned to shareholders. However, my first point is that past history tells us this will not last. Housebuilding is a highly cyclical industry and when the next recession comes, new house sales will plummet, as they did in 2003 and 2008. Housebuilders, especially the smaller ones, will fail, and there will be high unemployment in the building trades. Indeed, in 2009, Barratt, which is doing so well according to the press this morning, lost over half a billion pounds and resumed paying a dividend only in 2013. This high level of risk is one of the reasons why so many smaller firms have disappeared and we now have a dysfunctional housebuilding sector that, as the noble Lord, Lord Best, pointed out, is alarmingly oligopolistic.
Government interventions could help, such as guaranteeing bank loans to small housebuilding firms and setting a requirement for local authorities to reserve a proportion of their planning permission grants for land owned or optioned to small builders. Such interventions are worth making but we delude ourselves if we think that, important as it is, sorting out the housebuilding industry is the answer to all our problems. Therefore, my second point is that we already have some outstanding analysis of the complexity and dysfunctionality of the housing market, and, more importantly, we have some answers in the excellent report of the Economic Affairs Committee, Building More Homes, which we debated in this House in March last year. The truth is that our housing crisis cannot be solved by the private sector alone.
In my own area, there are over 22,000 households on council housing lists in the Tyne and Wear region and over 8,000 in the county of Northumberland. This represents tens of thousands of people, including children, without a home that feels like a home. The report highlighted that this country can create enough new homes only when local authorities get back into the business of building them. Key to this is removing the restrictions on local authority financing and borrowing to build homes, as has been mentioned by noble Lords. Therefore, I join them in asking the noble Lord, Lord Bourne, to tell us whether any progress is being made with the Treasury in this area.
My third and last point is that this crisis is not, at heart, about buildings; it is about people. It is about not just housing supply and quantity but, as the noble Lord, Lord Best, indicated, quality. If we are truly to solve the crisis, we need to build communities where people can put down roots and thrive. All too often, our housing developments sit at two ends of a spectrum. At one end is new social or affordable housing, usually very small units—too small for families—that are cramped, with very limited space, and sometimes shoddily built. At the other end sit developments of luxury homes priced beyond the reach of local households. We are witnessing the hollowing out of communities along the fault lines of social class and income. We need to preserve the diversity of our communities, which is such a cherished feature of this nation.
I am delighted that the noble Lord, Lord Best, secured this debate, because it is about something far more important than just the performance of our housebuilding companies. It is about people, and it is on our watch. I hope that we will find the personal determination and that we will support and encourage the Government to work towards honouring the human dignity of every man, woman and child in this country by creating the homes and communities that our children and grandchildren deserve.
Lord Borwick (Con):.. A site with planning permission for immediate work is so valuable that public companies do not sit on assets worth millions of pounds for a period of years. The big housebuilders very nearly went bust in the recession—a point made so well by the right reverend Prelate the Bishop of Newcastle—so they are very careful not to waste money now. They are measured by the stock market on return on capital employed. It is planning system inflexibility, and not land banking, that slows housebuilding.
Lord Kennedy of Southwark (Lab Co-op):… The right reverend Prelate the Bishop of Newcastle made very important points about building homes and communities, and again made it clear that even more social housing is needed and a distortion has been created in recent years by the failure to deliver that.
The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government and Wales Office (Lord Bourne of Aberystwyth) (Con)…Many noble Lords have talked about this being a debate not just about housing but about people. For example, the right reverend Prelate the Bishop of Newcastle made that very pertinent point. People referred to the new name of the department. In fact, it is now a ministry—the Ministry of Housing, Communities and Local Government, or MoHoCoLoGo, as I am told it is being called in the corridors of power. It makes us sound like a Mexican nightclub…. The right reverend Prelate the Bishop of Newcastle, among others, referred to the housing revenue account and the borrowing cap. We have recently raised that cap by a total of £1 billion in areas of high affordability pressure for local authorities that are starting to build new council homes. We will be assessing bids in relation to that before long….In addition to ensuring that small and medium-sized enterprises have the financial support that they need, we have also responded to concerns about access to viable land and the unnecessary planning burdens that the sector faces. Proposals in the White Paper include increasing the availability of small sites through changes to the National Planning Policy Framework. The right reverend Prelate the Bishop of Newcastle referred to this. We have set out that at least 20% of the sites allocated for residential development in local plans should be sites of half a hectare or less.
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