The Earl of Lytton (CB)

After such an expert series of speeches on this, I hesitate to rise, but I feel compelled to support the noble Lord, Lord Best, and others who have introduced a critical series of amendments and raised a challenge to current practice. As somebody who has had a long-standing association with Exmoor National Park, I fully understand and recognise what my noble friend Lord Inglewood has said, but I suspect that we are dealing with the process and proceeds of bulk housing rather than the situation that he refers to, important though that is. I have in the past had to wrestle with development appraisals and I recognise the points that noble Lords have made about that. The system is rather opaque. You can variously tweak the process to decide on the profitability, on your relationship with your subcontractors, on what you are prepared to concede by way of Section 106 obligations, and on what you are prepared to pay for the land—and all of these in one model. So the model is complex and, unless one is familiar with the algorithms that stand behind it, it is very difficult for local authorities to find their way through that. We have heard that affordable housing is funded out of the development of market housing. The noble Lord, Lord Lansley, made the point. As the noble Lord, Lord Best, said, the question arises as to what we mean by “affordable”, since 80% of the market price in the south and south-east of the country, for instance, is still totally unaffordable to anybody with limited means, particularly if it is pegged to the selling price of market housing, which of itself often carries a premium as a result of marketing processes. That premium is instantly lost as soon as the house is second hand and on the resale market. Often, market prices do not catch up with that premium on the second-hand market for some years. Sometimes it is quite a long time. For somebody of limited means in need of a home, this is a matter not of voluntary choice but of what is economically possible and of their own priority as a candidate for an affordable home, based on the housing need and the length of the waiting list. For many people, this is something of a lottery. The affordable housing component of a residential development scheme is subject to this viability, the core financial ingredients of which are largely owned by and the intellectual property of the developer. Bearing in mind what I have said about the general complexity of the whole process, that adds to the problems that we are dealing with. Developers are a breed on which the noble Lord, Lord Best, has previously expressed some quite trenchant views, and the noble Lord, Lord Carlile, has rather spectacularly reinforced those this evening. I have no remit to necessarily speak up for housebuilders. Some of them are clearly thoroughly exploitative, but I do not think that all of them are. I feel certain that there are some who are decent, honest and disposed to be transparent as far as they are able, but my professional work certainly has revealed that there is a great deal of opacity to the whole process. The nature of the affordability offering ranges from what in developer terms might be regarded as the optimal—namely, a shared ownership, because of course it releases a sum of money for the development through affordable rent—and what might be regarded as the least profitable bit, social rent, which is often driven by accountancy processes and profit motives. Social rent components thus inevitably get seriously squeezed. The whole process of affordable housing may get further eroded by being fitted out to a lower standard than market housing. I will leave that to one side, but it gives a bit of an insight into how much cheeseparing goes on in the whole process and how many adjustments might be made before the final product comes out. I acknowledge that part of the problem may go back to the rolled-up costs of land acquisition and the expectations of the parties under the original sale of land, although I venture to suggest that some of the developer’s profit, taken in the round, in many cases substantially exceeds the sum paid to the original landowner, and part of that is rolled-up cost, risk, finance and all sorts of other things that are going on at the same time. It is also a fact that satisfying this housing need depends on the perceived profit from the development at any given time. The ability of developers to defer starts or go slow on a site, depending on market conditions, adds to the problem of congestion in terms of providing affordability, and those in critical need of something genuinely affordable in rent are effectively seriously compromised. Mention has been made by other noble Lords of shared ownership; I think it was the noble Lord, Lord Young of Cookham, who a week or so ago mentioned shared-ownership problems. My mailbag is often punctuated with people who are unable to get round the resale of their properties because there may be a pre-emption problem or they have to get consent from their registered provider, for example—and then circumstances change, the whole thing goes back into the melting pot and they have to start all over again. For owners who are trapped in such difficult-to-shift situations—even without fire safety remediation problems, which is another thing—if that is what ownership looks like, we should be prepared for people to start switching off, because it is not good enough if you are offering that as a home-ownership approach. As another aside, I have recently heard it said that house prices are driven by the availability of credit, not the inherent value of the product. If so, there just has to be a better way of dealing with that without choking off land supply, and I think it starts with shortening timescales, derisking the current protracted processes, making planning more cost efficient, less contentious and less uncertain—and probably with a not-for-profit construction model. Protracted timescales allow for far too much wriggle room and reconfiguring of the offering that is made, and they give too much space for poor practices to take root. I have tried to work out how such a model would be achieved—possibly through community interest structures in which local need and desire would come a long way in front of imposed bulk market housing—but I am not there yet. It raises questions too about clustering of social housing versus pepperpotting, and about building the sort of inspirational developments that deliver best quality rather than having some sort of stigma attached to them because of the nature of what is produced. We in this country have in the past succeeded spectacularly with schemes; some of the great industrialists produced wonderful developments for their workforce that were really well thought out. We ought to be able to do the same sort of thing for those in critical need of social housing. My view on this is that, if one is concerned about the attitude of landowners, maybe it is time to start asking whether getting maximum price at some uncertain point in the future would not be offset by having a greater certainty of outcomes and transparency, and being able to plan for that over a timescale might be appropriate. With that, I will sit down, but that may warrant looking at further.