Table of contents
On 8 November 2022, the House of Lords is due to debate a motion from Lord Moylan (Conservative) to take note of the report of the House of Lords Built Environment Committee, ‘Meeting housing demand’, published on 10 January 2022.
1. What were the report’s conclusions and recommendations?
The committee said the context of its report was a UK housing market in which “too many people are living in expensive, unsuitable, poor quality homes”. It said changes in the housing market over the past 40 years were characterised by:
[…] a doubling of the private rented sector, a halving of the social rented sector and relatively steady rates of home ownership following a peak in the mid-2000s.
The committee concluded that to meet current and future housing demand it was necessary to “increase housing supply now”.
The report welcomed the government’s target of building 300,000 new homes per year, but it warned that the target may not be met if “barriers to building new homes are not addressed”. The committee called on the government to:
[…] remove the administrative and other blockers which […] make increasing the number of new homes built much more difficult.
To meet future housing demand, the report’s recommendations focused on the following seven areas:
- Housing for the elderly. The committee noted that the UK population is ageing. It stated that one in four people are estimated to be over 65 by 2050, with a related increase in older people living alone. Housing supply should reflect this in the types of new homes built, with a “mix of ‘mainstream’ housing and specialist housing for later living”.
- Small and medium-enterprise (SME) housebuilders. The committee claimed that the number of homes built by SMEs had “collapsed” in recent years. It said the government and local authorities should support SMEs by reducing planning risks by introducing a dedicated “fast-track planning process” for SMEs; making more building sites available; and increasing access to finance.
- Planning reform. The committee argued that uncertainty about future planning reform had a “chilling effect” on housebuilding. It noted that the government had published a planning white paper in August 2020. However, the committee stated that the government needed to set out its strategy for implementing its planning reform agenda. The committee claimed that spending on planning had decreased by 15% since 2010, which was causing “delays, issues with recruitment, and staff shortages”. The report urged the government to ensure that local planning authorities had the resources and staff they need to provide an efficient planning service.
- Social housing provision. The committee said there was a “serious shortage” of social housing. It claimed that many tenants who would previously have been in social housing were now living in “expensive private rented accommodation”, with their housing costs subsidised by housing benefit. The committee recommended a “transition” to spending more on social housing, which it argued would decrease the housing benefit budget in the long term. The committee also criticised the social housing right to buy scheme. It recommended that the scheme be reformed to allow local authorities to use more of the receipts to replenish their social housing stock.
- Help to buy scheme. The report criticised the government’s home ownership schemes (such as help to buy equity loans). The committee said it had received evidence that the schemes “inflate prices by more than their subsidy value”. The report concluded that the schemes “do not provide good value for money, which would be better spent on increasing housing supply”.
- Skills shortages. The committee claimed there was a shortage of skilled workers in the construction, design and planning sectors, which had not been addressed by the “construction industry training board […] over many years”. It called for the board to upgrade its training offer, or the government should “consider potential alternative models” for a national construction career body. The report also claimed that apprenticeships in construction had “fallen consistently” since the apprenticeship levy had been introduced. It called for the government to review the levy to address the issue.
2. Government response to the committee report
In March 2022, Boris Johnson’s government published its response to the committee’s report. The government said it was committed to creating:
[…] a fair and just housing system that works for everyone. This includes supporting more first-time buyers to move onto the housing ladder, delivering more homes that are genuinely affordable, radically improving housing quality and reducing homelessness.
The following section summarises the government’s response to the committee’s recommendations in the seven areas outlined above:
- Housing for the elderly. The government stated that all local planning authorities should assess the needs of older people’s housing and reflect this in their planning policies. The government said that the £11.5bn affordable homes programme 2021–26, a government grant funding programme to increase the construction of affordable housing, included the “delivery of new supported housing for older, disabled and other vulnerable people”. The government said it would also launch a new taskforce “which will look at ways we can provide better choice, quality and security of housing for older people across the country”. However, in answer to a parliamentary question in October 2022 the Department for Levelling Up, Housing, and Communities did not confirm that the taskforce had been established.
- SME housebuilders. The government said it wanted to increase competition in the housebuilding industry and that it had introduced a package of measures to support SME builders. This included financial initiatives intended to help SMEs grow and develop, such as the home building fund and the ENABLE build guarantee scheme. The government said the home building fund would see “up to £3 billion of funding or short-term development loans provided to SMEs, custom builders and developers using modern methods of construction”.
- Planning reform. The government said it was committed to modernising the planning system. It said reform proposals had been included in its February 2022 levelling up white paper, which would “deliver better outcomes by fostering beautiful places that people can be proud of, improving democracy and engagement in planning decisions”. The government also said it was “pleased that housebuilding has remained steady since we announced our changes to the planning system, with most housebuilding now back up and running after Covid-19 impacts”.
- Social housing provision. The government said it shared the committee’s concerns about “long waiting lists for social homes and the number of families housed in temporary accommodation”. The government said that since 2010 it had delivered “574,100 new affordable homes, including over 403,400 affordable homes for rent, of which over 154,600 homes for social rent”. It said that “around half” of the homes built through the “affordable homes programme 2021–26 will be for social and affordable rent”. On the right to buy scheme, the government said it believed the scheme was working as it was intended. The government said it had already introduced “flexibilities to help local authorities to build more replacement homes using right to buy receipts”.
- Help to buy scheme. The government questioned the evidence the committee had produced that the help to buy scheme had an inflationary impact on house prices. The government cited other research evidence, including a 2019 National Audit Office progress review of the help to buy scheme, which found no significant increase in house prices. The government said “there is not sufficient evidence to support a conclusion that the scheme inflates house prices by more than their subsidy”. The government disagreed with the committee’s conclusion that the scheme was not good value for money, and it argued that help to buy had increased housing supply.
- Skills shortages. On the effectiveness of the construction industry training board (CITB), the government said it had been reviewed as part of the 2017 review of the industry training boards. The government said the CITB had subsequently implemented a three-year transformation programme and had a new governance structure. The government said it kept the performance of all arms-length bodies under review and it was “currently considering the appropriate time” for the next industry training board review. On the apprenticeships levy, the government said it had no plans to review it. The government said the levy was an important part of its apprenticeship programme, and it was increasing funding for apprenticeships to “£2.7 billion by 2024–25”.
3. Recent developments
The following section summarises developments in housing and planning policy since the government response to the committee’s report was published in March 2022.
In May 2022, Boris Johnson’s government introduced the Levelling-up and Regeneration Bill in the House of Commons. The bill would implement a range of policies associated with the ‘levelling up agenda’ as set out in the February 2022 levelling up white paper. It also includes a range of changes to the planning system. A government press release on the bill summarised the planning measures:
- Local plans—the way in which councils set the vision for future development in their area and decide whether to give planning permission—will gain stronger legal weight and be made simpler to produce. Communities will have a major say in these plans giving them more opportunity to shape what happens in their areas. Currently 61% of councils do not have an up to date local plan, which leaves communities exposed to development on which they haven’t had a meaningful say.
- A digitised planning system making plans and planning applications fully available on your smartphone.
- Stronger protections for the environment in local plans, empowering councils to make better use of brownfield land and protect precious greenbelt land.
- Local design codes will be made mandatory so that developers have to respect styles drawn up and favoured locally—from the layout or materials used, to how it provides green space.
The bill is currently progressing through its House of Commons stages, with no date for its report stage announced at the time of writing. For further information on the contents of the bill, including a summary of recent proposals for planning reform, see the bill briefing from the House of Commons Library (1 June 2022).
In July 2022, Boris Johnson resigned as leader of the Conservative Party. In the subsequent Conservative leadership election contest, Liz Truss (MP for South West Norfolk) was reported to have said that she would abolish “Whitehall-inspired Stalinist housing targets”.
Liz Truss became prime minister on 6 September 2022, following her election as Conservative leader. In the ‘mini-budget’ growth plan announced on 23 September 2022, the Truss government intended to introduce a range of supply-side reforms which included planning liberalisation within newly created investment zones, and further planning reform to be legislated for in a separate planning and infrastructure bill.
In October 2022, Liz Truss resigned as prime minister and was replaced as Conservative leader and prime minister by Rishi Sunak. It has been reported that Rishi Sunak does not intend to proceed with Liz Truss’s planning reforms.
Rishi Sunak reappointed Michael Gove as secretary of state for levelling up, housing and communities. On 30 October 2022, Mr Gove said he was still committed to the target of building 300,000 new homes a year. However, he indicated that economic conditions may make it more difficult to achieve the target. He said:
We need to be straight with people: the cost of materials has increased because of the problems with global supply chains and also a very tight labour market means that the capacity to build those homes at the rate we want is constrained.
The Labour Party has criticised the government’s record on house building. Lisa Nandy, shadow secretary of state for levelling up, housing and communities, told the Labour Party conference in September 2022 that a Labour government would “mend the deliberate vandalism of our social housing stock” and would be the “first government in a generation to restore social housing as the second largest form of tenure”.
The chancellor, Jeremy Hunt, is due to deliver a full autumn statement on 17 November 2022.
4. Read more
- Christine Whitehead and Geoff Meen, ‘Meeting housing demand: Only one side of the coin’, UK Collaborative Centre for Housing Evidence, 18 January 2022
- Glen Bramley, ‘Meeting housing demand’, Institute for Social Policy, Housing, Equalities Research, Heriot-Watt University, 22 February 2022
- Philip Inman, ‘Sort out housebuilding obstacles or miss target, Lords warn UK government’, Guardian, 10 January 2022
- Vicky Shaw, ‘Too many people live in expensive, unsuitable, poor quality homes—report’, Independent, 10 January 2022
- Carl Brown, ‘Lords committee calls for increased fees to tackle planning ‘crisis’’, Housing Today, 10 January 2022
- House of Lords Economic Affairs Committee, ‘Building more homes’, 15 July 2016, HL Paper 20 of session 2016–17; and Debate on ‘Building More Homes (Economic Affairs Committee Report)’, HL Hansard, 2 March 2017, cols 987–1038.
- House of Commons Library, ‘Housing market: Key economic indicators’, 31 October 2022