Rt Hon Lord Lilley

    Lord Lilley:

    My Lords, it is a pleasure to follow the noble Baroness, Lady Thornhill, on whose remarks I will comment a bit later. Above all, I congratulate my noble friend Lord Young on securing this debate on one of the most important topics affecting the country.

    We live in a property-owning democracy. That has been the objective of the Conservative Party, and probably shared by other parties, for many decades. The main form of property that most people can hope to own is their own home. We aspire to be a home-owning democracy, and we were achieving that. Before the First World War, only 15% of the population owned their own home. That rose to 70% by 2001. However, that was the peak, and from there it has declined to about 60%. Whereas each generation had been becoming home owners younger, the trend has reversed even more strongly: in 1997, 55% of 25 to 34 year-olds had got on to the home owner ladder, but that was down to 35% two decades later in 2017.

    It is not just that young people cannot afford to buy. Many cannot afford to rent either, because rents and prices are inevitably linked and both reflect shortage. In the last two decades, the number of 25 to 34 year-olds living with parents has risen by 1 million. One-quarter of people in that age group still live at home with their parents. It is not surprising that, if young people cannot hope to join the property-owning democracy, they should begin to lose faith in democracy, which is what we hear from the opinion polls.

    Let us be clear: this is not a problem that can be solved by manipulating mortgage terms, freezing rents or tinkering with the terms of tenure. That is just rearranging the deck chairs on the “Titanic”. As long as there is an imbalance between the number of dwellings and the number of people wanting to live in separate households, some of them are going to be disappointed. They will have to share properties, by staying at home with their parents, cramming together in bedsits or subdividing existing dwellings into smaller sub-units. We already have the smallest average size of home of any country in Europe, and we will be making them smaller. All the measures that I have heard about so far in this debate, such as a different form of tenure, would help one group, but if you help one group to get some of a fixed supply of housing then that means other people are not getting it. It does not solve the problem.

    What about the long term? We had a debate on 29 February in the Moses Room on a long-term strategy for housing. Apart from my noble friends Lord Jackson and Lord Bailey—who is not here today—every single contributor said that their long-term strategy was to have a long-term strategy. They did not tell us what it would consist of, and it certainly did not deal with the problem.

    All those speakers reminded me—I make no apology for repeating this—of the challenge that is laid down by Zen masters to their disciples. The Zen master asks his disciples, “Describe the sound of one hand clapping”. All these debates are the sound of one hand clapping. We heard the sound of supply—we will allocate it differently or even build a few more, although of course we all admit to being nimbys—but no mention of demand. I am afraid it is a simple matter of arithmetic. The supply is not adequate. If there are, say, 30 million dwellings and 33 million wannabe households, then 3 million wannabe households will not be able to live in separate dwellings; they will have to share, subdivide or stay at home. There are two possible solutions: build more homes or stop adding to the number of households. Those are the only two solutions which will resolve it in the long term.

    Before the 2015 election, I was challenged by my local Liberal Democrats to attend a public meeting in Harpenden and oppose the subdivision of gardens and people building extra houses in their gardens. They had a public meeting, so I went along. They had a big, wonderful slogan that said: “Harpenden homes for Harpenden people”. I asked the audience of several hundred people how many were born in Harpenden. There were 14 of them. “All right,” I said, “You are the only people the Lib Dems will house and the other 180 had better leave”. We must not go for these cheap nimbyist slogans.

    In the 2015 election, I was presented with an ultimatum by the civic society in Harpenden—much influenced by the Lib Dems—that, unless I opposed all new housebuilding in and around Harpenden, they would either run a candidate against me or support any candidate who would make such a promise. I naturally refused, but I did attend a big public meeting, where I passionately argued that it is a moral issue. We have to build more houses, including in places such as Harpenden. If we do not, then young people in this country will not be able to get on the housing ladder and our children and grandchildren will not be able to live nearer to us than several hundred miles away, such as in the Orkneys.

    I began studying this issue back at the beginning of this century because my constituency and all constituencies in Hertfordshire were continually facing higher and higher targets for the number of homes they had to build. That struck me as very odd, because the number of people being born in Hertfordshire was less than the number of those dying, so the population should have been going down. Of course, it was not going down because people were moving out of London, which they were doing because people were moving into London. All 17 statements made by the Government on the subject said or implied that they were moving into the south-east of England from the rest of the United Kingdom. When I looked at the figures, I saw they were actually moving out of the south-east of England because prices were so high and they had to move further away from London. The inflow was all from abroad, but no one dared mention it.

    At that stage, we were importing the equivalent of the population of Birmingham every decade. I wondered how we would house an extra Birmingham and still provide extra homes for our own young people and people born here. A few years later, it was the population of Birmingham every five years and then every three years. Over the last two years alone, we have imported the net equivalent of the population of Birmingham. Does anyone seriously imagine that we can meet their needs and the accumulated, pent-up and unsatisfied needs of the young people for whom we have not built any homes over the last few decades? We cannot. But will anyone in this debate mention it? No. Perhaps on this side there will be some. I would be delighted if they did.

    There will not be any mention of it on the other side; there never is. They should be deeply ashamed, because it is such a serious problem. Unless they can explain and justify why they support continuing mass immigration before they have met the needs of the people of all colours, races and sizes who are already here—who were born and grew up here—they should be deeply ashamed. I fear that, once again, we will have a debate that, with the exception of noble Lords on this side, reflects the sound of one hand clapping—some talk about supply, but nothing about demand. Until we do something about demand, we have an insoluble problem.

    Lord Best:

    My Lords, I thank the noble Lord, Lord Young of Cookham, not just for securing this debate and getting it off to a brilliant start, but for his decades of highly distinguished policy action in addressing key housing issues. As usual, I agree with his words of wisdom so eloquently delivered today.

    This debate is very timely: the housing crisis for those with nowhere to go represents a national emergency that demands our urgent attention. It is gratifying to hear just how much we all agree on the urgency of the situation. I declare my housing interests, as on the register. Currently, I chair the Devon Housing Commission. Noble Lords may think that acute housing shortages are a problem for London and the big cities, but they could hardly be more extreme than in the beautiful county of Devon. Fewer and fewer young people brought up in the county are finding it possible to buy a home of their own—and, over recent months, they have found it almost impossible to secure a rented home they can afford. The numbers of young households having to be placed in unsuitable temporary accommodation have increased by 100% and more over the last couple of years. Nationally, the dire situation is replicated in every locality, and there are now over 140,000 children in insecure, often highly unsuitable, temporary accommodation. This is becoming an increasingly significant part of the financial troubles afflicting so many local authorities.

    A fortnight ago, many of your Lordships expressed support across party lines for a national strategy to get us out of this mess, as was championed in the Church of England’s report last year. A national strategy would set a broad vision for ending the housing crisis. It could be brought together and sustained over time by a statutory national housing committee, along the lines of the Climate Change Committee. The new committee would hold government—and, no doubt, a succession of Housing Ministers—to account.

    In supporting this call for creating and monitoring a long-term housing strategy, I suggest that policymakers must prioritise the housing needs of younger households in two overarching ways: first, of course, by increasing supply overall and, secondly, by ensuring that the supply reaches those with modest incomes. Supply is the problem—

    Lord Lilley:

    I am grateful to the noble Lord for giving way. Will this body dealing with a long-term strategy also consider the demand for housing? Will it have any control over the massive increase in demand coming from abroad? If not, what purpose will it serve?


    Lord Shipley:

    My Lords, I pay tribute to the enormous contribution that the noble Lord, Lord Young of Cookham, has made to the cause of housing over so many years. I jotted down a number of things that he said, and I will mention the top three in order of importance.

    First, watch the Treasury like a hawk. For issues such as how you convert the very high amount paid to the private rented sector in housing benefit to construct homes for social rent, which would be a much better use of the money and increase the housing supply, that kind of debate needs to be had with the Treasury. Secondly, the best way to help younger buyers is to help older buyers—that is so true, for this should not become an intergenerational issue. Thirdly, we need more planners. That is quite clear. It must be done through enabling local planning authorities to charge and set their own fees. The noble Lord will remember the debates we had on the then levelling-up Bill, when the Government gave a little ground but nothing like enough to deliver what is needed.

    A number of things have been said about net immigration by two or three noble Lords. What is being said is a misconception, because our housing problem has been developing over 30 years and the increase in immigration to its current level is comparatively recent. There is much published evidence to show that, over the last 30 years, we have built around 2 million homes too few. There has been a spike in net immigration figures in the last couple of years, one of the key reasons for which is the fact that the Government insist on counting overseas students in them. Many of those overseas students—

    Lord Lilley:

    They also count them when they go out. So, if they come in and go out, they account for zero in total.

    Lord Shipley:

    The noble Lord is absolutely correct, but the Government, through deliberate policy over the last few years, have been increasing the number of overseas students. The result is that there are more coming in than going out. Statistically, the number is currently in decline, as we were told in a debate a few days ago, so I think he needs to take a slightly longer-term view. As the noble Baroness, Lady Valentine, said, many of those students are in the student accommodation units that have proliferated in many of our university towns and cities. When we debate housing, we need to be a little more measured about what the cause and effect actually are.

    A key reason why the population is rising is that people are living longer. Another reason why we need more houses is that our housing stock is poorer than those of a number of other countries. We absolutely have to increase the supply overall, as the noble Lord, Lord Best, said. I am not sure whether the Centre for Cities estimate that we have a deficit of 4.3 million homes is right—it may be.

    This debate is about the first-time buyer. I remember owning my own home at the age of 25. My wife and I bought our first home on a 95% mortgage, worth 2.5 times my income. Many more young people were able to buy or to secure rented accommodation at an affordable price in those days. That is what this debate is about: in recent years, the number of young adults who own their own home has fallen. As we have heard, more young adults are living at home. Too many are priced out of ownership and into the high rents of the private rented sector, because investment in social housing has been so low. Had those homes been properly replaced between the Government’s decision to sell council homes and now, we would have many more homes than we currently do.

    Housing has become so expensive at a time when incomes are under greater stress. The number of first-time buyers fell to a 10-year low in 2023, partly due to the cost of mortgages. I find these facts disturbing. It is particularly disturbing when you realise that the people who are suffering most are those young people who are not graduates. A lot of research evidence has been published on this. We have to increase the supply side, and in that the noble Lord, Lord Best, is absolutely correct.

    The Government have tried a number of initiatives that we should support. I think we need more long-term, fixed-rate mortgages and more gradual home ownership schemes, and not just for new build. It is a worry that last week’s Budget lacked so much real substance on housing. It did not address the basic problem of high house prices caused by high land costs leading to insufficient supply. We have had this shortfall in new homes being built year after year, with the Government counting conversions from business premises to homes as new homes. These are often flats and quite small. The real problem is the need for more homes that families can use.

    There has been a lot of discussion around brownfield sites. I have believed for a long time that we have to move to a brownfield presumption. I am quite content with the views of the Secretary of State on that matter. Lichfields says that 1.6 million homes could be unlocked on brownfield sites. Homes England has just published its plans for the next five years and it is really good that its top key performance indicator is the amount of brownfield land reclaimed. However, are there enough brownfield sites? The Northern Housing Consortium said in a report published two weeks ago that there is an 82% shortfall of brownfield capacity in the north of England. If the Centre for Cities is correct that we need more than 4 million new homes and Lichfields is correct that only 1.6 million can go on to brownfield sites, there is a gap which can be filled only by better planning, proper housing supply policies and faster building on the brownfield sites that we can build on.

    I see much to recommend the proposal that we should move towards a rules-based system. I am very taken by the report from the Competition and Markets Authority which recommended a streamlining of the planning system, with more homes built and more homes that are genuinely affordable. The regulator has called for significant intervention, which I welcome.

    However, I am very surprised to learn that nearly half of local planning authorities lack a five-year housing supply; of the 72 northern local planning authorities, 23 have no five-year housing supply. As a number of noble Lords did, I listened on the “Today” programme this morning to the experience of a community-led housing initiative in Bristol which plans to have 100 units of 100% affordable housing. It has been months in the planning system, unable to get its applications through. One application had a six-month wait simply to get a case officer. The solution is exactly what the noble Lord, Lord Young of Cookham, said: let local authorities set their own planning fees. The solution of going straight to the inspectorate is not adequate.

    In conclusion, a number of noble Lords have said that we need more small construction companies. Post Covid, this really matters. We cannot just rely on the big housebuilders. The small construction companies are building only 15% of homes today; they used to build 40% before the housing crash. If Homes England could look at how it gets smaller construction companies back into the market, it would help enormously with solving some of the problems of first-time buyers.