Housing

HL Deb 12 May 2004 vol 661 cc280-321

3.16 p.m.

Lord Lucas

rose to call attention to the review of housing supply by Kate Barker (March 2004); and to move for Papers.

The noble Lord said: My Lords, I declare an interest: I have an association with an outfit called Green Issues, which facilitates community consultation.

I welcome the publication of the Barker review and of the counterblast to it from the Campaign to Protect Rural England. I would welcome the publication of the Egan review, if I could get a copy of it out of the Ministry. Although the Printed Paper Office asked for copies a week ago, it has yet to be given any.

All these things are, I hope, indications that we are at last moving to address some issues of real concern and distress in the areas of housing and property development. Perhaps, over time, we are moving to achieve consensus, because that is what is needed in this area. We need the same sort of basic consensus that underlies the planning system. Of course, we all argue between parties about what the planning rules should be, but there is a basic understanding that the planning system should exist, and a basic understanding and agreement on roughly what it should do. We need to achieve the same sort of consensus in two particular areas. What sort of houses do we hope that people will live in? What importance should we attach to house price inflation?

Some while ago, I asked a Question of the Government, and their Answer could be summarised by saying that over the past 20 years the average household is 20 per cent richer in real terms and lives in a house that is 20 per cent smaller. That is because of the vast increase in house prices. I would not wish that trend to continue. We ought to hope that, over time, our people will live in better homes. We ought to set it as an objective that in a generation's time, as far as possible we all have better places to live in

We spend an awful lot of time in our homes. They are the source of a great deal of our pleasure in life, and the location of a great deal of our enjoyment of life. It matters a great deal to us what our homes are like, from the smallest to the largest. It ought to be our objective that we will have better living conditions over the years; not that our houses will become ever more valuable, but that we have a better place in which to live. That is a widely shared ambition, which is reflected in this plethora of television programmes on home improvement and self building and so on. People really care what their houses are like.

One aspect of the Barker review that I welcome is its interest in gathering evidence about the sort of housing that people want. If we are going to set objectives for what housing should be, we ought to understand what people want. There is remarkably little evidence of that at the moment. We tend to provide on the basis of housing need, which is defined by officials. We ought to take into account the sort of housing that people want.

The other objective that we should set ourselves—and one which is central to the Barker review—is controlling house price inflation.

When I was young, house price inflation was seen as a wonderful thing. We could all make money out of playing with houses—and a lot of people have done so. But we are now beginning to realise that this is not an economic good, by and large. It does not create wealth, except at the fringes. It is merely a matter of wealth transfer: it transfers wealth from the young to the old; from the poor to the rich; and from pretty well everybody to estate agents and landowners. That is not the sort of policy that we should pursue.

I welcome Kate Barker's emphasis on reducing the rate of house price inflation to something that bears some relation to the general increase in national wealth and is ideally a little below it. If we could have the rate at 1 per cent below the rate in earnings, then that would be the mechanism necessary for us all to be able to look forward to better houses and homes over time.

I remember the hilarity in the newspapers when the Albanian pyramid scheme burst. But this is exactly the same thing. It is a pyramid scheme that we are all playing—or at least that 60 per cent of the nation are playing. We are all buying a house on an enormous mortgage in the hope that in a few years we will be able to sell it to some other sucker for rather more. It is exactly the same set of motivations and exactly the same disaster awaits us at the end of it.

We can see the problems now in the difficulty key workers have in finding places to live in London or large parts of the countryside. We can see it in the difficulty that young people, setting out on a career newly encumbered with their student loans, have in affording places to live.

There is no reason why this should not go on getting a great deal worse. At the height of the property boom in Japan mortgages were granted for multiple generations. People inherited a mortgage, because there was not enough time in one lifetime to pay it off. So we can get a lot further. When that bubble burst, 10 years of stagnation followed. It is not a good thing that we are getting into. If we can set out as a consensus— as an objective—that we wish to see housing inflation controlled, that would be a good basis for moving forward on future policy.

So what should we do about it? The Barker review concentrates on housing supply. That must be part of the answer. In its document the CPRE appears to say that supply has no effect on price. Go to the bottom of the class—O-level economics starts with that kind of relationship. It cannot make that allegation and be taken seriously. Of course supply has an effect in the long term, rather than in what happens next year. The effect must be there.

I hope that organisations such as the CPRE can return to the realms of rational debate. They have an enormously important part to play in making sure that the beauty and purity of our countryside is defended and that we do not lose that under a rash of ill-advised development.

That does not only apply to the CPRE. The Kent Wildlife Trust—of which I have been a member for a long time, and which is usually a sensible organisation—has produced a flyer on all the new houses being built in Kent. It attributes the decline in the water vole to housing development. It also states that: The river Stour could become 66% sewage and that putting an extra 10,000 houses in Kent will double the amount of road traffic in the county. We have to have a rational debate. We need the defenders of the countryside to come down off their hysterical pillar and engage in a proper debate.

The homes that every single one of us lives in were green fields once. How many of us will put their hands up and say that they will turn it back into one? None of us would. We must start from a basis that some development is good. It has provided us with homes. What once was woods and fields is now our houses and we are glad that that has happened.

We in this party rightly give the Government a hard time over the way in which the grammar and public school educated Front Bench tries to pull the ladder of achievement up after it and not extend the same facilities for advancement to the poor people of today. In our party we must not commit the same crime when it comes to housing. We all live in very nice houses. If we want a future expanded population to live in nice houses too, we must allow an additional measure of house building and development. It must be part of what we wish for the future of this nation.

Consider a field: a typical upland Hampshire field run on a rotation of barley, barley, barley, barley, barley, barley, beans; with hedges like a row of bedraggled ostriches, because they are cut thin and straight and the wind blows through them underneath. Replacing that with a proper housing development is an ecological plus. There will be much more wildlife, a greater variety of wildlife and a lot of happy people living on it. And a good deal of that countryside will look better. We have to talk sensibly. Not all our countryside is such that it has to be preserved to within an inch of our lives. We are allowed to pay some attention to what is best for our people too.

The CPRE hopes that we will all move north: do not build in the south, build in the north. But there is no sign that the north wants us. The whole north-west has a moratorium on house building until the end of 2005. It is possible to build a house in the middle of Manchester but almost nowhere else in the north-west are people allowed to develop anything. There is no indication that they want us up there. And even the areas in which they are trying to build are being kiboshed by the changes in landfill regulations, which reduce the number of sites that will take the industrial waste that has to be cleared from many northern sites. That means that there will be no house building site of any scale in the north-west for the next two years. There is no sign that the north-west is setting out to search for people from the south.

Is there, up there, anyway, what southerners want? Apart from sunshine—we all have a prejudice that it always rains in the north-west—if we are prepared to move up there, we want to find the standard of shop, the standard of leisure and the standard of house that we have got used to. If you try to build a house of any size in the north-west you will not get anywhere. In the north, permission will not be given to build big houses. If a company wishes to move a managing director up north, he has to wait in the queue for one of the existing houses—new ones cannot be built.

If we are going to follow the advice of the CPRE, there has to be a real willingness in the north to take us on. Perhaps we should have a competition, and make them an offer: if they will open up room for 250,000 southerners to move north, we in the south will gather together and pay for it to happen. Faced with that bill, would we do it? The question of responding to demand in housing is not an easy one.

If we really want to move north, it is not a question of trying to shift a few civil servants up to Tyneside. We have to move important centres of economic activity up there—something that will draw economic and business life after it. The Law Lords are in search of a new home: send them to Hull. Why not? That would move some serious jobs north. We could put Parliament in Stoke-on-Trent or send the CPRE to Rotherham. If we made that sort of move, the south would begin to squeak, because—golly—it would be starting to lose things that it valued. That is what moving to the north means—losing things that we value. That must be taken into account in the debate that the CPRE wants us to have.

If we are to have a system that is built on consensus, we must have one that allows a good long time to think about things. There again, there is a good point in the Barker review. It suggests that local planning authorities should build up, as it were, a bank of land that, they know, will be developed in due course. If the emphasis was not on how quickly planning permission could be run through and there was a 10-year bank of land for which there was outline permission and if people knew what the plans for the future of that land were, local authorities could draw down on the land, as they decided that there was a local requirement. That would give an enormous amount of time for all the problems relating to the environment to be considered, for local consultation and for the assessment of local benefit.

That would create plenty of opportunity to work through another of Kate Barker's suggestions that I agree with; namely, that new development should, wherever possible, bear the costs that it imposes on the rest of the community. It should not be possible just to get away with putting up a housing estate without facing the fact that that places costs on the local health service, the local transport system and the local education service. We could consider doing what the noble Lord, Lord Rooker, advocated so expertly during the passage of the Planning and Compulsory Purchase Bill—building sustainable communities. All that takes time and a lot of public consultation. If we follow the suggestion in Kate Barker's review that we should give ourselves time and allow local authorities to base their decisions on such a timescale, we will get development of better quality that will be more satisfactory in giving people what they want from property development.

I hope that this is the beginning of consensus. I know that it begins in argument, but so does everything. When my noble friend Lady Thatcher set out to give council house tenants the right to buy their home, there was no consensus; now there is. That is a great victory. The consensus to come should be that those who now have their home will, in a generation's time, live in a better one. I beg to move for Papers.

3.32 p.m.

Lord Howie of Troon

My Lords, it gives me particular pleasure to follow the noble Lord, Lord Lucas, in the debate. He and I had several interesting and, I hope, fruitful discussions while he was Minister for construction in Mr Major's government. I never got anything out of him, but that was his loss. I should declare my usual interest: I have been involved in the construction industry for a lifetime. I should also add that I am a columnist for HouseBuilder magazine, which is owned by the House Builders Federation. They pay me, but I write what I think, not what they ask me to write. The noble Lord referred to the grammar school-educated Front Bench. I was at a comprehensive school. They were common in Scotland and have been since, I think, the time of John Knox.

I shall begin somewhat obliquely and, perhaps, unusually by congratulating the Deputy Prime Minister, Mr Prescott, who, last week, was elected honorary fellow of the Royal Institute of British Architects. It is a worthy honour, but it was, I think, conferred on the basis of policy initiatives such as the Commission for Architecture and the Built Environment and on the basis of promise, rather than for actual performance in house building. As we know, we now have the lowest level of house building in this country since 1924, when Ramsay MacDonald was Prime Minister. That year is important to me, because that is when I was born. A lifetime has gone past, and we are back where we started.

The shortfall, of course, is mainly in affordable housing, rather than in the private sector. Affordable housing was called council housing in my day. I shall be mildly critical, but I hope that my noble friend on the Front Bench will not be alarmed. The Government have had ample time, since they came to power in 1997, to improve the situation, but they have failed to do so. Several years have been wasted. I will not say that the Government have been neglectful, but they have not been terribly competent. Now, though, there is a hint from the Chancellor that something might be done. In his Budget speech a few weeks ago, he said that he and Prescott would consult on how we could increase the supply and affordability of housing and the goals that we should set, while striking the right balance between the economic and social case for development and environmental and housing needs. That is good news. We must hope that there are good results.

In her report, Mrs Barker promotes design quality, something that John Prescott has promoted. He has produced a new measure of design quality that, I must admit, I do not wholly understand. I am a civil engineer, not an architect. He calls it the "Wow" factor. He is looking for something that he thinks to be good. He is right, but I have a word of warning for Mr Prescott: he must be wary of the Pound bury effect or the Sea view, Florida effect. I am sorry to say this, but he must keep the Prince of Wales at arm's length in looking for the "Wow" factor. He must pay more attention to the views expressed publicly and in this House by my noble friend Lord Rogers of Riverside.

Rightly, Mrs Barker approached the problem as an economist. That is what she was asked to do by the Chancellor. However, on page 19 of the report, she says: Increasing housing supply could also have benefits for individual and social well-being". I am glad that she said that, but I was bothered a bit by that comment. I should have thought that the economic advantages should not come first; the advantages to be had from an increased housing supply should be aimed at individual and social wellbeing. Economics used to be called the "dismal science", probably rightly.

I turn to the danger of concreting over the countryside, as it is called by the nimbys and people such as the CPRE, which was mentioned by the noble Lord, Lord Lucas, a while ago. Oddly enough, only 7.1 per cent of England is urbanised, according to the review. That is slightly less than I thought, but it means that nine-tenths of the country is not urbanised, whatever that may mean. Furthermore, just over a third of the land is protected from development.

One of the surprises to come out of the review is the fact that the north-west, which was mentioned, is more urbanised—9.9 per cent—than the south-east — 7.8 per cent, just a bit above the national average. In addition, 60 per cent of land in the south-east is protected from development, either through greenbelt status, designation as an area of outstanding natural beauty or other designated conservation or protected areas". That leads Mrs Barker to an interesting conclusion. She states, suppose government chose to allow an additional 120,000 houses per annum— which she had asked for— to be built over and above existing plans and that all this building were concentrated in the south east (an unlikely and undesirable event). Over the next ten years, this would mean using an additional 0.75% of the total land area of the south east, 1.92% of developable land". Those simple figures should blow away the wilder fears of tree huggers and people of that nature—even the CPRE—but I imagine that they will pass unnoticed. They are based on an assumption that 60 per cent of new homes would be built on brown field sites and they include an allowance for infrastructure.

That notion that the countryside is to be concreted over is a chimera. As the noble Lord, Lord Lucas, has said already, the pressure groups should come to terms with reality and deal with things as they are and not as they are in their wildest dreams.

Mrs Barker is right about social housing. I have already said that it used to be called council housing. I lived in one for about 25 years. Between 1994–95 and 2002–03, the number of new social houses built for rent in England fell from nearly 43,000 to about 21,000. The review suggests that 17,000 to 23,000 additional houses should be provided each year. That is about double the existing number.

That would be costly and I presume that it would involve some element of subsidy. It takes me back to what I said earlier about 1924. I assume that the house-building ratios in that year were the responsibility of the previous Conservative government, but in the years following MacDonald's first government—and his second one later—a considerable effort was made to provide what we now call "social housing". It was brought about largely by the Housing Act of the late John Wheatley, who was Tam Dalyell's wife's uncle. The Wheatley Acts produced council housing to an extent which ameliorated the housing problem at that time. All I shall say to Mr Prescott, whom I much admire, and to my noble friend on the Front Bench, is that if such an attitude toward housing the poor, as one might call them, was good enough for Ramsay MacDonald and John Wheatley and the Labour governments of the 1920s and even later, it is surely good enough for the Labour Government of this century.

3.44 p.m.

The Earl of Selborne

My Lords, I begin, as I am sure other speakers will, by thanking my noble kinsman Lord Lucas for giving us the opportunity to discuss housing supply and the Barker review. I declare an interest immediately as a landowner in the south-east and specifically as Chairman of the South-East Rural Affairs Forum. The forum advises the Government Office of the South-East on the issues which are of most concern to the rural communities in the southeast, reporting to Alun Michael. Although I cannot speak today for the forum, I admit that the issue which concerns us most in the rural communities in the affluent area of the south-east is the difficulty of providing affordable housing for those on an average wage. We have failed lamentably to do that for reasons perhaps of unimaginative planning and for reasons that the Barker review sets out; namely, lack of innovation in the building sector.

Perhaps that is also because we have relied rigidly in the past on providing what is described as "social housing" as a cost on the taxpayer without recognising the real challenge, which is not necessarily impossible, to provide affordable housing through the market. By that I mean providing housing below the market price that would otherwise be commanded in a way which is nevertheless attractive to business or to the landowner. The Barker review touches on that. A box sets out two or three initiatives. I hope that the Minister will follow up the suggestions made there to see what opportunities are available to allow the market to address the issue of how one brings in housing stock at a price which would otherwise have to be achieved by subsidy.

The problem at the moment is that the south-east, for example, has a draft regional housing strategy. I am referring specifically to village communities of fewer than 3,000 inhabitants. That draft strategy proposes that 720 homes should be built throughout the south-east, from Oxfordshire to Kent, over two years. That implies a cost to the social housing grant of about £40 million. If I look at my neighbours in the village where I live, in neighbouring villages and in villages elsewhere in the region, I realise that that implies an astonishing lack of commitment to the families who have lived in the villages and who have plenty of work available to them in the rural enterprises. There is simply no statistical hope that they will benefit from that modest provision.

We need to think again about how we are going to provide affordable housing, recognising the combined pressures exerted by people wanting to live in the south-east because that is where the jobs are, by its attractive countryside and by its planning system. Those factors all add to market prices.

At the moment, the exception sites policy—Section 106 agreements and the like—provides a measure of affordable housing, but the definition of houses that planners will normally accept as eligible for an exception site are those in receipt of a social housing grant. We then come back to limitation of the amount of grant available and it does not go very far. A more imaginative approach would be to take the Housing Corporation's total cost indicator and say that any housing whose cost was 80 per cent or lower of that total cost indicator would be eligible for the exclusion sites. Those sites would then be recognised as fulfilling a role for the rural economy by meeting the desperate need for social housing.

The challenge would then be to provide houses at 80 per cent of what the Housing Corporation accepts as a reasonable cost. Part of the answer will he by shared ownership, because it will be in the interests of businesses, landowners and others to share part of the cost. They may not even wish to charge rent for their share. I have set up my own scheme, my own business. I declare an interest as a farmer with a shared ownership scheme. I am reasonably happy just to take the increase in equity on the share that I do not own, but I have given the right to staircase to those who live in the house. If I am bought out, that is all the better because I can recycle the money. That is one element. If rent is to be charged, the rent allowance can be used to fund that share of the ownership.

However, the ultimate requirement of housing in rural and urban areas is to attack the high cost of building in this country. The Barker review is interesting in its analysis of why it is that we appear to have costs that are higher than some, but not all, of our neighbours, and why we are particularly unsuccessful compared to Germany, Japan, Scandinavia and other countries in breaking through on the potential of offsite manufacturing systems. Industry offers all kinds of reasons why those do not work in practice. It usually comes down to economy of scale, but Kate Barker points out trenchantly—she could have been even more forceful—that the building industry is not known for its innovative skills. There is a need for much better research and development. There is a need to take the whole problem and to copy what is happening in Germany, where large companies such as Volkswagen have invested large sums of money in offsite manufacturing systems.

I am told, although I have to admit that I cannot substantiate it, that the costs are now likely to come in at a 25 per cent reduction from what were quoted for at British offsite manufacturing systems. That needs to be looked at carefully. They are still speculative and, of course, there are all kinds of difficulties in trying to persuade planners, neighbours, or even potential owners of the homes that what are effectively factory-built houses will be appropriate in their rural landscapes and will hold their values. It is sometimes difficult to persuade the financial services that they should be insured at a sensible rate or that mortgages should be offered. But these are issues about which we in this country appear to have a much greater hang up than in Scandinavia, Germany and certainly Japan. If we are to crack housing in this country, we simply have to take this step change and also have with it a much more enlightened planning policy.

The reason that we have failed so many people by not providing housing stock where they need it, where the economy requires it, is because the very people in the greatest need of such housing are not in a position to make a decision. They are not on planning committees; they are not trying to protect their house values; they are not trying to meet some modern concept of what a house should look like. Just think about their grandparents or great grandparents. When they started in the village communities, they very often built their own houses; they used local materials; the houses were not smart; they might have been built to a standard that perhaps would no longer be acceptable. Nevertheless, they provided the need of that generation. Because we now enforce standards that may be appropriate for those who can afford them, we do not allow self-build homes to the extent that we should, even if we insist, as I am sure we should, that the building regulations should in no way be short circuited.

If we are to consider low cost housing schemes, let us look again at offsite manufacturing systems, let us look at self-build, where a shell is provided, let us ensure that we crack the question of how to get high quality design using vernacular cladding materials, but, above all, let us recognise that the purpose of building houses is to meet the needs of the people who need to live in them.

3.52 p.m.

Lord Oakeshott of Seagrove Bay

My Lords, I hope that Kate Barker thinks more clearly and speaks more independently of the Government on the MPC of the Bank of England than she does in this, frankly, muddled and flawed review.

Kate Barker's analysis of housing affordability and what drives house prices misses the main point, which jumps out at you from the chart of housing completions over the past 50 years on page 125 of the report. Between 150,000 and 200,000 new houses for sale have been completed every year since the late 1950s. That total has been very stable over the past 20 years or so. But the flow of new social housing built for rent by the public sector—councils or registered social landlords'—is now down to a pathetic trickle. As the noble Lord, Lord Howie, pointed out in his fascinating historical excursion, it is now down to 21,000 new social houses per year. It was running at about 150,000 a year as recently as the late 1970s, certainly within my working memory, because I was a member of Oxford City Council's housing committee at the time.

If we are serious about tackling homelessness and housing crises in the high stress areas of London and south-east England, we must deliver far more affordable housing directly at the point of need, as the noble Earl, Lord Selborne, illustrated so clearly and expertly in his speech. Here I must differ in emphasis with my former city colleague, the noble Lord, Lord Lucas. Of course, increasing supply ultimately affects price, but so does reducing excess demand. There is not a shred of evidence that spraying estates of new executive boxes at a quarter of a million or half a million a time all over the green belts and flood plains of southern England will house key workers for our creaking public services or reduce the rate of house price rises any time soon.

Barker's key mistake is to assume that building only new homes for sale reduces house price growth. But building new social housing meets housing demand more directly. Much of the upward pressure on house prices comes from people being forced deep into debt to buy because they can find nothing to rent. There is no surprise there, of course, because new affordable housing has dried up and so much social housing has been sold off by the governments of the noble Baroness, Lady Thatcher, who I am sorry to see is no longer in her place, and her successors.

The Barker review's proposed additional 17,000 to 23,000 social houses a year barely scratches at the surface of our affordable housing crisis, as it is called by Home Truths, backed by the Town and County Planning Association, the Joseph Rowntree Foundation and many other leading housing associations. Barker believes that her recommended targets of building 17,000 to 120,000 extra new private sector houses for sale a year will cut long-term real house price rises to either 1.8 per cent or 1.1 per cent a year. Frankly, the evidence for that in her report is so thin that it is almost anorexic. That, in turn, undermines Recommendation 1, that the Government should establish a market affordability goal for house prices, which should be incorporated into the public service agreement framework.

Not content, of course, with just the national house price goal, which will be even more difficult to achieve than it is to define, Recommendation 5 goes on to say that every unelected regional planning body should, set its own house price target, plus sub-regional targets, which may include floors and ceilings". Regional planning bodies and regional housing boards would be merged to create regional planning and housing bodies, which, will be responsible for managing regional housing markets delivering the regions' affordability target … and will continue to be responsible for the Regional Spatial Strategy". The regional planning executive would, of course, require new appointments, including a chief executive". That involves building bureaucracy, not houses. These new regional housing commissars could no more set regional house prices, let alone sub-regional floors and ceilings, than King Canute could stop the tide coming in.

Picture yourself as the chief executive of the new RPHB in York or Nottingham, watching house prices rise in your region by 50 per cent over the past year. What would you have done—torn up your house price target, changed your sub-regional price ceilings into floors or rung the Governor of the Bank of England, begging him to put up interest rates? Recommendations such as these are for the birds. They cut right across the grain of how markets work and they override democratically elected local authorities. For instance, we read in the report that within the current institutional framework at the regional level, no organisation has overall ownership of the regional housing market. Of course it does not; millions of individuals own it. No serious economist would ever write a sloppy sentence such as that.

Also, sadly, Barker has been nobbled by the Treasury in her refusal to end the nonsense of a 0 per cent VAT rate on new building, compared with a crippling 17.5 per cent rate on the reconstruction, renovation and improvement of existing homes. That is very interesting, because her report actually makes a very powerful case for applying VAT to newly built homes on green field sites. It says that it has credibility, would correct the distortion between new build and repairs, maintenance and improvement, would create a more efficient market for housing resources, and would enable the wider community to use VAT to share in development gain without undermining the ability of most landowners to prosper from land sales for residential use. Wise words, backing a longstanding Liberal Democrat commitment.

Why then do we suddenly get a screeching U-turn worthy of Tony Blair over the referendum? "No equalising of VAT rates after all", says Barker—"let's try a planning gain supplement". However worthy in principle, that to me looks like some of the 1976 development land tax, the 1973 development gains tax, the 1967 betterment levy or the 1947 development charge. Politicians love ideas such as those, but property professionals have grave doubts about whether they will work any better than their predecessors, when land owners just sat on the land and the system seized up.

By contrast, VAT at, say, 5 per cent on new housing is simple, straight forward, fair, impossible to evade and easy to collect. Indeed, in the section of the report that Barker, rather than the Treasury, wrote before the U-turn, she confirmed that levying VAT on newly built housing would have little direct impact on house prices and would lead to a reduction in land prices, and that, it would have the desired effect of extracting some of the development gain associated with land sale for housing development". Some three and a half years ago I made the case for equalising VAT rates in this House. I received an encouraging and revealing response from the noble Lord, Lord Whitty. He called the present distortion, undoubtedly a significant perceived disincentive to refurbishment … However, at the end of the day, these are matters for the Chancellor … No doubt the taxation issue can be referred to at a later stage". —Official Report, 17/10/00; col. 970.] We have reached the later stage; some three-and-a-half years on, we are no further forward. When will the Treasury lift its dead hand blocking this long overdue reform?

So VAT reform would help to bring unfit empty houses back into use. In total, there is not a housing shortage in this country. The problem is that too many of our houses are in the wrong condition, at the wrong rent or price, and in the wrong place. VAT reform would provide a major boost to social house building for rent and thus attack the crisis in affordable housing and help to keep prices down.

Most important of all, the Government must pursue a much more vigorous policy to promote economic growth. jobs and therefore housing demand in our less prosperous and less overcrowded regions. Building new towns all over southern England only reinforces regional inequality and makes overheating down here worse. Northern and Midlands cities have plenty of cheap housing, plenty of cheap office space, and the skilled staff to take far more government jobs for a start. Members on these Benches have already proposed in all seriousness to move a substantial chunk of the Treasury's operations to Liverpool. Why not follow that by moving most of our swollen Home Office head office to Newcastle? Some 1,300 Home Office civil servants say that they must have daily access to Ministers and Parliament. What rot. Why, for example, does the Prison Service need to have its headquarters in London? In response to the noble Lord, Lord Lucas, whom I thank for his interesting speech, this is not a question of moving bodily a quarter of a million people from southern England up north, but of stopping the steady drift of jobs, money and people down south—or at least trying to reverse the trend.

I believe that the Barker review is a great opportunity sadly missed. It is now time for the Government to act on the areas under their own direct control—VAT reform, far more social and affordable housing, and jobs to move out of London and the south-east to where they are desperately needed in the regions.

4.2 p.m.

Earl Peel

My Lords, I start by expressing my thanks to my noble friend Lord Lucas for instigating this important debate on one of the most pressing subjects faced by this country at the moment. I do not profess to be a great expert on these matters and I am conscious that I shall be followed by the noble Lord, Lord Best, who certainly is an expert. He has probably forgotten more about the subject of housing than I have ever known. But I should like to take this opportunity to say a few words about housing needs in rural areas, in particular in the smaller and more remote villages of England and Wales. This is a subject which I think was largely ignored in the Barker report.

I start by declaring my interest as a landowner. As such, no one is more acutely aware than I of the need to protect rural Britain from the ravages of inappropriate development. However, the countryside cannot stagnate, and a recent report produced by the Country Land and Business Association on housing and the rural economy concluded that the current planning policies are neglecting the growing crisis in housing in rural areas, particularly in villages in the wider countryside, and that the problems of affordable housing cannot be addressed in isolation from the insufficient supply of housing as a whole.

That last point is important because I think it means that the difficulty faced by local people, including key workers, to whom my noble friend quite rightly referred, is that they are not able to compete financially with outside forces. It is also a question of a lack of houses in general. The report stresses the need for an increase in the supply of all types of houses in order to help reduce the pressure.

Of course, building under any circumstances is an emotive subject, particularly so in the more remote rural areas because of the perceived visual impact on the countryside. However, I believe that there are good examples which demonstrate that with intelligent thought and good design reflecting traditional local styles, not only can new housing blend into the local landscape without causing offence, but if it is done really well, it can be a positive enhancement.

The rural economy is as important as any other sector of the economy in this country. It does not deserve to be abandoned. A well-managed countryside depends on a vibrant economy, and an adequate supply of housing is an essential ingredient to achieving such a goal, a point acknowledged by Kate Barker in her report. Moreover, given the changing face of agriculture and the need for rural enterprise to expand into alternative ideas, a more pragmatic approach needs to be adopted by planners towards the re-use of redundant agricultural and commercial buildings in rural areas. When such locations are close to public services, I suggest that there is no reason why judicious plans combining commercial and residential use would not be appropriate. To that end, I believe that there is a case to be made for the definition of brown field sites to be extended to include land supporting buildings previously used for agricultural purposes.

Notwithstanding the need for a general increase in the supply of housing in rural areas, the greatest problem lies in the shortage of affordable housing, a point already identified by several noble Lords. This has been brought about by the lack of supply and the ever-increasing demand from people living away from rural areas to pursue what might be described as the countryside idyll.

There is also much talk of key workers. But the category does not apply only to doctors, nurses and teachers; that is, those working in the public sector. Workers in the private sector are equally important in their own way and their contribution to the local rural economy and the well-being of the countryside is essential. Here I refer to farm workers, plumbers, electricians, gamekeepers, forestry workers and the like.

The Countryside Agency has estimated that an additional 10,000 new houses are required per annum in settlements of under 10,000 people. Yet I believe that Housing Corporation finance is budgeted to supply only 1,750 start-up homes in rural settlements of under 3,000 inhabitants. I appreciate that the two figures do not compare exactly, but it is clear that there is likely to continue to be a severe shortage while lack of finance continues to act as a major restriction on the provision of sufficient affordable housing to meet the needs of the smaller settlements of this country.

However, affordable housing in smaller rural settlements is generally uneconomic unless the land is made available at price levels significantly below the market value. That requires some degree of subsidy either on the rent or through shared equity. One solution is to consider what landowners themselves can do to bridge the gap between affordable housing and key local employees. In the absence of available land there will be no housing, so it would seem logical to try to encourage the release of land to meet such demand.

I feel certain that, if encouraged, landowners would be willing to provide land for affordable housing provided that it was understood that such dwellings would be occupied by people who play a key role in the local community in either the public or the private sector. Unlike a speculative developer, I am sure that the local landowner would be prepared to accept a figure well below the open market development land value, provided—and this, I believe, is key—that those houses were retained for their original purpose and not allowed to fall on to the open market. Such properties could be rented out or sold using shared equity as described by my noble friend Lord Selborne.

I now raise the subject of exception sites, as defined in the 1992 national planning policy. The CLA in its housing report, to which I have already referred, has strongly argued the case for the retention of such a mechanism. It says that exception sites should be used more imaginatively by planners, using Section 106 agreements to provide more affordable housing. It goes on to say that the allocated quota site approach has not worked for smaller settlements because it paralyses development, whereas exception sites allow local authorities to find the right site and to negotiate an appropriate land price with the landowner concerned, thus going a long way to reducing the call on the public purse.

Many, if not most, affordable housing schemes in remoter areas have been achieved through the use of the exception site mechanism. So I hope that the Minister can give the House an assurance that this scheme will not be compromised. I also suggest that the use of exception sites concurs with Recommendation 9 of the Barker report which calls for local plans to be more realistic in their initial allocation of land and more flexible in bringing forward additional land for development.

I suggest that the combination of encouraging landowners to release small pockets of land at reduced rates for the purpose of housing key community employees, in both the public and private sectors, along with the flexible use of exception sites, should help towards easing, in a modest way, the housing needs in the remoter rural areas. It is often suggested that building in villages is unsustainable through lack of services, but the shortage of houses for local people is making communities unsustainable, resulting in additional travel, usually by car, with all the obvious consequences.

4.12 p.m.

Lord Best

My Lords, I declare my interests as chief executive of the Joseph Rowntree Foundation which undertakes a continuous programme of research on housing matters, with a long list of reports on housing supply to which references are made in Kate Barker's review, and as chief executive of the Joseph Rowntree Housing Trust which tackles problems of housing supply, in particular in relation to affordable homes, and which is currently planning a sustainable new community as an urban extension to the city of York.

I am extremely grateful to the noble Lord, Lord Lucas, for bringing forward this debate on a subject that is now near the top of the political agenda. I am deeply appreciative of the hard work and skill that Kate Barker has applied to her task and which I have witnessed first hand at a number of meetings with her and her colleagues. I think a word of appreciation should also go to the Chancellor for commissioning the review in the knowledge that it would be bound to put pressure on the Government to address the problem of inadequate housing production and the requirement for more support from the Treasury.

From the many recent reports from the Joseph Rowntree Foundation on the issues raised in the Barker review, I thought it might add most to the debate if I drew upon the findings from three new studies which we shall be publishing in June. The first research project that I want to cite is currently being concluded by Professor Steve Wilcox of York University. It looks at the facts on affordability—who can afford to buy a home and who is left out. The Barker review explained the position nationally: only 37 per cent of new households could afford to buy in 2002 compared with 46 per cent of new households in the late 1980s. The number of homes bought by first-time buyers has declined markedly, even though at least as many people aspire to home ownership as ever before. As Kate Barker puts it, this brings potential for an ever widening social and economic divide between those able to access market housing and those kept out". Steve Wilcox first demonstrated, on the basis of 1998 house prices and incomes, that it was not just in London and the south-east that home ownership was beyond the reach of many new households. As incomes may be relatively lower in relation to house prices in some other places—for example, in the southwest and in other rural areas—affordability was just as great a problem there as in the over-heated London and south-east regions. Now this evidence has been updated to 2003 and—this comes as a surprise to no one—it is clear that the problem of affordability has worsened dramatically and more areas are seriously affected.

The tip of the iceberg is the rise in homelessness. Thank goodness that no longer leads to families being placed in unsavoury bed-and-breakfast accommodation because of sterling efforts by the Government and local authorities to use privately rented accommodation instead. But the B-and-B success story is at the expense of other groups who can no longer rent the same private property. Unless the supply of affordable homes is addressed, the misery is just moved around. Shortages of affordable housing destroy quality of life for more households than those declared homeless by local authorities—those forced to share into middle age; those in miserable, overcrowded flats; and those who have a two-hour commute that ruins family life.

Steve Wilcox's latest research illustrates the extent of the affordability problem. In 100 local authority areas working households with average incomes now need a mortgage of five times their earnings to buy the average house. In places like Pen with in Cornwall, south Lakeland in the Lake District, and east. Devon, as well as in Westminster and Islington, those on average earnings need a mortgage of over seven times their income, which is clearly impossible.

The second piece of work commissioned by the Joseph Rowntree Foundation to which I want to draw your Lordships' attention relates to the position of parents. While all of us homeowners may feel a warm glow from the increasing value of our home—even if we think current figures are unrealistic in the longer term—those of us who are homeowners with children are coming to recognise that high house prices are not quite such good news after all. We asked MORI to do a poll for us to determine how parents with adult children are being affected by the problems of affordability.

The MORI poll shows how more and more parents will need to dip into their own pockets to support the next generation in meeting current levels of house prices. Two-thirds of those with adult children under 30 are affected. That takes no account of the impact of bigger student loans in the future. Parents of such adult children who have not yet purchased overwhelmingly believe that their children will want to do so, but over half of the parents feel that it is unlikely that their children will be able to buy without parental support. Although three-quarters of these parents would be willing to help, only half of them will have the resources to do so. Parents reckon that each of their children will need an average of £17,000. To raise that money a fifth of parents thought it likely that they would need to borrow themselves—for example, by remortgaging their own house. More than half of the parents fear that without parental funding their adult children will never be able to buy.

It may help to change hostile attitudes towards new housebuilding as more homeowners recognise that just when they might be finishing with their own mortgage, they may be forced to borrow again to help out the next generation; or, at least, be required to give away much of any capital they have saved.

This brings me to a third piece of work supported by the foundation and undertaken by the Cambridge Architectural Research organisation. This report, which will be released next month, looks at public attitudes to new homes and has tested the notion that "we are all nimbys now". The study involved interviews with over 1,400 people in areas of potential growth in the south-east and discovered that, when faced with reasoned argument, opposition to new housing was not universal or total. Consultation can work; people make reasoned choices and compromises if presented with information about a range of options. They are prepared to see development on open land, not just on brownfield sites. Mostly they agreed that the region must be allowed to grow. While they remained opposed to the thought that many more homes should be built, there were clear worries about the shortages of affordable housing.

Of course, rational and sensible public views in relation to a region or city may not hold good when it comes to the potential development of the site next door. I have been shocked at the level of opposition to our proposals for creating a sustainable new community on the edge of York. This is intended as a model in terms of design, traffic calming and accessibility; an integrated mix of renting, part owning and owning; and with heavy expenditure on environmental aspects. But, despite 36 local consultative meetings, those who live nearby have had exaggerated fears and misapprehensions about the consequences of any such development.

This case, in microcosm, reveals the pressures that vocal opponents of new housing bring to bear upon local councillors. There is a democratic deficit in that those people who will be delighted to occupy this new community in the future are not yet in a position to make their views known. Clear and forward looking local leadership can be hard to exercise—although we detect it in York—in the context of the constant round of local elections, particularly where the strength of the political parties is finely balanced. To me, this suggests more decision taking at the more distant regional level, rather than expecting sensible local councillors to incur the wrath of their electorate if they speak in favour of new housing.

Having indicated that research in the Joseph Rowntree Foundation's pipeline underlines a picture of worsening affordability, of new pressures on the parents of those in their twenties and of the importance of local opinion, perhaps I may end with two conclusions.

First, the problem of an inadequate supply of affordable homes can be addressed only by more supply. It cannot be overcome by paying subsidies to special groups. If subsidised mortgages are made available to nurses or teachers—as with the starter homes initiative—these worthy people may be able to outbid others in the market place. But if there is no increase in the number of homes, the extra cash will pour fuel on the flames and simply push up the prices of existing homes beyond the reach of other people. The taxpayers' money needs to be used to increase supply, and that suggests targeting grants on the production line of the registered social landlords—the housing associations.

As Kate Barker has made clear, it is not a decline of private sector house building that has reduced housing output to the levels of the 1920s despite rising household numbers; it is, as other noble Lords have emphasised, the reduction in grant-aided housing—homes previously built by local authorities and now by housing associations.

Kate Barker estimates that it will cost perhaps another £1.5 billion each year to increase sufficiently the output of subsidised or affordable housing—with, of course, the new homes pepper-potted among owner-occupied housing, not put into segregated ghettos. This call for funding is an uncomfortable reality but it is one which the Chancellor really must address in this summer's spending review.

My concluding point is that the private renting sector also deserves a boost. The current buy-to-let lending boom— with nearly £40 billion of loans now going mostly to new small landlords—represents only additional demand for existing property, not the commissioning of a supply of extra homes. The Chancellor is looking at the opportunities for property investment funds—which could bring in new money and an increase in new supply—and we need to address that issue.

I greatly welcome Kate Barker's excellent review. I hope that it will lead us into addressing one of the great challenges still facing this country.

4.24 p.m.

Baroness Byford

My Lords, I thank my noble friend Lord Lucas for giving the House the opportunity to debate Kate Barker's report. Whether we agree with all of it or disagree with all of it, we at least have a chance to consider it fully. I hope that our discussions today will move the debate forward. With its 36 recommendations, the report challenges many long-held views. Unfortunately, the Government have failed to allocate parliamentary time for a full debate on it and so I am particularly grateful to my noble friend for introducing the subject today.

In her introduction, Kate Barker stated that in 2001 the construction of new houses fell to its lowest level since the Second World War and that fewer were built than in 1924. Over the 10-year period to 2002, the output of new homes was 12.5 per cent lower than in the previous 10 years. That is a worrying figure.

Builders will argue that planning permission is not being granted and cite the strength of local opposition to new house builds. This argument has been reflected in the Chamber today. Others will explain the fall in numbers by quoting the perception that most of the houses being built are large and often detached. But the House Builders Federation representative to whom I spoke yesterday gave an example of what pressure can do. In the south-east in 1997, 47 per cent of dwellings constructed were detached and only 15 per cent were flats; in 2003, the proportion was 19 per cent detached and 47 per cent flats. The remaining build was a mixture of bungalows and semidetached and terraced housing. Can the Minister comment on the reasons for these figures?

Does the Minister believe that we will have enough skilled trades people available if we decide upon a large increase in house build? Does he accept the report's suggestion that perhaps three out of every 100 employees should be apprentices? If so, how do the Government envisage moving forward with that proposal?

Kate Barker suggests that we should build our way out of the supply shortage. If, however, only 1 per cent of the houses required are built every year, it will take decades before the shortage is overcome. It is also true that, since the fall in the value of stocks and shares, many people have turned to investing in the housing market, an issue to which the noble Lord, Lord Oakeshott, referred. The buy-to-rent sector has grown, but will it continue to thrive? It will do so only as long as sufficient demand exists for rented accommodation. So the balance between the rented and owned sectors is interlinked.

Are the Government's figures on the demand for new houses based on people's preferences, or are they an accurate measurement of the number of people who lack their own homes, whether rented or purchased? Can he explain how predicted growth demand is factored in and whether the drop of 1 million in the 2001 census figures has yet been reflected in the new housing total requirement?

I turn now to consider the issues of brownfield sites and empty homes. The Government are to be congratulated on the work they have carried out towards the use of brownfield sites. However, I understand that there are still some 650,000 hectares of brownfield land available, of which 11 per cent is immediately suitable for housing development. Can the Minister confirm these figures? Can he say, either by department or in total, how much unused land is held by government bodies such as the MoD, the NHS and other public institutions? Such information would help inform our debate today.

I believe that there are some 718,000 houses standing empty. A large number of these reflect the problems that some councils have in filling their properties quickly once they become vacant; others belong to people who seem to prefer to live elsewhere; and, of course, some belong to elderly people who have had to move into sheltered or residential accommodation. What research has been undertaken to ensure that sufficient and relevant housing will be available in the future, having regard, in particular, to the likely increase in the number of single elderly people which is forecast over the next 10 years?

Do the Government agree that one of the major difficulties for new house build lies in the granting of planning permission, a matter to which I referred earlier? What is the latest total for land with full or outline planning permission held by local councils or by developers and builders? Do the Government agree with the recommendation that regional planning bodies and regional housing boards should be amalgamated? If so, will the Minister explain how the new body will enable more housing to be built? For instance, will it impose new building sites on rural and urban communities where planning permission has previously been refused, or will the new body be yet another additional costly layer of bureaucracy?

Does the Minister accept that there should be a proper assessment of the current situation whereby we have surplus houses in the wrong place while in other areas we are desperately short of affordable houses?

So far I have not mentioned the newer types of housing construction. Several larger companies have been quietly investing in houses that are built in factories before they are put on site. These are engineered to a high standard of insulation, energy efficiency and the use of materials which have a less unfavourable impact on the environment. They are manufactured in factories and then conveyed to the site. I understand that a layer of bricks or wood panelling may then be added to the shell so that they look like a traditional house. Other noble Lords have touched on that area, which offers great possibilities.

I declare an interest. My family owns property in Suffolk. We have sold land for affordable social housing to be built. We are very happy to support that. The land we sold to the local authority now houses many families. It is then hard, as my noble friend Lord Peel said, when one applies to convert other buildings for either business or other purposes to be turned down by that same council, which says that it is not relevant.

The Government need to allow a degree of flexibility to local communities to encourage the take up of what I would call "practical workings". Here I should like to give the Minister an example. Two days ago a councillor from south Shropshire came to see me. His council's survey shows that 1,435 new affordable build homes are needed in his district, but the county structure plan allocates it only 18 new houses, of whatever type, per annum until 2011.

Clearly, that is a mismatch. So the council has taken the bull by the horns and launched a joint venture between the district council and the private sector to develop a balanced portfolio of market and affordable homes. Has that come within the Minister's portfolio at this stage, or is it a new innovation about which he knows nothing? It makes sense where there is permission to build ordinary private houses for sale and there is a willingness to include affordable housing.

I understand that the houses are limited in price. When a person sells the house its price can be raised only by an amount related to the average value of property in that area. So it would be retained and not lost as affordable housing. I think that is a good example.

Do the Government have a role in encouraging such new developments? Do they continue to support building research? Are they contributing to work designed to reduce demand on water supplies, to improve the efficiency of water storage, particularly the reduction of evaporation in the face of climate change and to lessen the impact of dwellings on the environment, or does the Minister think that that should be left to the private sector?

What work are the Government commissioning or carrying out to establish the housing requirements in the next two decades? I am particularly concerned that we should not find ourselves once again faced with a situation in which older people living in large houses which they cannot afford to maintain find there are no smaller houses in the area to which they can move.

House affordability in rural areas is increasingly worrying. Several noble Lords have spoken of that. If we do not have enough affordable houses in those areas the communities die. As services are increasingly centralised, there are fewer GPs' surgeries in the villages, fewer rural post offices and a steep fall in the number and scope of village shops. Strong, supportive communities need to be encouraged. All that depends on the accessibility of affordable houses.

This afternoon's important debate raises huge issues. I am very grateful to my noble friend for giving us the opportunity to consider them. I hope the Government will take up the challenge and that the Minister will respond directly to some of the questions raised this afternoon.

4.35 p.m.

Lord Sutherland of Houndwood

My Lords, I thank the noble Lord, Lord Lucas, for giving us the opportunity to debate these immensely important issues. It is an appropriate tribute to Kate Barker and her colleagues that we are assembled to spend time on a report that sheds light on many of the complex issues that surround this area.

I want to make four points in the debate. The four points may seem disparate but in fact they are linked together by two things: first, they concern planning and regulation; and, secondly, they require for their proper treatment that holy grail of politics—interdepartmental co-operation, what perhaps in headier days was called "joined-up government".

I shall introduce my first point by mentioning a novel that I thoroughly enjoyed and approved of in my fairly early youth. It is a novel by David Lodge called Changing Places. In it, which is a satirical account of British and American universities, there is an exchange of places by two professors. The one from California, from the University of Euphoria—typically and perhaps illusorily named—came to the rather less illusive University of Brummidge in the Midlands. On the first morning of his stay near the University of Brummidge the professor in question woke up in a panic; he thought he had caught fire because he thought he saw smoke above his bed. In fact, it was his breath condensing in the air. He had not realised that in Britain we do not yet know how to regulate the temperature of houses. Things have not got significantly better. We have got better at pumping heat into houses, but of course a great deal of that simply heats the local environment.

My first point really is a request. There is the prospect of a significant increase in building, as envisaged in the Barker report and certainly in the comments of the Office of the Deputy Prime Minister, at Thames Gateway and around the country over the next 10 to 15 years. This is an opportunity to change building regulations to ensure that much higher standards of energy efficiency are built into the houses that we would like to see available for all sectors of the community. The first point concerns that kind of regulation. Are the Government paying any attention to this issue? Granted that very many new houses will be built over a comparatively short period, it is a chance to move the whole debate ahead and, indeed, to change the character of some of the energy needs of the community in which we live. It is a very important issue.

My second point concerns how the design of houses will affect the use to which the houses are put and their suitability. I pay tribute in passing to the Rowntree Trust and its Hartrigg Oaks Scheme, which is specially designed for older people who might have care needs in the future. I shall not go into detail, but it is an immensely important example of how. in this country at least, some agencies are trying to deal with the needs of the elderly, potentially frail and, indeed more broadly, the disabled. My plea is again a request to ask whether further guidance might be issued, particularly about one aspect. If you have a potentially frail person in your family—and we are all frail in one sense or another—there are two ways of trying to deal with it: first, by making arrangements for proper care home supervision; and, secondly, and much the preferred way for virtually everyone asked, by enabling people to stay in their own homes.

The technology infrastructure of homes will make this more possible and more likely if we pay attention to it now at a national level. This infrastructure, creating the possibility of so-called smart homes, makes possible an extension of life that is tolerable and acceptable to many who otherwise would need complex care arrangements to be made in homes and possibly even in hospitals. My second question to the Minister relates to inter-departmental planning, cooperation and discussion. What opportunities does he envisage for taking that discussion forward if so many new houses are to be built? How will the elderly and potentially frail be integrated into the new communities that will be built up as very large numbers of houses are completed?

In relation to my third and fourth questions, I declare an interest as chairman of the Quarry Products Association. This, initially, has to do with rather important planning matters. The Barker report properly spends a lot of time on planning issues. However, planning is not simply for houses and land; it also concerns the materials used to build the houses. Of course, there are marvellous ways in which we can use new technology, but even the infrastructure in which houses are set requires large amounts of quarried material.

The quarry industry is sadly not a popular industry. That is a great mistake because civilisation is built out of holes in the ground. That is also true of houses. Unless there is sufficient adequacy in the planning horizon for the quarrying and extraction of relevant materials, whatever plans you have there will not be sufficient houses or they will be built at great cost by importing materials from far afield with the appropriate transport costs.

There are two aspects to this issue. One is that 15-year planning horizons for quarry extraction are currently being set. Have these planning horizons been set in the light of the demand potentially created by the statements from the Office of the Deputy Prime Minister and from the Barker report? If not, they may have to be looked at again. To have planning for houses means land, but it also means the material dug from holes in the ground. I simply ask whether the inter-departmental consideration necessary for that is being given?

The second aspect of this issue of planning relates to a point that I raised in Questions when the statement by the Office of the Deputy Prime Minister was made about the huge need for new houses. Many of these houses will be built—whether we like it or not—in fairly congested areas in the south-east. That is simply a fact. That is where many of the brown field sites are and that is where the Thames Gateway is. If that is so, large quantities of material will have to be taken into the building sites and probably detritus and debris will have to be taken out of them. If we have a horizon of 10 or 15 years when these houses are to be built, we could actually sit down now and think about how this is to be done. Are we siting the planning permissions for quarries sufficiently near the potential development sites? That reduces the cost of transport significantly, and the cost of a tonne of aggregate will vary according to the transport involved.

Equally, are we preparing the infrastructure that will take this vast volume of material—the ODPM was talking about 400,000 to 500,000 houses—often through pleasant rural areas and possibly through congested city and town areas? To do that effectively requires one to think in advance about the right routes, whether we have the rail track that will increase the efficiency of this operation and what the possibilities are of bringing much of this material close to the development sites by sea. Of course, that is an increasing factor now. Material is brought by sea into the Thames Estuary from all along the south coast of England.

These issues require planning. On a related point, at this very moment a discussion is going on elsewhere, in a public meeting in these Houses, about marine dredging. This is a key element of how we supply the material necessary. What thought is being given to ensure that the material available through marine dredging and from more traditional quarrying sites is going to be available? Can it be transported into the building sites in a way that will ensure maximum efficiency, economic saving, and the best treatment of the environment that such a development could tolerate?

4.44 p.m.

Lord Brooke of Sutton Mandeville

My Lords, I much enjoyed the speech of the noble Lord, Lord Sutherland of Houndwood. One of my professors at the Harvard Business School came to teach in London one summer and after he had been staying at a hotel in central London for about a fortnight, we asked him to lunch. We asked how he was finding the hotel and he said, "Peter, my experience after 10 days is that all toast in the United Kingdom is manufactured in Birmingham and shipped out during the night".

I also echo the noble Lord's argument for anticipation at a national level. From my own constituency experience, I have found that immigrants frequently need houses with more bedrooms because their families are larger. Unless thought is given in advance, we will have a conflict thereafter.

It is a privilege to come in at the Back Bench tail of so worthwhile a debate. I am proud that my party should have provided alternate speakers in the debate so far. and will continue to do so until the end. It is a matter of narrower pride too, that both today's debates have been or will be opened by Balliol men. As one who has the same college loyalty, I quote the observation of Philip Guedalla, a man similarly blessed or afflicted: Life is just one damn Balliol man after another". I congratulate my noble—and Balliolian—friend Lord Lucas on the admirable manner in which he set us on our way. Batting much lower in the order leaves much less to say or need to say it.

That is, however, in many ways a comfort. Though my late noble kinsman was for four years Minister of Housing and Local Government in days when that was a Cabinet title, and though he chaired a series of committees on housing matters set out by Aneurin Bevan, when the latter had the housing responsibility in Cabinet—thus demonstrating a bipartisan attitude—I have inherited my late noble kinsman's interest but not his knowledge. I am therefore not remotely qualified to comment in the round on Kate Barker's magnum opus in the way the noble Lords, Lord Oakeshott and Lord Best, variously did. I hope that noble Lords will forgive some more random comments.

I understand the Government's rationale in setting up the review, and I also congratulate the Chancellor. There is no question but that the review provides us with a quarry. I appreciate that the revisiting of PPG3 does not meet with universal approval, but I have always admired the Duke of Wellington's conclusion that his victory at Waterloo was because his battle plans had a leather harness, whereas Bonaparte's had an iron one.

I realise the scale of the nation's task in future housing provision, and I recognise the implications for the Government of that. Incidentally, I am interested in how we are performing in relation to our brownfield targets. That was a salient issue both before and after 1997 and was alluded to by the noble Lord, Lord Sutherland. Could the Minister add a word or two about the comparative density of population in England and Wales within the European Union?

I appreciate that a task on this scale requires a road map, and a wide-ranging one. However, I will acknowledge one apprehension. The road map, like the attitude of the UGC and HEFCE towards universities, can become unduly formulaic. A fortnight ago, we debated London, with the same Minister winding up. I believe passionately in mixed communities. I recognise this objective came under Kate Barker's scrutiny, but successful mixed communities evolve rather than leap fully formed from the head of Pallas Athene, the goddess of wisdom.

Taking examples from both town and country, I had 15 wards in my prior inner city constituency, and I live on a lane in the country which is a sub-hamlet of six houses within a dispersed hamlet of 90 souls. In those 15 wards, there were many good examples of mixed communities, as there were bound to be in a seat among the richest in the country, but also 48th in terms of the poverty indices on a national basis. I take in particular two contrasting examples: Pimlico and Soho.

Pimlico was the more recent, designed largely by Cubitt in the 19th century, on a grid pattern on the marshy farmlands near the river which the heiress Mary Davies—the eponymous origin of Davies Street in Mayfair'—brought as her dowry on marriage into the Grosvenor family 1653. Suitably for a ducal estate—although the Pimlico element had to be sold in 1953 to meet death duties—Pimlico is a largely residential community, where duke and dustman really do live side by side, assisted by Peabody housing which conforms to the same grid pattern that Cubitt created. Working-class families in Pimlico and its perimeter often go back at least four generations, and I disagreed with Dame Shirley Porter on their role in society.

Soho is different. Its origins go back before Mary Davies' marriage in 1653. It was always a manufacturing and trading community, and is also on a grid pattern. In 1685 there were 16 churches for Huguenot worship in Soho. Those working there lived there. Thanks to determined community resistance, which included some small light industry, the demolition of the 18th-century terrace houses was resisted in the 1970s, and the community likewise curbed the expansion of the sex industry. Twenty times as many people work there now as live there, but the alliance between the two sides of the community—residential and commercial—lives on, ironically threatened only by the licensed and entertainment trades that are the subject of the next debate.

In the country, my lane comprises: the manor house lived in by a retired industrialist; a bungalow lived in by a man who largely works from home; a house using old materials on the site of an 18th-century farmhouse, rebuilt by a master craftsman cum artist and his German wife; another bungalow lived in by our immediate neighbour, a retired and partially disabled agricultural labourer and the oldest person in the hamlet to have been born there; a small, handsome stone house let to a London family who come there occasionally and who, at a critical moment, betrayed unfamiliarity with the constraints that the foot and mouth regulations had imposed on the countryside; and ourselves, in a property accurately described by the vendor's agent as, a 17th-century shepherd's cottage, interestingly extended". We all know each other; we talk to each other, although we necessarily see less of the London family; we help solve each other's problems; and we exchange periodic hospitality. That mixture is induced not by statute but by housing history and human contiguity two miles from the nearest shop.

Those three communities are all different, both in history and social admixture, but they are all admirable. I shall be happy to be cured of my formulaic apprehensions, but England will be poorer if that social richness becomes diluted or diminished were we to become too formulaic. I refer to England because an ODPM Minister recently deflected a Welsh question I asked outside this Chamber on the grounds that the ODPM had no responsibility for the subject of my question.

My concentration on mixed communities also necessarily springs from a preoccupation with affordable housing. Matthew Parris once based one of his parliamentary sketches on linking Tam Dalyell MP, now the father of the House in another place, with myself as dinosaurs. I forget which of Mr Dalyell's hobby-horses provoked the sobriquet, but in my case it was inner-city affordable housing for key workers. The Minister will probably be aware of the pro forma analysis organised by the National Housing Federation of 36 relevant recommendations in Kate Barker's review in relation to affordable housing. It has the Government's response in one column and the National Housing Federation's reaction in the next one, followed by appendix B, which takes issue with Kate Barker's calculation of the need for affordable housing. I am not qualified to pass judgment on the differences between the NHF and Kate Barker, although intuition and instinct direct me to the figures that come between the two. Any comments that the Minister might care to make on their differences would be welcome.

Although my interest in affordable housing was originally prompted by urban constituency considerations, I was at school with the late Derek Smith, a successful farmer who, in retirement, founded the charity organisation ViRSA in response to a variety of aspects of rural deprivation, including village shops, housing and rural employment.

I would also be interested in any comment by the Minister on the National Housing Federation's separate observation that there has been no earlier response from the Government on recommendations for selective green-belt release and changes to the operation of the sequential test for land release. I should perhaps add that, although I still savour the Deputy Prime Minister's famous boast in the early stages of the previous Parliament that the green belt was the achievement of a Labour government and that the present Government intended to build on it, I recognise that the jury is still out on his real intentions.

Like my noble friend Lord Lucas, I am sorry not have had access to the Egan paper, not least because of my admiration for the author's background and interest in such important matters, which are, of course, paralleled by the same qualities in Stuart Lipton, the chairman of CABE. Anything that the Minister can say on that will be helpful, as well as on guidance to the availability of the Egan paper. I think that I am echoing my noble friend Lady Byford in saying that I hope very much that this will not be our last debate on this exceptionally important subject.

4.54 p.m.

Lord Cobbold

My Lords, I am grateful for the opportunity to speak briefly in the gap. I am grateful also to the noble Lord, Lord Lucas, for introducing this important debate. I must declare an interest as a landowner in the south-east.

I read Kate Barker's report and recommendations with interest and broad agreement. There is one issue, however, to which I believe that she has given insufficient emphasis. It was touched on just now by the noble Lord, Lord Brooke, and is the extent to which the enforcement of green-belt designation has been and remains a major contribution to the supply of housing. That is particularly so in the south-east where, as the report acknowledges at paragraph 1.45, 60 per cent of available land is protected by green-belt or other conservation designation.

We all understand and value the reasons for greenbelt designation, but it is a blanket designation. It is quite clear that not all land subject to green-belt designation is of equal value in conservation terms. On many parcels of land within the green belt, appropriately designed and conceived development would have zero detrimental effect on the environment—and, as the noble Lord, Lord Lucas, suggested, could often improve it, as the natural development of our villages and hamlets has done over the centuries.

PPG2 on green belts allows for a concept of "safeguarded land" or "white land", which is land between urban areas and the green belt that, to quote from its paragraph 2.12, may be required to meet longer-term development needs". The Government should allow landowners to submit to their local or regional planning authorities any areas in their possession in the green belt that they believe might be designated as white land or under some new terminology, on the grounds that suitable development on those sites would present no detriment to the wider green belt while contributing to the supply of housing, including of course, most importantly, locally needed affordable housing. In the report, paragraph 2.42 and recommendation 10 at least acknowledge the problem and call for planning authorities to show greater flexibility in using their existing powers to change green-belt designation.

4.57 p.m.

Lord Jacobs

My Lords, I am also grateful for the opportunity to speak as briefly as possible in the gap. I want to make only two points. First, I refer to the issue mentioned by my noble friend Lord Oakeshott concerning the possibility of a lower rate of VAT on refurbishment of homes. In France, where the standard rate of VAT is 19.4 per cent, the VAT rate for all home refurbishment is 5.5 per cent. I have noticed that there is a tremendous effort there all the time to improve homes. There would obviously be a cost for that for the Treasury. If 5 per cent were charged on new homes, for example, I imagine that the charging of that lower rate for refurbishment would be revenue neutral.

I have thoroughly enjoyed the debate, and I was waiting to see who would grasp the nettle. The noble Lord, Lord Howie, came closest, when he referred to the percentage of land in this country that is urban land, as he described it, the rest presumably being open land or green-belt land. If I had to recommend anything to your Lordships, it would be that they needed to make journeys—I have had the opportunity to do so—by helicopter from the centre of London to Colchester, and from the centre of London to Coventry. When we drive, we believe that there is ribbon development all the way, and we assume that most of the land is covered with buildings.

After about five minutes of travelling from the centre of London by helicopter, I discovered to my astonishment that the country is green everywhere. One can hardly see the villages, although the towns occupy more land. My second point is really that what has not been discussed in real terms is what we will do if the supply of housing cannot be increased significantly—probably by between 100,000 and 200,000 homes a year. Over the past 50 years, the population has risen from 50 million to 60 million, and there are huge numbers of one-parent families.

It is the demand for homes that is pushing prices higher and higher. The law of supply and demand determines what will happen to house prices. If we cannot increase the supply, there is certainly no likelihood of the demand being reduced. Coming from these Benches, this is not easy to say but I believe that a great deal more land, and not only brownfield land, should be made available for the building of homes. I quoted the south-east, but if people had the opportunity to fly over the whole of Britain, they would realise that, even if we took 2 million acres to create more homes, that would still leave the country as a green and pleasant land.

5 p.m.

Baroness Maddock

My Lords, we are all very grateful to the noble Lord, Lord Lucas, for introducing what has been a wide-ranging and very interesting debate. It has been so stimulating that we have had two contributions in the gap, which, in my experience, has not happened for a while. I declare two interests. I am president of the National Housing Forum and also a vice-president of the National Housing Federation.

Like the noble Baroness, Lady Byford, I welcome the Barker report, whether or not we agree with everything in it, because it provides the opportunity to debate housing and it gives us reference points around which to focus our debate today. I also welcome the fact that the report connects housing and the economy. I have been a housing spokesman for the Liberal Democrats in both Houses and many of my housing speeches have made that point. I am delighted that the Government have woken up to it, although it is a shame that it took them so long—a point touched on earlier by the noble Lord, Lord Howie of Troon. That is particularly the case when we see what has happened to house building in this country, with the lowest number of homes being built since 1924. Behind that are the even more important figures which show that the number of households in temporary accommodation more than doubled in the period from 1995 to 2003. We are building affordable houses at one-tenth of the rate that we did in the 1970s, a point made by my noble friend Lord Oakeshott.

Barker emphasises some of the effects on the economy. One of the main effects is that labour mobility has decreased as people often cannot afford to move to jobs in the south because of the price of houses. Interestingly, some people are put off moving to areas such as the north-east, where I live and where houses have been cheaper, although they are going up in price, because, if they want to move back to the south again, the question arises of whether they will be able to afford to do so.

The volatility of the housing market has caused macro-economic volatility. We hear that matter being discussed time and time again. As other noble Lords have said this afternoon, the current situation is incredibly favourable to some people such as home owners, land owners and house builders. Those groups and their families get richer but other people—key workers, for example—are kept off the housing ladder. The noble Earls, Lord Peel and Lord Selborne, and the noble Baroness, Lady Byford, emphasised the problems for those in rural areas.

My other reason for welcoming the report is that it looks in depth at the supply side in housing. For too long, housing policy has been a response to the latest demand crisis. Such responses often merely patch over the immediate problems and do not deal with the fundamental ones. I do not remember who it was, but one noble Lord touched on what the Government have been trying to do for key workers. Will the subsidies for the loans to key workers have a knock-on effect? Do we understand what that will do?

The number of new homes needed in both sectors has been outlined by Barker and also by Rowntree. Over the years, we have seen least growth in the social or subsidised housing sector. If one looks at graphs of housing-building in recent times, the private sector remains fairly steady; it is in the social sector that the amount of such building has gone down.

It is interesting that Shelter believes that Barker may have underestimated the number of homes that we need. As we have already heard this afternoon, the CPRE thinks that it is an overestimate, but I believe that the CPRE is in a minority here. My noble friend Lord Oakeshott referred to the Home Truths document produced by a number of people with an interest in this matter. That document is supported not only by the Joseph Rowntree Foundation but by the Town and Country Planning Association, Shelter, the National Housing Federation, the House Builders Federation, the Chartered Institute of Housing, the Civic Trust and the Royal Town Planning Institute. That covers a fairly wide range of people who agree that we have a problem with supply. Although people will argue about the extent of the problem, there is general agreement on it.

Barker and all of us have made the case for more homes to be built. But the important point is that we all want to see well designed homes. Several noble Lords touched on that matter this afternoon. Those homes also need to be in appropriate locations and they need to be built with the right infrastructure. As other noble Lords have said, too often the only voices that we hear on matters relating to housing supply tend to be from those who are opposed to new developments. The arguments for new homes need to be heard across the board if we are to improve access to housing for all—a point expanded on very well by the noble Lord, Lord Best. I believe that Barker is a useful tool in doing that.

However, I have some concerns about some of the solutions put forward by Barker. First, I find them to be far too centralist. It is not surprising that I should have that view, coming from these Benches. Secondly, I fear that she is far too ready to cast aside democratic accountability. That was mentioned by several noble Lords this afternoon. Thirdly, and very importantly, I do not believe that she places enough emphasis on sustainability and on the need for us always to be mindful of how we affect the bigger environmental picture. Again, that point was referred to by other noble Lords.

Interestingly, Kate Barker recently spoke at a seminar organised by the British Urban Regeneration Association. She admitted that this was one area on which she was not very good and said that she had not appreciated how high feelings ran over housing and the rural environment. She said: I went into this with a fair amount of naivety". She added that her chief regret about the report was that pressure of space meant that she did not have a greater opportunity to address the water supply issue. That has been mentioned by other noble Lords this afternoon, and the Minister may like to report on it.

Another matter which I do not believe was touched on as much as it should have been—in a sense, it was dismissed—is the importance of empty homes. Noble Lords have also referred to that point in the debate. I do not believe—and I do not think that anyone believes—that bringing empty properties back into use will solve the housing shortage. However, it would make a very good contribution to our immediate problem and it would certainly help to improve local environments. There is nothing worse for those who live there than having empty homes in a street. It leads to crime and involves all kinds of other factors.

Returning to my first criticism—that of centralism—Barker's recommendations are heavily based on a centralised business model. My noble friend Lord Oakeshott was able to explain that far better than I could ever do. But she rightly identifies some of the problems that have held up building. I have already touched on the issue of nimbyism, as have other noble Lords, but Barker also talks about the planning system. Some of us in this Chamber, including the Minister who is to reply, have spent much time over the past few weeks dealing with the Planning and Compulsory Purchase Bill. We on these Benches do not like the fact that, again, convenience has been put before the democratic process. I think there is much evidence that the top-down approach really would be government telling the regions what they are to do, and the regions telling the people. That sort of approach does not work. That is one of my biggest worries.

We need to value the role of planners, to boost their numbers and confidence and give them modern tools to enable them to do a better job. In reading the background for this debate I came across a contribution which pointed out that most European countries are far more advanced in the use of geographical information systems to assist their planning process. I hope that the Government are mindful of that.

One of the other criticisms I have is that Barker does not attempt to look at why our economic development is so unbalanced across the regions. My noble friend Lord Oakeshott went into that, so I shall not repeat the many things he said, except to say that in the northeast, where I live, we are for the first time keeping more graduates from our universities than we are exporting.

I conclude with one or two questions to the Prime Minister.

A noble Lord

Not yet!

Baroness Maddock

My Lords, I am not in another place. I am afraid those days are gone. That obviously indicates the esteem with which I hold the Minister here today.

The Planning and Compulsory Purchase Bill has now passed through both Houses. Was the timing right? Kate Barker said at a meeting that she was really rather shocked when she discovered that she was asked to produce this report when the Planning and Compulsory Purchase Bill was going through Parliament. I wonder whether the Government have conducted an audit on Barker. How many proposals do they think are in the new Planning and Compulsory Purchase Bill? I hope that the Minister will comment on fiscal incentives. Where are we on VAT, which has been mentioned? What about measures to encourage investment for renting and measures to ensure that money for infrastructure is provided upfront, not after the homes are built? How can we recapture increased value from development in local communities? What about the forthcoming spending review?

There are all kinds of other things the Chancellor wants to do—extend child care, tackle pensioner and child poverty and meet defence commitments—yet we hear that we are to receive money for housing. I hope that the Minister will feel that he has the backing of this House when he puts in his bid in the spending review for more money for affordable housing in our country.

5.12 p.m.

Baroness Hanham

My Lords, I welcome this valuable opportunity to discuss the terms of Professor Barker's recent report and the problems associated with the supply of housing. I, too, congratulate my noble friend Lord Lucas on securing what was, as my noble friend Lord Brooke said, an extremely worthwhile debate and one which we might not have had if it had not been achieved in a ballot. Certainly, there does not seem to have been any enthusiasm to bring it forward. I do not put the blame for that on the Minister. I have never known him to be averse to discussing anything to do with his responsibilities. He is always very ready to do that. We have been fortunate today in holding this important debate, which has generated some of the best and most thoughtful speeches that I have heard in the House for some time.

The whole question of housing supply and demand and its affordability is one which has bedevilled succeeding governments. What is clear is that even though this Government have swung into action with their Sustainable Communities Plan, currently, fewer affordable houses are being built annually than in the last years of the Conservative government. As other noble Lords have said, it is clear that there has been a sustained collapse in the development of completed houses in all sectors over the period 1967 to 2002. That is well-documented by the chart on page 125 of the report, where the massive blue section highlights the subsidence of the development of houses.

Local authorities have been taken almost entirely out of the equation as far as concerns providers of housing and have been replaced more or less entirely by registered social landlords—that is, by and large, housing associations supported by the Housing Corporation. However, here and now under these circumstances, as pointed out by the noble Lord, Lord Oakeshott, sadly, completions are depleted.

My noble friend Lord Selborne said that there is a real challenge here for the private sector and I agree. He demonstrated from his own experience the value of shared ownership, for example. That is not always a panacea, but it is a way in which land can be made available and affordable housing provided for people who can—he put it in jargon that we understand although it may not be entirely clear to other people—"staircase" their way out; that is, gradually to buy a property which then becomes their own. I believe also that house builders would not be adverse to looking to ways to provide affordable housing within private schemes. That is the way that we must start to go.

The Sustainable Communities Plan predicates a vast increase in the number of houses to be built over the next 10 to 15 years. It produces vehicles such as urban development corporations to deliver the policies and, by and large, has frightened half out of their wits people who live in the south-east, in particular, at the prospect of large areas being taken over and extended on an alarming scale.

That is not much helped by the pictures of the swathe of south-east England between Peterborough and the Essex coast on which it is proposed to make those extra communities, or by the discussions that we have had over the past few weeks on the extension of Stansted Airport. It may be right that only a small proportion of land is involved, but try telling that to the people who live in those areas and wait for the reply.

It has been informative to listen to the noble Earl, Lord Peel, and the noble Baroness, Lady Byford, on the subject of the effect on the countryside of the proposals in both this report and the Sustainable Communities Plan. They spoke about the difficulty of providing housing in the rural communities and, in doing that, the importance of being able to sustain those communities for the people who traditionally have lived there and who want to continue not only to live there but to work there and to provide the backbone of rural society. It is extremely important that we find ways to ensure that small organic growth in communities can be undertaken and that that can be locally based and locally negotiated.

As I said in a debate last week, along with others from Parliament I had the opportunity recently to visit Poundbury to listen and to see the rationale of developing in an organic and sensitive way the outskirts of a city, which was based on an idea from His Royal Highness the Prince of Wales. I think that most of us came away seized with the importance of building communities gradually, developing the infrastructure of roads, schools, medical facilities, dentists, vets, shops and employment all at the same pace, not at the same place.

I thought that everyone would like that concept. However, I understand that the noble Lord, Lord Howie of Troon, most certainly did not. That is one example—indeed, the noble Lord, Lord Best, with his scheme outside the City of York cited another example—of how people are trying to imagine sensitive development built on a whole system of sustainable living for the future. There is no doubt that we simply cannot dump down a whole lot of little boxes and try to pretend that that will bring together communities; it will not. We must find ways to enable people to come together. As I have said in this House many times, the big problem is ensuring that developments are such that people move in organically and in small numbers so that they get to know each other before anyone starts trying to extend the development. There is nothing worse than lumping together, as we have seen in the past, people who do not know each other and have no commitment to each other or to the area.

Against such a background, this is an opportunity to take a closer look at the report and its recommendations, given the almost daily headlines on the problems associated with housing, house price inflation and lack of affordable homes that Barker looks at. We welcome the report; it has set the tenor for a proper look at what is required. However, we have some concerns. Despite the call by my noble friend Lord Lucas for consensus, there are areas on which we do not all agree.

We are worried about the analysis on which the figures are predicated. They make assumptions about a range of social and demographic facts. Over time, we will want to ensure that we can rationalise them. In addition, they ignore the 2001 census data. It has been measured that 900,000 more houses are required in the UK than the Government estimate. That means that the estimated mismatch between households and dwellings may be flawed. In straightforward terms, perhaps the unsuitable mix of housing and the problem of affordability—related not to supply, but to incomes and mortgage eligibility—are more significant than housing numbers.

Barker assumes that inadequate supply is the main driver in house price inflation, but noble Lords have questioned that. Low interest rates may have an effect; or perhaps the relative unattractiveness of alternative investment vehicles is bringing pressure on the housing market. Other factors are the disproportionate allure of home ownership in British culture and the level of borrowing guaranteed by housing equity. I agree with the noble Lord who said that it was becoming increasingly impossible to buy a house of a size capable of sustaining a family, or for our children to set a foot on the first rung of home ownership.

Kate Barker's advocacy of large-scale building and relaxed greenfield planning constraints is likely to result in unsustainable development. There are three principal concerns. One of those is the effect on communities and the environment—use of greenfield sites, flood plains and historic villages. Lack of water must be acknowledged even in this country as a problem that must be dealt with.

Developers cogently argue that more brownfield development could be achieved through better planning guidance. As the noble Baroness, Lady Maddock, said, quite a number of recommendations in the report deal with planning issues. I agree with her that it would be very useful to have an audit of what is proposed in that. We might have been able to deal with some of those issues during the passage of the delayed planning Bill, on which we have had endless discussions over recent months.

Another issue that was not raised much during debate on the planning Bill, and certainly not in the Barker report, was the lack of planning officers, the difficulty in providing them and ensuring that there is training and time to ensure that they can deal with such matters.

The recommendations in the report will not solve the crisis in affordable housing that is growing increasingly worse. Furthermore, its suggestions would place enormous pressure on green fields and existing historic communities. Again I agree with the noble Baroness, Lady Maddock, about the report's centralising tendencies. Had we had a chance to discuss the matter during the passage of the planning Bill, we would have deprecated enormously the report's centralising tendencies in bringing together the regional planning boards and regional housing boards then dictating down the amount of housing that must be developed in a region. I certainly do not think that we should embark upon such a process.

There is no doubt that this is a thoughtful report. If there are criticisms of it, I hope that they are constructive. We do not have time to go into them all in detail, but I am sure that there is far more time to be spent on it in future. I very much hope that the Government will have the courage to do that, so that we can ensure that what will make a major contribution over the years, as with all the other work done on this serious matter, can be properly taken into account.

5.25 p.m.

The Minister of State, Office of the Deputy Prime Minister (Lord Rooker)

My Lords, I am very grateful to the noble Lord, Lord Lucas, for initiating the debate. It is my third Wednesday debate on the trot. I make no complaint about that, because it has been the first debate each Wednesday.

I shall do more or less what I did last week. When we debated the Sustainable Communities Plan, I came with a set-piece speech, although I had no intention of ignoring colleagues' remarks. A few minutes ago I was torn in deciding whether to stick with my original plan and make the winding-up speech. But I shall cover many of the points raised and intend to respond in writing to the others. In many ways, I saw the opportunity offered by the noble Lord, Lord Lucas, as an extension of last week's debate. It is a further step on the road to delivering sustainable communities in this country.

As I have just said to my noble friend Lord Davies, listening to the quality of the speeches today I feel thoroughly ashamed of some of the speeches that I made in the other place. I have just been reading a report of the Barker debate that took place in Westminster Hall a few weeks ago. It was child's play compared with the seriousness of the issues raised here today. I shall be sitting around the table with the top dogs early tomorrow, and I shall ensure that the points made in this House will he stuck straight in their faces. They need to know the details of our discussions on Barker and such issues because a wealth of experience has emerged. What is more, it has reverberated around the Chamber. I know that there have been criticisms, such as those made by the noble Lord, Lord Oakeshott. However, the other points that the noble Lord made were only supportive in the sense of moving on. That is important.

The planning Bill was introduced in the House of Commons in December 2002. Its Committee stage had been completed by the time of Kate Barker's appointment in 2003. It was a matter of public record that there was a major planning Bill in the parliamentary process. It cannot have been a surprise to anyone.

Baroness Maddock

My Lords—

Lord Rooker

My Lords, perhaps noble Lords will forgive me if I do not give way, because there will not be enough time. I needed to put that point on the record; it did not come out of the blue.

We asked Kate Barker's review on housing supply to look at two key concerns centred on the housing market. The first was decreasing affordability, particularly for those on lower incomes. In 2002 only 37 per cent of new households in England could afford to buy a house, compared to 46 per cent in the late 1980s. The second was a lack of responsiveness in the house-building industry. Over the past 10 years, the number of new houses built was 12.5 per cent lower than in the previous decade.

The current housing market overall is not working. It prevents people who would normally expect to move into owner-occupation from doing so. It creates pressure in other sectors, such as private renting and social housing, as pointed out during the debate. Differences in house prices between regions make it more difficult for people to move between jobs and, as pointed out, to move back again. It has the potential to create an ever-widening social and economic divide between those able to access market housing and those kept out.

Where house prices are the highest key workers such as nurses and teachers find it difficult to find somewhere to live. I wish to point out that everyone with a job is a key worker—a noble Lord raised that issue. If you are the boiler man switching on the central heating in an office block in central London you must be in first; you are a key worker so far as concerns the people in that office block. But the necessary constraints of priorities mean that the scheme for key workers has been narrowed to teachers, nurses and one or two others.

In her report, Kate Barker set out a challenging agenda for change. Her key recommendations were: increases in housing supply, both private and public; establishment of an affordability goal to underpin housing supply targets; increasing responsiveness in how housing supply is planned and delivered; and incentives to encourage the provision of housing supply. Obviously, there is a lot of work to be done. I am not giving the Government's reaction to the Barker plan this afternoon. The Government's reaction is not available. I can only give an initial reaction to her proposals.

I will also take this opportunity to talk about the important work that we are doing, as part of our sustainable communities plan, to tackle the issues targeted by the Barker plan, building on what I said last Wednesday. We are working hard to increase housing supply in London and the wider south east. Completions in the London, south-east and east of England regions have increased continuously since 2001. The most recent figures show an increase in completions of 8 per cent against the comparable period in 2002. Starts are up by 10 per cent. In addition to work to achieve existing plans, which as I made clear last week are for 930,000 extra dwellings up to 2016, we are working with local partners to deliver 200,000 extra houses on top of that figure in the Thames Gateway and the other three growth areas of the south-east: Milton Keynes/south Midlands, the Peterborough/Stansted/Cambridge/London corridor, and Ashford in Kent. We are learning the lessons of the past and making sure that we do not create soulless housing estates, but sustainable communities—mixed communities, not commuter communities—genuine communities with jobs and a social infrastructure.

I have said this repeatedly, and I said it again on Monday morning in Essex to representatives of district councils, not exactly welcoming to the overall big picture, as the noble Lord, Lord Hanningfield, made clear. No infrastructure; no development. No infrastructure; no growth. It is just not on for the Government to push the one and not deliver on the other. We are making sure that new infrastructure—roads, health centres, and schools—goes in before the houses are built, so that the services are already in place when people move in. Good progress is being made. We have only made a start, and I agree that there has been some difficulty in recent years. Over £2.7 billion has been made available for major transport schemes in the growth areas. We have put in place a funding package to enable the NHS to increase local service capacity in the growth areas. We are currently working with local education authorities and the Department for Education and Skills to ensure that schools' needs are met.

Our drive to increase housing supply is not confined to new developments. We are committed to accessing the potential of the 300,000 long-standing, private sector empty homes in England. Our approach emphasises voluntary measures through work with the Empty Homes Agency to develop local authority capacity, but following positive reactions to our consultation paper last summer, we are also considering how to introduce some degree of compulsion. We are exploring options for securing the release of vacant space over shops. We have established the Housing Above Shops Task Force, and we are looking closely at its recommendations for measures to overcome barriers to the release of more space above shops. Those barriers are serious, and I pay tribute to the positive response that the British Poverty Federation made when I first asked it to help on this matter, when housing was my daily responsibility. It has been positive about this, along with its other partners.

Through the Housing Corporation, we delivered over 23,000 new affordable homes in 2003–04, focused in London and the south-east, where the need is. In March, we met our target of bringing to an end the use of bed and breakfast accommodation for homeless households with children, except in emergencies. We did not solve the problem of homelessness: I fully accept that it goes on, and more is needed. We have accepted the case made by Kate Barker for increased investment in social housing, and we will begin to address this in the 2004 spending review, which will come to fruition in July. We are also looking at how we can maximise the outputs from existing funding. The Housing Corporation is leading initiatives to improve the housing associations' performance.

We also want to reduce unit costs through better design and modern methods of construction. It is part of the problem, in a way. Some of the money has gone in, but social housing dropped. We were getting fewer square metres per pound. I do not want to pick out individual speeches, but I would say that the speech of the day goes to the noble Earl, Lord Selborne. He raised the point about off-site manufacture and modern methods. The other week, I made a detour, while travelling around England, to get to Interbuild, which was at the National Exhibition Centre. I specifically went to the off-site manufacturing section, which was huge—compared to the exhibition that I had gone to the previous year. it was massive. People were telling me about new factories being put down, £10 million investments for building the ingredients and the components. It was a wonder to see.

There is a site at the moment somewhere in Manchester that is the largest off-site manufacturing site for housing, with 1,100 dwellings under construction. There is a real push being given through the Challenge Fund to the Housing Corporation. It is a small blip in the overall production. If we can double or treble off-site manufacturing, it will still be small, but it would make a massive contribution. Most of the factories are in the Midlands and the north, for a start. The skills required are totally different, although as the noble Lord, Lord Best, will constantly point out, because I have heard him do it, when they get on to the construction sites and meet the British building industry they must work doubly hard at quality control to ensure that the assembly is done correctly. We are working on that.

A range of equity loans, intermediate renting, and shared ownership on new build is available to key workers, and £630 million will be spent on the scheme over the next two years. The Sustainable Communities Plan set out our commitment to prioritising development on brownfield sites and to promoting higher density developments through the planning system. That commitment has not changed. I will repeat the figure that I gave last week. For 2002, the latest figure available, 64 per cent of new dwellings were on brownfield sites. That was up from previous years. It will be more difficult to maintain that target as we step up the total housing production. That is the reason that we are not changing the target, as we have been pushed to do.

Our approach on housing density is now starting to take effect. In 2002, dwellings were built at an average of 27 dwellings per hectare, which overall is an increase on previous averages since 1996. The density directive now applies to the wider south-east as well, where the minimum is 30 dwellings per hectare. High quality design at higher densities will help us to preserve the countryside. Part of the renaissance of the cities is the other side of the card to preserving the flight from the cities to the countryside, so that there is less pressure on land. This point has been raised by several noble Lords, and it was also raised last week—I will repeat it. Green belt land occupies 14 per cent of the land. National parks, which are not green belt, occupy 8 per cent. Areas of outstanding natural beauty, which is not green belt, occupy 16 per cent. Green belt land is not pretty land. Green belt land is not national parks or AONB. Green belt land is there around urban settlements to stop urban sprawl. As such, it is pretty poor land in a lot of areas, but it is green belt. It is there for a reason. The idea that we would concrete over the prettiest land, if there is a release of green belt, is nonsense. We have pledged that where we do have to have an incursion into green belt, we will not only replace it, we will replace it with knobs on. There are over 20,000 more hectares of statutory green belt now than there were in 1997. We are growing green belt as we go along.

I think that it was the noble Lord, Lord Jacobs, who spoke in the gap about the helicopter ride. He was absolutely right. When I went to ODPM and found the Thames Gateway on my desk, which I did not know much about, I said, "I need to find out about the Gateway". Someone paid, one of the partners, for me to fly up and down the Gateway, both north and south, to have a look at the Gateway. The beauty of it is that when you are 500 metres up in the air, you do not see local authority boundaries. It is more joined-up. Most of the land is green belt anyway. It is the same when you go out into the country. Urban land occupies 9 per cent of the land, leaving green field at 90 per cent of the land—

Lord Sheppard of Didgemere

My Lords, it is better to fly even higher, because then you would not see any people, and you would not need to bother about the people.

Lord Rooker

My Lords, I accept the point. Given those figures, 90 per cent of England is green field. If we meet our target as regards existing plans in the wider south-east of the 930,000 plus the extra 200,000, we will take about 1 per cent extra into the urban— that is, about 1 per cent off about 90 per cent of green field. That would take us to the beginning of Barker. No doubt about it—the existing plans under the regional planning guidance, plus the 200,000 in the communities plan, takes us to where Barker comes in. She predicates more on top of that. The take-in land is minimal compared to what is there.

I saw in the Guardian on Saturday, and the Sunday Telegraph on Sunday, some nonsense about concreting over our green and pleasant land. They ought to be forced to read the speeches made in the House today to see what the reality is of people coming from different parts of the country, taking a considered approach to a serious problem—homes for our people.

As was said, the research commissioned by Rowntree delineated by the noble Lord, Lord Best, will be extremely useful. My department will be very interested in taking on board the issue of how we can explain what we are trying to do, and—which is more to the point—what we are not trying to do. That is another reason for welcoming this debate.

We have recently expanded the communities plan to publish the document The Northern Way which gave slightly different solutions in different places. We had those because the country is not uniform. We all know that if we can get development in the north it will take pressure off the wider south-east. That is also crucial for jobs.

I would like to mention the Egan review and its publication Skills for Sustainable Communities. The Deputy Prime Minister asked Sir John Egan to carry out this review in April last year. The publication was launched on 19 April. There was no statement to either House in 2003 about the commissioning of the review. Somebody decided not to make one available at its launch. However, 50 copies of the publication are being walked over to the House as I speak. I take full responsibility for not making sure that they were here beforehand. I knew about the debate, I should have asked, I assumed it would be here and I knew it had been published last week. I am not blaming anybody. I take full responsibility.

In the few minutes that remain I would like to thank the noble Lord, Lord Lucas, for his debate; to welcome the figures that the noble Lord, Lord Howie, gave about the fact that we are not building and concreting over the land; and to reinforce the points made by the noble Earl, Lord Selborne, particularly his point about 80 per cent of the total cost figure equalling planning permission. If people can do that, they will get planning permission for building affordable housing. We will look at that. I will make sure that each idea that has come up today is fed into the department to be tested against the communities plan. We will see if we are doing those things that sound like good ideas.

I am reluctant to talk about bringing about changes by making changes to the tax system. I will get into deep water. Everything that has been said is sensible. I know what is going on in internal discussions. At the moment, the tax system is against generating and refurbishing homes and against brownfield sites. The same principles apply for greenfield sites and it is self-evident that it is more expensive to build on brownfield than greenfield. Something has to be done and that matter is being looked at.

The noble Earl, Lord Peel, raised the issue of exception sites. We have no intention to do anything to jeopardise existing schemes where they help the problems identified by Barker. I take his point about mixed developments in rural communities.

I thank the noble Lord, Lord Best, for his contribution. He made an excellent case for the existence of people's Peers in this House. That does not apply to everybody. The debate has been excellent. I will make sure those points are put to the department.

After the noble Baroness, Lady Byford, had asked me her 15th of 16th question I lost count. She must have asked me 30 questions. I will see if I can get the answers to her points as they are not unimportant.

The noble Lord, Lord Sutherland, raised the issue of building regulations. That is being looked at. However, building regulations only affect new buildings, and we have a stock of 26 million dwellings to deal with on the issue of insulation. Both CABE and the regional housing boards are looking at specialist housing design and smart houses. Quarrying extraction, like water supply, is also being looked at. It may not hit the headlines, it is not politically sexy, but work is going on regarding extraction of the quarrying materials that we need and the water supply required for growth.

I am running out of time. I have covered a lot of the points, although not all of them. I would like to mention specialist housing. A sustainable community without housing for the elderly is not sustainable, because it means that people are driven away from their community and lose the doctor and everybody else. They may want to move from the house they are in now to a smaller one, but they do not necessarily have to lose their social infrastructure. A community is not sustainable if it is not a mixed community.

I apologise again about the Egan report. I welcome the debate and I will make sure that the points made will be fed in and tested against what is happening in the communities plan. I will stick to my word. When I look them in the eyes across the table in the morning I will tell them how good this debate was compared to the one in another place.

5.44p.m.

Lord Lucas

My Lords, I agree with that last sentiment. I have been extraordinarily lucky in the quality of people who have chosen to speak in this debate, and I have learned a great deal in the course of it. I am very grateful to all noble Lords.

I am particularly encouraged by what the Minister said about the speech of my noble friend—my noble kinsman. There is an awful lot that needs to be done to turn villages into sustainable communities. There is a lot of building to be done and it needs to be done in the right way. The more support we have for that the better. He and I both remember the countryside when it was full of people: I would love to see it that way again. That need not be destructive, it is merely going back to the way it used to be.

I would like to take the noble Lord, Lord Oakeshott, to task for wanting to export a lot of civil servants to the north. The north is not an extension of India, to which we can chuck all our low-grade jobs. If we are going to do that sort of thing, we must export the high-grade jobs too.

I suggest to the Minister that he could solve the problem he has with getting the south of England to adopt regional government if we were to move Parliament to the north. I beg leave to withdraw the Motion.

Motion for Papers, by leave, withdrawn.