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29.04.16

Right to Buy extension policy is 'entirely speculative' and unclear

In yet another harsh blow to the government’s flagship Housing and Planning Bill, the Commons Public Accounts Committee (PAC) has dismissed plans to extend Right to Buy to housing associations as “entirely speculative”, unclear and financially uncertain.

The committee’s latest report launched a scathing attack towards the DCLG’s failure to understand and lay out key policy details in this extension scheme, as well as to clarify how it will be funded in practice or what its financial impacts might be.

The centrepiece to this extension scheme, which was announced late last year and is already being piloted by five housing associations, is the government’s proposal to replace homes sold under the policy on at least a one-for-one basis.

But the PAC expressed concern that this commitment “will not ensure that these will be like-for-like replacements”, given that new homes could be of a different size, in a different area, or even cost more to rent.

Meg Hillier MP, chair of the committee, said the government “should be embarrassed” by the report’s findings, adding: “Extending Right to Buy will affect many thousands of people yet the department has failed to provide basic information to support its stated aims. Instead we have heard vague assertions about what it will accomplish and how.

“The approach to paying for this policy seems to be entirely speculative. On the basis of evidence heard by our committee, there are no costings or workings out. We are not talking about a ‘back of an envelope’ calculation – there is no envelope at all.

“Similarly scant regard appears to have been paid to the practical impact on social housing tenants, the long-term knock-on costs of the loss of social housing and potentially of a change in the mix of housing types.”

The PAC leader argued that the committee “can form its own views” about the government’s motives for this, but that ultimately, Parliament and the public are being asked “to take a leap of faith about how this will stack up financially”.

“The department has not made a diligent and credible case for this policy,” she concluded.

In an unusual step for the committee, today’s report is the result of an inquiry held before the policy was even implemented, which the PAC felt was important given its potential impact “on a large number of individuals, and the significant amount of public money likely to be involved”.

This is particularly relevant to local authorities, who will be forced to sell high-value council housing to fund the extension scheme.

Part of its recommendations to the DCLG include publishing a full impact assessment of the extension policy in line with establish Treasury guidance.

By this year’s Autumn Statement, the DCLG should have published full analysis “showing how this policy is to be funded, provide a clear statement of where financial and other risks lie, and spell out its contingency plan if its policies prove not to be fiscally neutral” – all of which the department failed to do during the inquiry.

It should also publish detailed data on replacement homes and addressing existing concerns around fraud, including plans to tackle fraud and abuse to protect public money.

And to ensure its ‘one-for-one basis’ replacement plan is accurate and fair, the DCLG should publish data on where replacement homes are built, what size and type of tenure they are, and when they are completed – both for housing association homes under Right to Buy and for high-value council homes sold to finance the scheme.

Amendments at the Lords

The committee’s damning report comes just two days after peers passed a final series of amendments to the Housing and Planning Bill on Wednesday (27 April), some of which will affect Right to Buy rules.

Lord Kerslake, president of the LGA and the DCLG’s former permanent secretary, criticised the fact that a key amendment concerning the replacement of council housing stock sold to fund the Right to Buy extension had been scrapped from the draft Bill ahead of the final Lords reading.

The amendment asked for councils to be able to “retain from the council house sale receipts the funding necessary to reprovide a house of a similar type to the one it had sold”.

“What may look like a technical amendment goes to the heart of the concerns of local authorities and their communities about one of the most contentious parts of the Bill: the forced sale of higher-value properties, typically the larger properties in the most sought-after areas, to fund large discounts for housing association tenants with the wherewithal to buy,” he said.

“Local government is paying for a central government policy. Those most in need are denied the opportunity of a new home to rent when it becomes vacant. The only saving grace for local authorities was the prospect of replacement funding.”

In a vote, the LGA president’s amendment was supported 275 to 197.

The Bill, which has suffered a series of attacks and strong criticism since its first introduction as part of the Conservative Party’s manifesto, has finished its third reading in the Lords and will now have its amendments considered by MPs.

(Top image c. Joe Giddens, PA Wire)

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