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03/05/2016

Government should be embarrassed by right-to-buy report findings - PAC

Words: Laura Edgar

The Department for Communities and Local Government (DCLG) has presented ‘little information’ on the potential impacts of right to buy legislation required, concludes a report by the the Public Accounts Committee (PAC).

Extending The Right To Buy To Housing Association Tenants (pdf) also says that “many key policy details have not been clarified”.

It highlights the committee’s continuing uncertainty about funding, replacement housing and abuse of the scheme.

The DCLG intends to give 1.3 million housing association tenants the chance to buy their own home at a right-to-buy discount price, through a voluntary agreement with the sector.

The Housing and Planning Bill sets out the agreement.

The committee heard evidence on the policy before implementation, while at the time the relevant legislation was also be still being debated in Parliament.

The report states: “We were mindful, however, of both the potential impacts of the policy on a large number of individuals, and the significant amount of public money likely to be involved.”

The report concludes that the DCLG has “presented Parliament with little information on the potential impacts of the legislation required” and it is “not clear how this policy will be funded in practice, or what its financial impacts might be”.

The government’s plans to replaces homes sold under the policy on at least a one-for-one basis “will not ensure that these will be like-for-like replacements”, the committee said, and it is therefore concerned that the new homes could be a different size and in a different area, and could cost more to rent.

In response to the report, the committee wants the government to publish a full impact assessment of the policy in line with established Treasury guidance.

By the time of this year’s Autumn Statement, it should publish “a 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".

Meg Hillier, chair of the PAC, said: "The government should be embarrassed by the findings of this report. 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.”

Hillier said 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.”

“Scant regard” appears to be have paid to the practical impact on social housing tenants, the long-term, knock-on costs of the loss of social housing and the potential change in the mix of housing types,” she said.

“We can form our own views about the government’s motives for this, but Parliament and the public are being asked to take a leap of faith about how this will stack up financially, and that is completely unacceptable.

“The department has not made a diligent and credible case for this policy. The PAC follows the tax pound and so far all we have are assertions that it will be fiscally neutral."

Responding to the PAC's report on extending right to buy, Sharon Taylor, vice-chair of the Local Government Association, said: “We share the committee’s concerns about the difficulty in assessing the impact of this in each local area, and have opposed proposals for it to be funded by forcing councils to sell much-needed housing, particularly as the Housing and Planning Bill will give the secretary of state the power to determine the definition of “higher value” for every local area.”

She said the LGA is urging MPs to vote for a “vital” amendment to the Housing and Planning Bill that will mean councils retain sufficient funds to replace any higher-value home they are forced to sell to fund the policy one-for-one and with a tenure that best meets local need, when the bill returns to the House of Commons today.

“This is vital to ensure the policy does not severely hamper councils from rapidly replacing the socially rented homes that people in their areas desperately need. Such a loss in social housing would have the unintended consequence of leading to growing waiting lists, increased homelessness and higher housing benefit spending.

“Not only that, right to buy will quickly become a thing of the past if councils are prevented from building the new homes for tenants to actually buy. Homes for affordable and social rent - alongside for home ownership – are crucial to help everyone in our communities access the home they need now and to provide for future generations.”

Extending The Right To Buy To Housing Association Tenants can be found here (pdf).

Image credit | iStock

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