Serious questions still to be answered on extending right to buy

29 April 2016

The Public Accounts Committee report raises significant and pressing concerns about the extension of the Government's Right to Buy policy.

Report findings

In its report, the Committee concludes "many key policy details have not been clarified" and highlights continuing uncertainty around funding, replacement housing and abuse of the scheme.

The Department for Communities and Local Government has announced its intention to give 1.3 million tenants of housing associations, through voluntary agreement with the sector, the chance to buy their home at Right to Buy levels of discount.

Provisions in the Housing and Planning Bill 2015–16 will enable this voluntary agreement to be implemented.

Department has presented "little information"

The Committee took the unusual step of hearing evidence on the policy prior to implementation, stating in its Report that it was mindful 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 Committee concludes the Department "has presented Parliament with little information on the potential impacts of the legislation required" and that it is "not clear how this policy will be funded in practice, or what its financial impacts might be".

It expresses concern that the Government's commitment to replace homes sold under the policy on at least a one-for-one basis "will not ensure that these will be like-for-like replacements" and that new homes "can be a different size and in a different area, and may cost more to rent".

Increases in the value of discounts available under the policy "have increased the risk of abuse", says the Committee.

Full analysis by the Autumn Statement

In its recommendations to Government the Committee calls on the Department 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".

The Department should also publish detailed data on replacement homes and address concerns around fraud including "setting out its plans for tackling fraud and abuse to protect public money".

Chair's comments

Meg Hillier MP, 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.
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.
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.
We urge the Government to address the very serious concerns highlighted by our Committee as a priority."

Report summary

The policy of extending Right to Buy discounts to tenants of housing associations, funded by the sale of high-value council housing, has potentially significant impacts for both local authorities and tenants of social housing, especially in areas where house prices are high.

Despite the implications and complexity of this policy, the Department has not published a detailed impact assessment to inform Parliament's consideration of its legislative proposals.

Key policy details not clarified

Many key policy details have not been clarified, with the Department offering only vague assurances as to how this policy will be funded, without producing any figures to demonstrate that additional funding from central or local government will not be required.

Other concerns remain, including the extent to which the new homes funded by this policy will be genuine replacements for those sold, and whether there will be sufficient controls to prevent abuse of the scheme given the significant discounts proposed for housing association tenants wishing to buy.

Further information

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