Lord Kerslake to say housing bill will force councils to sell off more than 100,000 homes to subsidise right-to-buy discounts

The former head of the civil service will accuse government ministers this week of trying to phase out social housing altogether in favour of a new generation of “starter” homes that will be unaffordable for people on low incomes.

The intervention from Lord Kerslake, who was the most senior Whitehall mandarin until July 2014, will come as opposition and crossbench peers join forces against key aspects of the government’s controversial housing and planning bill when it reaches the Lords on Tuesday.

In a further indication that the bill could receive a rough ride, Lord Bassam, Labour’s chief whip in the Lords will abandon the normal convention that holders of his office do not enter legislative debates, when he delivers a highly personal speech invoking his childhood experience of being brought up on a council estate in Essex.

The bill, which the Commons passed earlier this month, extends the right to buy to housing associations as part of a voluntary deal with the sector, ends indefinite tenancies in council-owned properties and prioritises the construction of so-called starter homes for first-time buyers. Ministers say it will increase home ownership and housebuilding.

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Kerslake, a crossbench peer who was in charge of housing policy in his role as permanent secretary at the Department for Communities and Local Government until last February, will say that councils will be forced to sell off more than 100,000 homes to subsidise right-to-buy discounts for housing association tenants, with no guarantee of like-for-like replacements.

He will say: “Local authorities will be forced to sell affordable rented properties to pay for the housing association right to buy discounts. New rented housing for those on lower incomes appears to be being written out of the script in favour of starter homes that are not truly affordable. Too much reliance is being put on building new housing for sale when we are facing real economic uncertainties. These are big issues that will need to be seriously explored by the Lords.”

He will also say it is good that the government has agreed not to force housing associations to sell their properties, but that local authorities will be forced into selling much of their badly needed social housing stock to fund the policy, further reducing the availability of housing for those in need.

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Bassam, a former leader of Brighton and Hove council, will accuse the government of a “grand theft of the public realm”. Praising the Tory party that “was as committed to the development of local authority housing as Labour” in the period immediately after the second world war, Bassam will argue that the bill “is another nail in the coffin of the postwar settlement that helped people get on and provided a social net that gave a degree of security”.

He will also attack right to buy, which “rather than promoting social mobility has simply condemned an excluded generation to poorer quality rented housing and deprived us all of homes that helped lift people out of poverty and into a world of optimism and opportunity.”

The Lords’ pre-eminent expert on housing issues, Lord Best, will say the government’s plans deal with only “half the picture”.

A former chief executive of the National Housing Federation, Best said: “Although it’s good news the government wants to build lots more homes, the trouble is that it is all going to happen at the expense of a stream of affordable rented housing that we desperately need.

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“We’re seeing a loss of the stock of affordable rented homes and we’re not seeing new build to meet those needs. Do that for five years and you run into problems for people who can’t afford to buy. That’s the fundamental flaw in the government’s strategy.”

He said he expected his concerns to be widely shared across the upper house, including among some backbench Conservative peers. He said many peers were especially troubled by the potential consequences of the bill for the stock of affordable housing in rural areas.

The government’s starter homes initiative will offer first-time buyers under 40 the opportunity to purchase homes at a 20% discount. Critics argue, however, that at up to £450,000 in London and £250,000 elsewhere, these properties are not truly affordable for those presently priced out of the housing market.

Toby Lloyd, the head of policy at Shelter, said: “Simply put, this bill risks disaster for the provision of genuinely affordable homes for those on lower incomes. We need more of them, not fewer.

“Instead, council homes will be auctioned off in the exact areas they are needed most, while new ‘affordable homes’ will now be starter homes affordable only to higher earners. On top of that, new council tenants will now be forced to endure the instability of short-term tenancies.”