Ex-Whitehall chief criticises right-to-buy housing policy

The former head of the civil service will this week denounce the government’s flagship plan to extend the “right to buy” to 1.3 million housing association tenants, saying it is wrong in principle and practice and will not address the urgent need to build more affordable homes.

Lord Kerslake (formerly Sir Bob Kerslake), who was the most senior mandarin at the Department for Communities and Local Government (DCLG) until February, when he was made a peer by David Cameron, will break cover in his maiden speech in the House of Lords on Tuesday, delivering a serious blow to a centrepiece of the prime minister’s legislative programme outlined in last week’s Queen’s speech.

Kerslake, who was head of the civil service from 2012 to 2014, and permanent secretary at the DCLG until weeks before the election, working on housing policy, told the Observer: “I will raise my serious concerns about the policy in its current form. I think it’s wrong in principle and wrong in practice, and it won’t help tackle the urgent need to build more housing and more affordable housing in this country, particularly in London.”

Now sitting as a crossbench peer, Kerslake is expected to demand that ministers hold urgent discussions with housing experts to rethink the policy, which has been widely criticised by the housing industry and business groups, including the CBI, as hugely expensive, unworkable and potentially damaging.

Meanwhile the London mayor, Boris Johnson, who returned to the Commons as the Tory MP for Uxbridge and South Ruislip at the election, has also warned colleagues at the highest levels of government that the plans could be a disaster for the capital unless guarantees are given that the money raised from sales of high-value properties in London is spent on building more affordable homes.

While he backs extending the right- to-buy in principle, Johnson wants assurances that the proceeds are not siphoned off elsewhere to areas where construction will be cheaper and land more readily available. At a recent meeting of the London assembly, the mayor said it would be the “height of insanity” if the proceeds are used to fund housebuilding in areas where the shortage is less acute.

He is also said to be worried that the policy will hurt London’s “social mix” and leave key public sector workers, including nurses, teachers and others on low incomes, without places to live.

A spokesman for the mayor said: “He has been clear that the new policy must deliver an overall increase in housebuilding in London, and that all the money generated from selling London homes is retained in the capital to help increase the supply of new homes, particularly affordable homes.”

The Conservatives announced before the general election that they would set out plans within 100 days on how to allow tenants in housing association homes to buy their properties at discounts of up to £104,000 in London and over £77,000 elsewhere.

Ministers say housing associations will be compensated for the discounts from money raised by forcing local authorities to sell off their most expensive housing stock when it becomes vacant. They say the plan will ensure “one-for-one replacement” of affordable properties sold.

The ideas have been widely attacked, including by housing associations, which are independent charities. Many have threatened to sue the government if forced into sales. Critics say that similar promises to replace homes sold with new affordable homes were not honoured when the right to buy council homes was introduced by Margaret Thatcher in the 1980s.

Whitehall sources say the Tories rushed out the announcement in the runup to the election when they believed the ideas could be shelved or watered down in any coalition with the Liberal Democrats or other parties.

The National Housing Federation has said the policy will cost up to £5.8bn a year because compensation will have to be paid to housing associations.

Kerslake will be joined by several other peers. One, Lord Best, another crossbencher who will speak on Tuesday, said: “There is an acute need for more affordable homes: even those on relatively good incomes are now priced out of London and much of southern England. And since we have been building enough homes each year for only half the number of new households, the position is becoming ever more critical.”

Communities secretary Greg Clark will this week tell local authorities to let go of surplus and redundant sites to allow new homes to be constructed, and will set a target for them to release enough land to build 150,000 homes by 2020.