I'm against Right-to-Buy because no government should force a charity to sell its assets

Housing associations are not public bodies – they are privately owned organisations with an essential social purpose

Prime Minister David Cameron and Chancellor George Osborne (Getty Images)

Today I will be making my first speech in the House of Lords. I sit as a cross bencher, having previously served political administrations led by all three of the main political parties as a senior civil servant.

I will devote some of my allotted time to address what may turn out to be a major policy mistake by the new government: extending the right-to-buy to housing association tenants while forcing local authorities to sell off their highest value properties as they become vacant.

The policy in its current form is wrong both in principle and practice.

It is wrong in principle because fundamentally these are not the Government’s assets to sell. Housing associations are not public bodies. They are private organisations operating with a social and charitable purpose. There is a strong principle that private organisations should not be compelled to sell their assets by the state.

I became the new chair of Peabody this week – one of the oldest housing charities in the country, having been created in 1862 by an American philanthropist who bestowed £500,000 for affordable housing in London. That is about £300m in today’s money.

Peabody has existed for 153 years and has received some public money for only around 40 of those years. The policy as currently articulated seems to suggest that Peabody’s historic stock, built with philanthropic money, could be put up for sale at a discount. This constitutes a compulsory transfer of a social asset to private individuals, which is deeply concerning.

In practice, the policy will not advance the Government’s stated aims. At a time of acute housing need it will almost certainly cut the supply of new homes across all tenures. It will also make it even more difficult for economically and socially mixed communities to thrive and survive in high value areas like inner London.

Based on the experience of council house sales, around a third of the properties sold will end up as privately let market rent homes, with higher turnover and less, not more, cohesive communities.

Housing Associations have been key players in the delivery of new housing in recent years, accounting for over a third of all new housing. Many have built not just for rent but for sale too. They have developed some excellent and innovative schemes to promote home ownership. The biggest group of housing associations in London have a development pipeline of over 93,000 new homes, substantially funded through private borrowing against future rental streams. However, the extension of right to buy as currently proposed will make housing associations much more cautious about investing in new build programmes and lenders much more cautious to lend. The knock on consequences on new build and regeneration schemes could be very serious indeed.

The Government is clear that each affordable home lost will be replaced, but it is very difficult to see how this will be possible. We know that only 1 in 10 social homes originally sold under right-to-buy has so far been replaced. It is not clear to me who takes the risk if the sale of high value local authority properties cannot cover the cost of the discount and re-provision of new affordable homes. At the very least this should be subject a full independent financial review.

There is an urgent need for the Government to sit down with all parts of the housing sector – local authorities, housing associations, financial institutions and private housebuilders – to see how the policy could be amended and the serious concerns addressed. We still have time to avoid making a huge mistake – but soon it will be too late.