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Capital conundrums

Published 01 March 2024

The waiting is over - or is it? The Communities Plan was billed as a £22 billion 'step change' that would settle the direction of housing for the next 20 years. But some of the details are still unclear. ROOF reports on the three big unanswered questions

What if you’ve got a ‘housing crisis’ but you’re not in the South East? Why has a northerner, who represents a northern constituency, who has always promoted the whole regional agenda, suddenly adopted a plan with an emphasis on growth in the South and East? Cynics put it down to Labour anxiety about the kind of middle class marginal seats they might lose if they don’t focus on homes for key workers in Brighton and Basildon, rather than the relocation of wealth to Burnley and Batley.

Chartered Institute of Housing director of policy John Perry says it’s to do with economics. ‘Gordon Brown realises that the South East is the engine of the economy – and he doesn’t want a lack of housing to restrain growth.’

The Communities Plan does contain a £500 million boost for a series of pathfinders designed to sort out failing housing markets in the North and Midlands. But they are only pathfinders.

And they are not enough, says Professor Brian Robson, director of the Centre for Urban Policy Studies at Manchester University. ‘Prescott talks about squaring the circle, but I’m not convinced. You can’t have your penny and your bun. I can see the pressures, that arguments about affordable housing have immediacy but kneejerk reactions aren’t what policy should be about.’

Pathfinders aside, the focus is firmly on housing shortage in the South East. But parts of the North and, particularly, the South West, face shortages of their own. ‘The South West has the highest housing growth, the fastest economic growth, and it’s the area where house prices have risen most quickly in the last four years,’ says Steve Wilcox, professor of housing at the University of York.

William Sutton chief executive Mike Morris says problems in the region are exacerbated by low wages: ‘Take South Hams, where the average house price is 10 times the average income.’

In York ,700 homes were built last year in total but the city needs 900 affordable homes a year alone to meet demand from homeless families and key workers. The council is meeting its brownfield target of 60 per cent, and is proposing a planning gain of 50 per cent on development. But it feels it can’t do more without more help.

There are also concerns that parts of the South East will suffer as the growth areas of Ashford, Milton Keynes, Stansted and Thames Gateway benefit. ‘Even in the South East, money will be sucked out of other areas in need – Brighton, Southampton and Portsmouth for instance – and dumped into the Thames Gateway,’ says one senior local authority figure.

Junior housing minister Tony McNulty says this is in hand. ‘Outside the South East we will monitor on a regular basis housing hotspots. But they are not in the position of London and the South East.’

And he adds, in a phrase which is becoming familiar: ‘Regional housing boards will also be monitoring this.’

Will the plan create enough affordable homes in the South East? It depends how much money has been put aside for this, how many affordable homes you think are needed, and what your definition of affordable is. None of these points are clear.

Investment for affordable housing and improving housing conditions is now a single pot, merging approved development and housing improvement programmes (ADP and HIP).

This will total £7.4 billion over three years to April 2016, an average of just over £2.4 billion a year. It’s not easy to compare this with previous years because the new single pool arrangement also includes money for major repairs and private sector renewal etc. But it’s worth recalling that a decade ago (1993/94) under the Cons-ervatives, the ADP alone totalled £1.8 billion.

So where will it all go? ‘That’s the crunch question,’ says one senior local government source. ‘It doesn’t say, but I suspect a hell of a lot of it will go into the growth areas.’

‘The level of output is not going up despite the increase in ADP,’ says John Perry. ‘It’s difficult to see any solution that doesn’t involve significant public money even to get 10,000 more units.’

The number of affordable homes required from that spending is also unclear. The Joseph Rowntree Foundation puts the figure at more than 80,000 homes a year, but a senior government source says it is more like 60,000. Either way, the ADP for 2013/14 aims to build 22,000 homes with £1.2 billion, a shortfall of nearly 40,000 homes even on the lower estimate of need.

The junior housing minister is vague on the numbers of affordable homes planned for the growth areas. Tony McNulty told ROOF: ‘I am not going to quote on figures plucked out of the sky. We have to work up development plans, but I would be astonished if it was less than 25 per cent and I would anticipate it being more.’

But 25 per cent of what? Prescott hopes to build 200,000 new homes over then next 15 years. However, this is not a target, it’s an ‘aspiration’ according to McNulty, or a ‘statement of potential’ according to ODPM civil servants.

‘The numbers will be decided by the regional boards,’ says Tony McNulty. This will become a familiar refrain until the full strategy for the boards is developed this summer. At the moment, we know very little about them – except that they will decide or recommend how public housing subsidy will be spent.

We don’t know for sure who will be on them. But the Local Government Association (LGA) is currently pressing McNulty for a meeting to clarify the role of councils. LGA housing executive chair Paul Jenks says local authorities have not been invited onto the boards. The Housing Corporation, English Partnerships and the Regional Development Agencies are assured of their involvement.

What does ‘affordable’ mean anyway? How much of the new affordable housing envisaged by the plan will provide affordable accommodation for really poor people? ‘We use the term ‘affordable’ very loosely,’ admits Margaret Ford, chair of English Partnerships. ‘It means different things to different people.

So what will the affordable homes announced for the growth areas mean, say, to a homeless family living in temporary accommodation in London? ‘If ADP is redirected to the east of London, does that mean people in need in the west have to go and live in Newham?’ asks John Perry. ‘Somehow they’ve got to finance growth in the corridors and carry on financing homes in the South East. Demand can’t just be moved around like that.’

Aside from practical problems to do with choice and shared nominations policies, there are real concerns that the plan will allow – or even encourage – a shift away from provision for people on no incomes to those on low ones. ‘Now housing has become a middle class issue, there is a danger that’s where the money will be channelled,’ says a local authority director from the east of England. He believes that trend could be exacerbated by the involvement of the new regional housing boards. ‘It will make sense to ask for money for things the government is keenest on achieving, rather than what is really needed,’ he says. ‘That way you’re more likely to get some.’

Tony McNulty denies that the government will favour key worker developments. He says: ‘£5 billion of the £22 billion is for the social sector and £1 billion is for key workers. The bulk of the money is in that direction.’

It is true that only £1 billion of the £5 billion pooled funds is ring-fenced for key workers, but some of the rest could also be used for this area of need. The ODPM’s most senior housing civil servant, Mike Gahagan, told ROOF: ‘In the South East there will be more money invested in low cost home ownership, because it’s sensible. That will mean taking it from social renting, because you can’t spend the same pound twice. We want mixed communities, not ghettos of social housing.’

But the need for social housing by people who are currently homeless is greater than ever before. The plan accepts new duties under recent homeless legislation will make this number even bigger. The final decision about how much of the money for housing is invested in traditional social homes will, of course, be made by the local boards.