The deputy prime minister promised a housing revolution this week, announcing an array of measures the new government hopes will transform the country. Tim Clark reports
“Today I am setting out a radical plan to not only get the homes we desperately need, but to also drive the growth, create jobs and breathe life back into our towns and cities,” Angela Rayner told the House of Commons.
“We are ambitious,” she added.
The deputy prime minister, who famously grew up in social housing, has laid out the long-awaited plans by Labour to tackle what she dubbed the most acute housing shortfall in living memory.
Mandatory targets are in, nimbyism is out. The large developers are called in to chit chat housing targets, urban uplift targets are out. The national housing target will be raised from around 300,000 homes per year to closer to 370,000 homes.
A New Towns Taskforce is launched, the Infrastructure Levy is ditched. The changes outlined in the consultation will take a while to fully digest but if Labour follow through with their plans, they could change planning culture in the UK for generations.
Plans to overhaul the green belt have been laid out in full, and will now be enacted upon. The consultation launch has been given a broad welcome by the industry.
So far, so good
Rico Wojtulewicz, head of policy and market insight at the National Federation of Builders, said: “We need to study the full consultation but so far so good. Particularly the mention of strategic planning, bringing back targets and upping the targets. It was also interesting to see the supply target for London reduce by 20,000 to 80,000. This shouldn’t really worry anybody because the capital would still need to double output to reach that figure.
“I would however urge the government to focus on commercial impacts of the planning process and why diversification is so important to growth.”
Gavin Smart, chief executive of the Chartered Institute of Housing (CIH) also welcomed the plans: “[The] government announcement on housing and planning is very welcome. Our national housing crisis needs urgent attention and it is encouraging to see the government set out both a set of immediate measures and commit to a long term plan for housing, designed to ensure everyone has a decent, safe and affordable place to live as CIH has called for.
“An effective planning system is an important element of housing delivery. National housing targets will help to create clear expectations about delivery at the national and local level; what gets measured gets done.
“The strong focus on providing social rented homes is especially welcome, we urgently need to concentrate on providing more of these most affordable homes for people in the most acute housing need, greater flexibility and certainty in funding arrangements will help with this.
“Local authorities have the potential to be an important part of the mix and it is encouraging to see government move to support them to do more.
“Reviewing the operation and the impact of Right To Buy is long overdue and is a welcome development.”
Rayner’s overhaul wasn’t launched in isolation either. The government documents include endorsements from major developers including Mark Allan, chief executive of Landsec, Rob Perrins,chief executive of Berkeley Homes, António Simões, group CEO of Legal & General, Helen Gordon, chief executive at Grainger, and Mark Allnutt, executive director – Europe, Greystar to name a few. It is fair to say that Labour’s plans haven’t come out of the blue and that a degree of market testing has been going on behind closed doors for some time.
One major change is the reintroduction of strategic planning, which will see the NPPF initially amended to work towards this aim by strengthening cooperation between councils, and will be followed by new legislation to allow for a new strategic planning system adopted.
The consultation stated that: “It is our intention to move to a model of universal strategic planning covering functional economic areas within the next five years.”
Discretionary vs strategic
The plan unveiled by Rayner aims to enable universal coverage of strategic planning within the parliament. The consultation stated that “this model will support elected mayors in overseeing the development and agreement of Spatial Development Strategies (SDS) for their areas”.
For areas outside of regional mayoral control the government will explore other arrangements to consider both the appropriate geographies to use to cover functional economic areas, and the right democratic mechanisms for securing agreement.
The consultation states that: “Across all areas, these arrangements will encourage partnership working but we are determined to ensure that, whatever the circumstances, SDSs can be concluded and adopted.
“The government will work with local leaders and the wider sector to consult on, develop and test these arrangements in the months ahead before legislation is introduced, including consideration of the capacity and capabilities needed such as geospatial data and digital tools.”
Rayner also noted that where it can be identified that shared housing needs would provide a benefit, the government will work with local authorities. By the end of the current parliament the change in scope of strategic planning could be significant.
Commenting on the plans, the Local Government Association’s (LGA) housing spokesperson, Claire Holland said: “While national government can provide useful guidance, it is local councils and communities who know their areas best, so changes to national planning policy should be suitably flexible to allow authorities to make judgement decisions on managing competing demands for uses in their local areas.
“We will look carefully at the changes proposed to planning policy and housing targets.”
The discretionary system has had its opponents, and not without justification. The discretionary planning system in England and Wales is described by a paper submitted to Parliament by the Adam Smith Institute in October 2020 as “highly unusual by international standards”.
The paper goes on to state that the current system is considered to have “horribly underperformed at the task of providing homes and high-quality housing” close to where there are job opportunities, as well as “restrict opportunities to allow more productive firms to grow. It has also permitted swathes of unattractive development”.
Labour’s plans look to overcome such restrictions once and for all.
“The consultation proposals and the written ministerial statement set out a comprehensive and, in some instances radical, direction of travel for planning and development. The goal is sustainable economic growth, and both MHCLG and the Treasury are on a mission to deliver it through the planning system,” says Nicola Gooch, partner in the real estate team at Irwin Mitchell.
“There is a lot to like in these proposals. The return of strategic planning, and the recognition that planning is about more than housing are long overdue.”
The consultation also added a number of stipulations to take social homes into consideration when calculating housing need assessments. It also scrapped the requirement to ensure affordable housing was for first homes – ensuring that social and affordable rent was an option.
The headline announcements may have called for the return of mandatory housing targets, however among the six releases from the Ministry for Housing, Communities and Local Government (MHCLG) on July 30, there was a plethora of information which gave a snapshot of the current housing landscape.
Affordable Homes Programme
Published in conjunction with the new housing plan, a revision of the Affordable Housing Programme (AHP) outlined what the government expects from the remainder of the programme’s duration. The current AHP runs from 2021 to 2026.
In early 2023, the government asked Homes England and the Greater London Authority (GLA) to carry out a renegotiation exercise, allowing AHP contractors (housing associations and local authorities) to submit revised bids, to take account of higher than expected increases in constructions costs and other pressures on social landlords’ financial position since contracts had been signed, including interest rates and the cap on rent rises in social housing in 2023-24. Providers were also asked to increase the proportion of social rent homes.
Rayner revealed that the programme is now expected to deliver up to 70,000 fewer homes than originally planned, down from 180,000 to between 110,000-130,000. Of those, 40,000 would be social housing and between 44,000 and 56,000 affordable homes.
The lower figures are both a problem for Labour and an indication of their inheritance from the previous government. The new regime may well point to the low house-building figures they have been bequeathed in five year’s time at the next election.
“The strong focus on providing social rented homes is especially welcome, we urgently need to concentrate on providing more of these most affordable homes for people in the most acute housing need.”
Gavin Smart
Rayner however didn’t seem keen to wait that long. “Once again it’s this government which will have to pick up the pieces. This is why today I am announcing immediate steps for the biggest boost to social and affordable housing in a generation,” the deputy PM announced.
“We will introduce more flexibilities in the current Affordable Homes Programme, working with Homes England. And we’ll bring forward details of future government investment at the Spending Review.”
As seems to be a running theme for the new Labour government, a major policy speech always trails yet more policy speeches and details that await on the horizon.
In the myriad of speeches in the (checks notes) four weeks since Labour won the general election, the spending review is another to await, and will likely help inform the chancellor at the Budget in the Autumn.
This may outline further changes to come for housing delivery, and for optimists may indicate a higher rent settlement for social landlords to help allow more development, as well as possibly higher direct government investment.
In an intriguing comment, the deputy prime minister said that: “I also recognise that councils and housing associations need support too. So, my Rt Hon Friend the Chancellor will set out plans at the next fiscal event to give them the rent stability that they need to borrow and invest.”
Could a CPI+ rental settlement be on the cards? We will have to wait until the Autumn.
Following on from the policy speech, the MHCLG announced a New Towns Taskforce to begin the process of delivering on the manifesto pledge. Headed up by Sir Michael Lyons, it will report back by next July on suitable sites for the major manifesto pledge. Any new towns will also be governed by a “new towns code”, which will aim to maximise connectivity.
Return of council housing?
As she spoke in the Commons, Rayner also mentioned that the government was calling on housing associations and local authorities to help deliver a “council house revolution”.
One instant change is a revision to the right to buy scheme, with new guidance allowing councils to now keep the entire contribution from housing sales, up from the previous 50%.
Right to buy receipts will also now be permitted to be used with section 106 contributions and the cap on the percentage of replacements delivered as acquisitions each year (currently 50%) has been lifted.
The measures have been back dated to be allowed to be used from sales from the 2019-20 financial year to bring forward replacements more quickly. The moves have been broadly welcomed by the sector.
“New flexibilities over how we use Right to Buy sales receipts are a big step in the right direction,” said Peter Mason, executive member for planning and skills at London Councils. “Reducing restrictions will help ensure more money raised from council house sales is better invested locally in building replacement homes.”
In a letter to all local authorities after her speech, Rayner outlined that the government would expect councils in the early stages of adopting a new local plan to take on the new requirements of the revised NPPF (once they come into force), however the government “will provide additional financial support to those authorities asked to do this”.
If that was the carrot, then the stick was Rayner’s note that the government will not hesitate to intervene.
The no-nonsense approach to solving the housing issue via planning reform is one that the sector will need to get used to. Labour’s betting on the fact that the radical changes will deliver results. Now the full plans have begun to be revealed, the revolution in planning to deliver homes has finally started.
Main image: The Deputy Prime Minister, Angela Rayner, and Greater Manchester Mayor, Andy Burnham, visit Victoria North, Manchester, July 2024. Courtesy of MHCLG. © All rights reserved
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