While Gove grabbed the headlines earlier this month with bold plans to boost the delivery of new homes, could a less publicised strategy launched by the Local Government Association better relieve Westminster’s housing woes? Tim Clark investigates
It is the kind of ministerial announcement made to make headlines. Michael Gove has unveiled a plan to build a million new homes, backed by the prime minister, using hit squads to sort out planning issues up and down the country and a renewed focus on inner city, brownfield development.
The commitment to build vast swathes of housing from Cornwall to Cambridge comes as part of an ambition to meet a manifesto pledge to deliver the new homes under the lifetime of the current parliament.
The announcement hit the required headlines for a number of reasons; however, as Housing Digital noted, the plans left little room for social housing.
A different, less well publicised plan unveiled earlier this month, however, could deliver a major part of the housing plan Gove and Sunak desire and help tackle the chronic shortage of social homes at the same time.
The Local Government Association (LGA) announced a six-point plan which would allow councils to build hundreds, new homes per year under what would be a “generational step-change” in delivery. The plan would also restore councils to their historic role as a major supplier of new homes and plug the seemingly impossible gap in housebuilding targets.
Launching the new plans, councillor James Jamieson, whose four-year tenure as chair of the LGA ended this month, said: “Housing is too often unavailable, unaffordable, and is not appropriate for everyone that needs it…A genuine renaissance in council housebuilding would unlock local government’s historic role as a major builder of affordable homes, which support strong and healthy communities and help to build prosperous places.”
The LGA’s six-point plan for social housing
- Roll-out five-year local housing deals to all areas of the country that want them by 2025 – combining funding from multiple national housing programmes into a single pot
- Government support to set up a new national council housebuilding delivery taskforce, bringing together experts to provide additional capacity and improvement support for housing delivery teams within councils and their partners
- Continued access to preferential borrowing rates through the Public Works Loans Board to support the delivery of social housing and local authorities borrowing for Housing Revenue Accounts
- Further reform to Right to Buy, which includes allowing councils to retain 100% of receipts on a permanent basis and the flexibility to combine Right to Buy receipts with other government grants
- Review and increase where needed the grant levels per home through the Affordable Homes Programme
- Certainty on future rents, to enable councils to invest; the government must commit to a minimum 10-year rent deal for council landlords to allow a longer period of annual rent increases and long-term certainty
Shoring up support
The plans have been welcomed by many in the industry.
“As significant landowners and landlords, local authorities need to play a crucial role in addressing the housing crisis,” says Gary Stevens, planning director at planning, design, and environmental consultancy Stantec.
“The LGA’s plan is an important step forward in the way we think about the delivery of new social housing – but it will need cross-party support and buy-in from both the public and private sectors to be successful.
“Five-year housing deals have proved successful in supporting the delivery of improved levels of social housing in London.”
The LGA’s plan revolves around allocating a new housing deal for every area in England by 2025, which would combine multiple national programmes into a single funding pot which, will enable housing associations, councils, and private firms to gain confidence in future supply and begin projects. The aim is also to remove national restrictions which “stymie innovation and delivery”.
The main impact would be that every single local authority would be able to deliver a minimum of 100 more council homes per year, meaning every part of the country would see an increase in supply, not only areas where funding is currently allocated.
The LGA has also called on the government to set up a new national council housebuilding delivery taskforce and continued access to preferential borrowing via the Public Works Loan Board. Another area is rent certainty so that councils, and other social landlords by extension, can invest. The LGA has called for a 10-year rent deal to allow better certainty.
A number of measures have been taken to help increase social housing supply from councils in recent years, such as the lifting of the housing borrowing cap, changes to how Right to Buy receipts are kept, and preferential access to the Public Works Loan Board, as the LGA recognises.
The mix of different funding allocations reflects the reality that social housing does not have a simple, central way of being funded in the current environment.
“The LGA’s proposal for a matrix of funding streams recognises that there isn’t an easy solution – and none are certain to have the desired impact,” says Ruby Giblin, partner at Winckworth Sherwood.
“There’s no guarantee that 10-year rent deals for council landlords will lead to an increase in revenue in real terms, especially in times of rising inflation like today.
“Meanwhile, we’re waiting to hear whether the Affordable Homes Programme (AHP) will continue beyond 2026, and rising borrowing rates have made the previously favoured funding stream of the Public Works Loans Board uncompetitive and relatively expensive.”
The future of the AHP is of interest as the role of Homes England will be put under the microscope in coming months as part of a wide-ranging review of its role and remit. The body already announced changes to how the AHP can be spent, allowing more regeneration of existing estates from the funding, which Housing Digital analysed earlier this month.
The new Homes England role looked to partner up with private developers to leverage the impact of any AHP funding and unlock more redevelopment of brownfield sites.
“The LGA’s proposal for a matrix of funding streams recognises there isn’t an easy solution – and none are certain to have the desired impact”Ruby Giblin, Winckworth Sherwood
The scale of the task facing councils is daunting. There are an estimated 1.2m households currently on social housing waiting lists in England, and over 100,000 households living in temporary accommodation.
When it comes to private developers many believe that by focussing solely on social housing, the LGA’s own plan has missed an opportunity to bring in other stakeholders in the industry.
“The key to long-term success in delivering new homes is a partnership approach between local authorities and the private sector, with SME developers playing a pivotal role,” says Marc Vlessing, chief executive of developer Pocket Living.
“While it is right that the main focus is on delivering more social housing, there has to be a broad range of affordable tenures delivered, including low-cost homeownership.
“Recent analysis by Pocket has shown that there is potential for hundreds of thousands of new affordable homes to be built on brownfield land across England, much of which is within the ownership of the public sector.
“Here, councils have a pivotal role to play in both directly delivering and helping to unlock the delivery of much-needed affordable housing.”
Giblin is also concerned over whether the LGA’s plan can be carried out. “We also need to be realistic about whether they are workable in today’s economy,” she says.
“Health, education, and other areas will be competing for attention, and getting building programmes off the ground is made even more difficult by increasing construction costs and post-COVID staff shortages.
“Equally, the retrofitting obligation is heavy and the cost of upgrading the energy performance of council stock could swallow up a large part of available funding for new homes.”
The F word
According to the LGA’s own figures, local authorities face a £2bn funding gap in 2024 in England and Wales, with little expectation that either the conservative or any new Labour government will increase central government funding.
Funding is key. Michael Gove allocated £24m to his new planning skills delivery fund, which has recognised at least that the planning system has held back delivery for the vast amount of developments. Compared with the finance needed to help launch a new wave of council homes, the £24m is a drop in the ocean.
Although councils have been given more flexibility to keep their Right to Buy receipts, Giblin notes that the month recouped from sales of current council homes “isn’t even close” to the cost of building replacement homes.
A step-change in attitudes to how funding is used could, however, help deliver the homes the LGA demands.
One area that may show how the LGA’s proposals can be delivered in reality is London, which saw its housing policy devolved to the mayor of London. In 2016, only 13% of new homes given planning permission in the capital were deemed affordable housing.
The London Housing Strategy published in 2018 established a strategic plan to ensure that half of all new homes being built were affordable, with the £4.82bn of funding available to support 116,000 affordable home starts by 2022.
Stantec’s Stevens is impressed by the efforts made in London to increase social housing in London.
“The principles established by the mayor of London would be a good starting point for a national policy, but more certainty on funding would need to be built in to ensure confidence,” he says.
“Nationally, increased flexibility on timescales would also need to be factored in to ensure larger-scale developments delivered over more than five years do not miss out on funding.”
Ultimately, the success of the LGA’s six-point plan will depend mainly on enthusiasm within Westminster.
“Perhaps most pressingly of all,” Giblin notes, “buy-in from central government will be needed to move these proposals forward. That is far from certain at the current time.
“At the very least, we should hope that these proposals will build some momentum for social housing delivery – an issue that urgently needs fixing.”
Main image: sommart sombutwanitkul/Shutterstock
Read next: Regenerating Homes England’s housing mission
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