It is hard to imagine a housebuilding policy that could be more extreme than the position reached by David Cameron and George Osborne last year. Having virtually ended new programmes of social rented homes, in favour of the so-called ‘affordable rent’ programme, they went one step further and pulled the plug on AR in favour of total reliance on subsidised home ownership products. The Government was only going to offer help to those who already had incomes that brought them within touching distance of home ownership. The rest could go hang.
Theresa May and Philip Hammond have rowed back from this position a little way. Quite how far is still unclear. The headline extra money that Hammond announced in the Autumn Statement sounds less impressive when you realise it covers a five year programme from 2016-2021. They will spend in half a decade what some might think is a reasonable programme for a single year.
It is good news that there will be more money for grant for new homes. The penny has dropped that a policy based on subsidising and supporting demand for home ownership is bound to fail in the medium term because the subsidy will feed into price increases unless there is a corresponding increase in supply, thereby defeating the original purpose. Subsidising supply is a much better thing to do. More grant will enable a bigger share of each development to be ‘affordable’ and, depending on the policies of the funder and the delivery body, should also ensure that some of the programme is for social rent. More grant makes negotiating s106 planning gain agreements easier.
It is also good news that there will be more money available for infrastructure to support housebuilding. Inadequate infrastructure has been a big barrier to many developments. However, there is still a lot to play for in operational terms to make the money work hard. Public funding of more infrastructure should mean more development is viable, producing more homes and more affordable homes, but, if not managed well, it could just feed into developer profits by reducing their costs. There is also a risk that it becomes another way of paying for roads. Programme management and effective negotiation will be key to getting the best possible social return.
It is also good news that the Government is now willing to see the grant that is available go into a wider range of forms of tenure – although the Treasury documents only talk about ‘affordable rent’ (ie rents at up to 80% of market rents) despite the Government’s talk of having policies that work for everybody. The extra money does not yet mean there will be a new stream of social rented homes.
Strategic funding bodies – the London Mayor and the Homes and Communities Agency in the rest of England – will be encouraged to help people who fall into Theresa May’s definition of ‘Just About Managing’, whatever that is. But a genuinely inclusive policy would also be aimed at those who are ‘Just About Sinking’. At this point a slightly less regressive housing investment policy comes face to face with a regressive benefits policy. Despite a small amount of amelioration, the impact of the new benefit cap and the general squeeze on benefits has not yet been felt. There are dire expectations that these changes, matched with a growing lack of access to private renting for people on benefits, will lead to a surge in homelessness over the next period. Measured against such need, the extra money begins to look very modest indeed.
The news has been well received in London, which will get the lion’s share of the new cash for investment. Sadiq Khan and his housing deputy mayor, James Murray, have played blinders so far, getting the balance right between shouting from the rooftops about London’s needs, winning the argument that housing is the biggest barrier to economic growth in the capital, negotiating stealthily with Ministers who are more open-minded than their predecessors, convincing them that they can help deliver Government priorities as well as promoting their own. Khan is now in a strong position: he controls the funding pot, can set the terms of trade, and is refining the planning requirements. Housing associations and developers are already beginning to go with the grain of his policies, just as they did with Ken Livingstone, and, miserably, just as they did with Boris Johnson. I think the new administration is genuinely committed to getting a social rent programme moving again. The extra cash oils all the wheels of their policy.
Outside London the response of the HCA to the new flexibility is harder to predict, and I have yet to see a response from them. In some places new combined authorities and, next year, the Metro mayors will have a much bigger say in what happens. Elected authorities should seek movement away from the priorities set out in the current Shared Ownership and Affordable Homes programme 2016-2021 – which was described by the HCA itself as ‘a decisive shift towards support for home ownership’. As the HCA is due to announce initial allocations under the programme shortly, effective intervention from local areas is needed now.
Together with decisions like dropping ‘pay to stay’, the deferment at least of forced sales of council high value homes, and action on letting agents’ fees, Gavin Barwell has made a strong departure from the policies of Cameron and Osborne. Yet the Office for Budget Responsibility raises doubt that the balance of new policies will increase housebuilding, predicting a reduction not an increase in housing association output.
So, should we welcome the new direction in policy? Well, that’s a big word. My feeling is that it is rather like going 10 rounds with Anthony Joshua. You would welcome the fact that he has stopped hitting you so hard. You also know that the pain is going to endure, but there is genuine relief that things might be less bad than they could have been.
It’s a victory for all those who have campaigned against the extremes of Government policy, but I can only give it one (stifled) cheer.
The response of SHOUT the campaign for social housing can be found here.