Friday, June 25, 2010
06/23/2010 Worries about the housing revolution

Local people are being given more control over how many homes are built in their area, but there are fears it could escalate the housing crisis. By Peter Hetherington

Housing targets have been dropped nationally. Planning strategies, determining the level of new homes needed in eight regions, are being axed. Public funding for social and affordable housing is taking a nosedive. And that is just for starters.

The housing professionals who thought that Liberal Democrat influence in a coalition government would temper the revolutionary zeal of a recent Conservative manifesto, are in for a shock as they meet at a key housing conference this week.

Already, these cuts bite. National Program for affordable housing, as well as other companies - Kickstart scheme of work at sites where construction has stalled, and drive the market renewal areas to turn the old terrace housing in the North and Midlands - are faced with cuts ?? 230 with the coalition came to power.

Richard Capie, director of policy at the CIH, worries that another £610m allocated in the HCA's budget this year will disappear, further undermining the agency's programme. And that is before the next three-year spending review begins to bite, dealing housing yet another blow.

Housing professionals also have serious concerns that a new planning framework replacing these targets and regional strategies already seems to be sending out the wrong signals to builders and developers, following a letter to councils from the communities and local government secretary, Eric Pickles â€" Shapps's boss â€" effectively giving them the green light to put housing plans on hold.

A third district in Oxfordshire â€" Cherwell â€" is keen to hang on to a proposed new "eco-town" earmarked by the last government, although some in the coalition seem keen to scrap the proposal along with other eco-town developments.

Bob Neill, planning minister, is adamant that urgent reform is needed because, he insists, regional targets failed to deliver sufficient housing. At a conference this month, organised by the Town and Country Planning Association (TCPA), he told delegates: "It may be controversial, but there is a clear mandate for the coalition to remove the regional planning apparatus, and that will happen. Swift steps will be made to remove targets and take the necessary legislative steps to dismantle those arrangements."

Yet in London, blessed with its mayor and his strategic authority, the picture will be very different. While regional planning and housing strategies will be scrapped in the rest of England, the capital will keep its London plan, housing targets and all. Ironically, the pragmatic Tory administration in the capital is living proof that, contrary to the assertions of ministers, targets do work; this plan has already delivered over half the mayor's target of 50,000 affordable homes by 2012, 60% of them in the social rented category.

"Ministers have made clear they will treat London differently," says one insider close to negotiations with the government. Agreement has been reached to transfer the HCA's functions in the capital, with a current annual budget of around £1.1bn, to the mayor. In turn, Boris Johnson will devolve housing powers to 32 boroughs under a "delegated delivery" programme. It should all be wrapped up before the summer recess.

Elsewhere, however, little, if any, spending in this area is ringfenced.

Yet at the same time, Neill said the coalition was committed to bringing forward new incentives to encourage "responsible and sustainable development". These include the government matching council tax receipts on new developments for six years by creating a special "matching fund" by top-slicing the revenue support grant to local authorities.

"We will match pound for pound the extra money councils get on council tax for six years," said Neill. "Localism is at the heart of our approach to planning because we genuinely believe it is important to give local people control over the shape and the future of their communities. We are determined not to go back to a situation where central government controls the content of local plans."

From the Oxfordshire perspective, Mitchell, for one, has his reservations. "Will those incentives work?" he asked the TCPA conference. " I don't know ... I have asked David Cameron this question. He is convinced they will. I've told him I'm very doubtful. I'm not sure they're big enough or quick enough, and I have a real worry about this. I think perhaps in three or four years' time someone will be scratching their heads and saying, 'What will we do now?'"

A year ago, it all seemed so different. The previous government â€" acting irresponsibly, according to the new regime, with little or no "real" money on tap â€" made a housing pledge of an extra £1.5bn to deliver 20,000 new homes over four years, with much of the cash coming from other departments and "underspends" elsewhere. This funding is no longer seen as secure, and the pledge has been dropped.

To be fair, the coalition recognises that England needs new and improved homes. Among other reasons, this is because household formation is outstripping house-building, people are living longer, and others are staying single â€" all placing greater demand on the market and on the need for social and affordable properties. More than 4 million people are estimated to be on waiting lists for social housing.

Up to now, the fragile housing market in England has been propped up by state intervention, in the form of the HCA which has, effectively, rescued much of the housebuilding industry by funding it to build affordable social housing for housing associations. Last year, for instance, almost three-quarters of housing starts â€" 64,811 â€" were partly funded by the agency. It has become a key player in the market.

The National Housing Federation, which represents not-for-profit housing associations, partly funded by government, has already written to Shapps warning that the number of affordable homes in England this year could slump by as much as 65% â€" the lowest since 1990. And this week it further underlined the looming housing crisis in a statement warning that the government's housing budget could be cut by a third over four years, with the loss of 200,000 further construction jobs.

With the government placing all its faith in councils to deliver the level of housing needed â€" and some small authorities have precious little planning capacity and expertise to meet this challenge â€" Capie argues that a commitment to devolve more powers to town halls, and communities, could still work well, given time. But why such a rush? "Local planning has the potential to be good, but managing the transition is not being done brilliantly," he warns. "Central government cannot abdicate its responsibility, and house-builders are very concerned about the [emerging] planning framework. Housing was in crisis before the election, and that crisis looks like it is going to escalate."

Emma Cariaga, head of strategic projects for Land Securities, one of the biggest developers, voices the concern of many private developers. "The view from the private sector is not about change itself," she insists. "But my question is one of time and whether the scale of change is what we need right now." Far better, she thinks, to test the new planning regime in several areas before rolling it out nationally.

Peter Hetherington ? Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds

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