2013 Autumn Statement: A long term vision for housing

2^nd December 2013

Boris Worrall puts a long term vision for housing at the top of his Autumn Statement wishlist

Housing is breaking through as a mainstream policy issue more strongly than it has done for a decade or more. That’s primarily down to two factors; growing public concern around accessing ownership and the wider costs of living; and cross party recognition that this is not so much a problem, but rather a full-blown crisis. Although there is a huge ideological gap between the Conservatives driver around ‘ownership’ and Labour’s ‘social need’ perspective, both parties basically agree it’s all down to a core crisis of supply.

There’s no question Help to Buy has boosted supply. But the fact that the Bank of England’s Mark Carney has just curtailed the mortgage element of Funding for Lending and flagged housing supply as a key policy issue, illustrates the limitations and risks of a blunt policy instrument deployed in such a fundamentally dysfunctional market.

That’s not something a Government is likely to be able to fix within the restrictions of a 5-year-term and certainly fiscal constraints and an 18-month window mean the Chancellor has very limited room for manoeuvre. But there are at least three low risk, low cost measures which could start to make an impact within the current term:

1. The Government at both local and national level has huge tracts of land available for development. But silos and value for money drivers are making release a rarity and stifling innovation around unlocking sites. The Chancellor needs to drive this agenda right across Government – remorselessly. The Homes and Communities Agency is already identified as the delivery vehicle, which makes sense, but there needs to be hard targets linked to clear incentives or penalties for departments and councils not releasing land banks. Low-cost or free land is vital for site viability within and environment of low grant, or no grant. And remember, sites are rarely all ‘social’ housing, we will usually leverage in private finance and deliver market sale and shared ownership on many sites. So there is a strong ‘win-win’ economic return available here.
2. The Government created a potentially powerful driver for growth with the LEP network and the subsequent channelling of EU funds through them. But much more needs to be done here. Housing is absolutely a local and regional issue, and housing associations, local authorities and developers are ideally placed to collaborate and deliver the against the ‘jobs and growth’ agenda with relatively quick and significant economic multiplier returns in the order of x2.5 against investment. But Government must make housing formally part of the LEP remit and channel more funding through that platform. Many in the sector are up for innovation and competition around securing this type of funding. But LEP engagement is patchy and challenging. A formal remit cash = game changer.
3. Between the Conservative ownership ideology and Labour’s tendency to default to public sector solutions there is (to coin a phrase) a third way – which is actually aligned to market demand and the wider affordability crisis. Shared ownership and shared equity products should work, but have failed to deliver on scale. There are many reasons for this, but the fact that there are literally dozens of Government schemes and widespread confusion about the products has hampered mainstream market penetration. Coupled with the well-documented issues around Help to Buy, Government needs to switch investment into Shared Ownership/Rent to Buy/Shared Equity (which is outside PSBR) and create clarity with a small set of intermediate ownership/equity products and then market it relentlessly and consistently. This ‘sweet spot’ ticks all the boxed for me in tackling the core issue of affordability while also delivering ownership aspirations but targeted at those on lower incomes. We still need huge investment in social housing – but moving current investment into the middle ground would also help to create more mobility around a ‘housing journey’ for people on lower incomes.

What we really need in this country is a proper strategy around housing, spanning a decade or more, ideally backed by a long-term investment pipeline akin perhaps to Garden Cities. Political commentators point out that this sort of long-termism is almost impossible given the scale of dysfunction in our broken market and the limitations of what can be achieved within a Parliamentary term. But actually, the announcement of a Royal Commission or similar to deliver a long-term vision for housing in this country is exactly what we need. I’ll stick on my list to Santa…