Steve Partridge, director, Savills Housing Consultancy, housing adviser to CIPFA and a member of the CIPFA Housing Panel
As has been reported widely, there were a number of positive announcements for housing by Philip Hammond in his Autumn Statement speech. So, amongst the big numbers, what was in it for local authority housing? And what responses might be necessary? Firstly, the key headline:
- An extra £1.4bn for 40,000 affordable and shared ownership homes.
- A new £2.3bn housing infrastructure fund to pave the way for 100,000 homes.
- Restrictions on existing £4.7bn grant to be relaxed to allow housing associations and registered providers to build more homes and of different tenures.
- A £3.15bn affordable housing budget agreed with the Greater London Authority to deliver 90,000 affordable homes by 2021.
These measures are added to existing plans:
- £4.7bn Shared Ownership and Affordable Homes Programme 2016-21 to deliver 153,000 homes.
- £3bn Home Building Fund.
- £2bn Accelerated Construction Scheme, administered by the Homes and Communities Agency.
Until we see the Housing White Paper – we’d hoped to have by now, but maybe we still will this side of Christmas - and detailed plans and prospectuses are published, the final capital investment figures available for house building is difficult to precisely pin down, especially in terms of the 'when', but Mr Hammond has said that he will "double annual capital investment in housing in this parliament" to tackle the "urgent challenge" of unaffordable housing.
While this increased investment is of course welcome, why has the Chancellor taken this course of action?
Affordable housing linked to low productivity
In his introduction to the Autumn Statement, Mr Hammond set out the three key challenges to the economy: economic imbalance, lack of productivity and unaffordable housing.
Lack of affordable housing is now explicitly linked to low productivity. For those watching closely since 2010, this is a significant change – the Chancellor is acknowledging there are economic and business drivers for new affordable homes – rather than seeing social and affordable housing as a 'handout', part of the welfare state. Building more affordable housing is now seen as an imperative to boosting UK productivity.
This is a strong position for local authority housing and housing associations to be in - a real vote of confidence in housing providers to deliver the homes the government wants. This is a government that wants the economy to work for everyone – those on low incomes as well as those on higher incomes. Housing associations and local government are now seen as key players in helping deliver this vision.
Emphasis on flexibility
So, whilst we saw no mention of starter homes in the speech, significant given the emphasis on home ownership of former government ministers, we did see an emphasis on flexibility of delivery for all tenures. And we also saw what seemed to be a major emphasis on local government – whether that be local authorities directly or combined authorities.
There is £1.8bn for the council-led Local Enterprise Partnerships throughout England. There is the progress on combined authorities in England. There is the allocation of resources to Greater Manchester, borrowing powers for London and the prospect of many more devolution deals.
The £2.3bn infrastructure spending explicitly aimed at facilitating new housing was also very significant in this regard. Funding bids will come through local government and will be expected to secure land to build up to 100,000 homes. Follow up announcements from the HCA suggest a strongly competitive bidding process where local authorities will need to demonstrate plans 'ready to go', meeting objectives in up-to-date housing strategies. Now is the time to get your local plan in place, agreed, costed and targeted to put yourself in the best position to get some of those essential roads built. It will be challenging in the face of overall council funding reductions which has led to many strategic housing functions being under-resourced, but there is the opportunity.
Housing associations and registered providers have the ambition and now the opportunity to bid to bring forward some large, brownfield sites to build large numbers of homes (the GLA funding settlement shows the government is particularly keen to ensure more affordable homes in the capital). To do this associations seeking partnerships with councils and combined authorities may fare particularly well. Councils will need to partner with developers and associations to maximise the use of knowledge, skills and capacity to deliver.
What of council delivery? As ever the message is… innovate. Councils have been outstanding in recent times responding to policy pressures by reducing costs, building new council housing under significant constraints, recycling right to buy receipts and setting up new companies and delivery vehicles to supplement development delivery. It has been a great story of diversification.
Here again the message is as positive as might have been expected:
- The extension of the housing association right to buy to a 'regional pilot' only stretching over what seems like four years with 3,000 sales at a discount cost of £250m – positive from all angles, not least retention of more homes for affordable rent.
- Uncertainty over the method for funding the discounts, in what form and when the enforced sales of high value voids will go ahead – although we know it won’t be before April 2018 – and crucially also what scale that might be.
- For those local authorities, ALMOs and local housing companies with RP status, the opportunity to participate in the expanded Affordable Homes Programme.
There are some things that were missed. Many housing people will be disappointed with the continued squeeze on welfare, and the absence of anything on care/support was particularly notable. Details around expanding the use of right to receipts to invest in local companies, relaxing the HRA debt cap, all should stay on the agenda to emphasise the role that local authority direct delivery can play. When we see the White Paper, maybe the opportunity to make the case can be made again.
Housing providers as key partners
There is much for the housing sector to digest in Mr Hammond’s first Autumn Statement, but the fact that housing providers are seen as key partners trusted to deliver is perhaps the most welcome news of all. For local authorities, the messages are clear: get your strategic house in order to participate in the infrastructure programme and get on with directly delivering: HRA, ALMO, company – through delivery comes the opportunity for more delivery.