Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions Memoranda


Memorandum by North West Housing Forum (HOU 24)

INTRODUCTION

  This document is submitted to the Select Committee on behalf of the North West Housing Forum, supplementing written and oral evidence provided to the earlier phase of the Inquiry.

  The Forum represents the views of housing providers in the North West of England, and membership comprises local housing authorities, registered social landlords, and representatives of the Chartered Institute of Housing, the Council of Mortgage Lenders, the House Builders Federation, Housing Federation North, the Local Government Association, and the Northern Housing Consortium. Some of our members will be submitting their own views to the Committee—this submission is intended to put forward a broader regional view on some of the issues raised by the Committee in their request for evidence.

CONTEXT

  The North West of England is a diverse region, stretching from Crewe to the Scottish border, and including large rural and semi-rural areas as well as the more familiar industrial and post-industrial urban areas. The Forum's earlier submission reflected the existence of severe problems of lack of affordable housing in parts of the region and reported some of the difficulties facing local authorities, registered social landlords and other agencies seeking to provide new affordable housing in those areas. It also noted the need, even in areas suffering low demand, to invest in providing different types of affordable housing in lower cost areas where the fragility of the housing market is caused partly by the unsuitability of existing affordable housing stock for modern requirements.

SPENDING REVIEW 2002

  The announcements made so far by Ministers following the 2002 Spending Review are welcome—housing seems about to benefit from a significant overall increase in resources in the coming three year period.

  However, there is considerable uncertainty as to the precise outcome of the Review for the North West, with key decisions apparently still to be made. Specifically, we do not know how much money is to be allocated nationally to the Housing Market Renewal Fund, to continuing "mainstream" investment in maintaining and improving existing housing, to housing regeneration activities, or to provision of new affordable housing. There is concern too that spiralling costs of providing affordable housing in the South (and in London particularly) will undermine prospects of securing adequate resources for the needs of the rest of the country, including the North West.

  Given the lack of clarity about the final outcome of the Spending Review, it is difficult to reach firm conclusions about the impact it will have on the housing situation in the North West. We should, however, not only focus on the financial implications, since the tools available to tackle housing issues are just as important. In that sense, there have been a number of positive developments in recent months:

    —  the widespread acceptance of the housing market renewal model, both as a means of understanding the problems faced by particular neighbourhoods, and as a strategic, long term approach to tackling those problems;

    —  the incorporation of market renewal approaches into North West Regional Planning Guidance by the Secretary of State in his proposed changes;

    —  removal of restrictions on local authorities' ability to act on a range of housing renewal issues via the Regulatory Reform Order process; and

    —  continuing debate on the various options available to local authorities to complement large-scale voluntary transfer, arms length management companies, etc.

WILL THE FUNDS ANNOUNCED IN THE SPENDING REVIEW ACHIEVE A DECENT HOME FOR EVERYONE BY 2010?

  We do not believe that, on their own, the funds announced in the Spending Review will allow the Government's target to be met. While existing models such as large scale voluntary transfer and arms length management companies will help where they are viable and attract tenants' support, they are not suitable for everyone. This situation may be changed as a result of the ongoing work within Government and elsewhere on new options for the future of local authority stock, but as 2010 comes ever closer, chances of meeting the deadline decrease. We are now told by ODPM that the Deputy Prime Minister is unlikely to make a statement on new stock options until "the turn of the year". Even where existing models are applicable, local authorities are understandably unwilling to commit themselves until ODPM reach decisions on other potential routes, and continued uncertainty and mixed messages about stock options will further delay progress towards the decency standard. Specifically on arms length arrangements, assurances about continuity of funding beyond the current three year arrangements would also be helpful in offering certainty to authorities (and tenants) about the resources likely to be available to achieve the decency target.

  More fundamentally, the Government's target is not that everyone should have a decent home by 2010, rather that "all social housing" should be in decent condition by 2010. Clearly, with the public sector's huge historic investment and greater control over social housing, it is important that Government takes the lead in setting standards for the physical condition of the sector's housing stock. But by far the greater number of unfit or "indecent" homes are in the private sector. If the driver for bringing homes up to the decent standard is the impact this can have on quality of life within communities, including health, educational attainment and all of the other issues linked to housing condition, then attracting investment into the private sector is of much greater importance than is currently apparent from the Government's approach. One suggestion floated is the extension of the business plan concept from local authority stock across all tenures. It should also be noted that black and minority ethnic communities tend to be concentrated in the worst private sector homes. While one outcome of the various reports on community cohesion may be a change to that situation over time, the short term implication is that focusing efforts on achieving decent social rented stock will mean that black and minority ethnic communities miss out.

USING THE NEW RESOURCES: THE BALANCE BETWEEN SOCIAL HOUSING AND OPTIONS FOR OWNER OCCUPATION FOR THOSE WHO CANNOT AFFORD TO BUY, AND MECHANISMS FOR RESOURCE DISTRIBUTION

  At a national scale, the Forum is supportive of the proposals put forward by the National Housing Federation, suggesting that housing resources be divided by Ministers into three pots—for new supply of affordable housing, repairs and improvement to existing social housing stock, and housing capital investment associated with tackling deprivation, neighbourhood regeneration and area renewal. This would eliminate the current spurious attempts to construct objective statistical measures of the relative needs of regions and local authorities across the whole spread of activities. Once the size of each of the pots has been determined, statistical measures can be used to spread the resources according to relative need under the three headings.

  Detailed decisions on the use of resources should be made according to agreed strategies, whether regionally (based upon Regional Housing Statement priorities), sub-regionally (eg in market renewal pathfinder areas), or locally on the basis of local housing strategies. We would suggest that attempts to make such decisions at a national level are unlikely to maximise value for money or positive outcomes—a bottom-up approach, based on sound understanding of local housing markets, and with sufficient flexibility to cope with local issues is vital. In our earlier oral evidence to the Committee, we touched on the difficulties of developing any new affordable housing in the Lake District National Park. One of the issues preventing progress was the lack of any flexibility for Housing Corporation officials regionally to bend national rules on grant rates and cost indicators, even where relatively minor changes could prevent collapse of valuable and (especially in smaller villages) often irreplaceable schemes. With the continued polarisation between the very different housing markets found across this region, we need to move away from rigid mechanisms toward flexible, outcome-based allocation systems.

  Similarly, in relation to the balance between social housing and owner occupation options, we need a process where those decisions are made according to the local housing market conditions, rather than setting of national targets. In our session before the Committee, we discussed the limitations of the current systems of shared ownership, suggesting that a much more flexible form of tenure, allowing people to move more freely along the continuum between traditional social rented tenancy and full home ownership would offer considerable advantages. Such an approach might allow us to move away from having to identify particular properties or schemes as being for shared ownership, traditional renting or owner-occupation, making it much easier to adapt them to changing market conditions and also potentially making a mixed community much easier to achieve. More work is being done in the North West on taking these ideas forward[22].

  Fundamentally, where affordable housing is in short supply and prices continue to rise, there are only two long term solutions—acting to reduce demand or increase the overall supply of housing. Nationally, there is a clear regional divide which Government seems unwilling to address in any real way. The over-heating of the economy in the South East brings with it acute housing pressures, but with the push for growth seemingly paramount, there is currently no meaningful attempt to manage the causes of those pressures. In that situation, investment in high demand areas needs to be concentrated on measures to increase housing supply and achieving maximum value for money in doing so. Simply helping particular groups to acquire existing properties cannot be anything other than a short-term palliative measure (and at the moment one which has not been made available to any of the communities in the North West suffering the same problems).

THE EFFECTIVENESS OF THE HOUSING MARKET RENEWAL FUND IN TACKLING HOUSING NEEDS IN AREAS WITH LOW DEMAND

  The Housing Market Renewal Fund (HMRF), strongly supported in the Committee's report on Empty Homes and, it would seem, by Ministers, is a once in a lifetime opportunity to transform the prospects of communities in the pathfinder areas. With the long term strategic approach market renewal provides, communities in the pathfinder areas now have a realistic chance to map out a positive future. Complemented by planning and economic development strategies, the HMRF can tackle the housing needs of pathfinder areas effectively.

  To make this a reality, the pathfinder partnerships will need a variety of support from Government:

1.  Firm commitment of dedicated funds

  At the moment, there are no confirmed funds for the HMRF pathfinders apart from the £2.66 million made available by HM Treasury to allow preparatory work to begin. The consistent rumour is that £500 million will be allocated for the Spending Review period, with the profile weighted toward the final year. If confirmed, this should prove sufficient to allow significant progress to be made. An early announcement would greatly assist the pathfinders in the preparation of their plans for the initial stages of their 10-12 year strategies.

2.  A long term approach

  One of the keys to success for the pathfinders will be their ability to attract investment from the private sector to help deliver the strategies. Given the depressed nature of the market in the pathfinder areas, private investors will need confidence of firm public sector commitment to the renewal process. A mechanism therefore needs to be found to allow long term commitments to be given about the funding of the pathfinder projects if they are to maximise leverage of private sector resources.

3.  A Flexible Toolkit

  The scale of the task faced by the pathfinders means that existing tools are insufficient. Government (and indeed other partners such as financial institutions) can help by supporting the development of new tools and the improvement of existing ones. Examples include (crucially) an effective Compulsory Purchase regime to assist in accelerating clearance, development of equity release models, a replacement gap funding scheme, and removing the differentials in tax treatment of new building and redevelopment. Less eye-catching measures to remove regulatory barriers facing RSLs could also play a part. In essence, Government as a whole should be an active partner in market renewal—the need for monitoring of the use of funds is accepted, but a positive partnership is more likely to deliver the goods than an arms-length relationship.

4.  Developing the skillbase

  Another important factor which Government can help influence is the availability of a pool of people with the portfolio of skills needed to deliver housing market renewal (and indeed other related Government initiatives). This includes skills such as neighbourhood management, partnership development, regeneration and project management, community development, as well as construction skills. Regional Development Agencies and Learning and Skills Councils need to be part of this process.

  But, crucially, Government must continue mainstream funding for housing alongside the HMRF. The submissions made to the Spending Review by the partnership of housing bodies across the North, including the North West Housing Forum, made clear that the HMRF could only work if it was an addition to existing resource streams, specifically to tackle the long term problems of areas with failing markets. If the Housing Investment Programme or Approved Development Programme for the North West were to be reduced to balance out the extra funds coming to the region via the HMRF, we would be back to square one.

  This is vital for the areas outside the pathfinders where market failure or low demand is either already a localised reality or a substantial risk (eg in West Cumbria or in parts of the conurbations not included in the pathfinders). Here, the second part of the two-pronged approach described in those submissions is required—investment of mainstream resources to prevent the development of market failure. Government's approach to the North's changing housing markets must include strategic investment to prevent collapse of housing markets in areas outside the current pathfinders. This may be achievable using mainstream resources and some of the new tools discussed above, but with housing markets still unstable in many parts of the North West, it may prove that a second phase of projects will be required to supplement the pathfinders. In summary, with low demand found beyond the pathfinder boundaries, HMRF will not, on its own, solve the problem of low demand. But, combined with the application of the market renewal approach and toolkit using mainstream funds in other areas suffering low demand, HMRF promises a much more effective response than could ever have been imagined without it.



22   The latest addition is "Delivering Affordable Housing: Low Cost Home Ownership-Equity Share", Jacqueline Blenkinship, Eden Housing Association and the Housing Corporation, a copy of which is enclosed. Back


 
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