Select Committee on Transport, Local Government and the Regions Memoranda

Memorandum by North West Regional Assembly (AFH 03)


  This document is submitted to the Select Committee on behalf of the North West Regional Assembly. The Assembly is a partnership of local government, business organisations, public sector agencies, education and training bodies, trade unions and co-operatives, together with the voluntary sector, working to promote the economic, environmental and social well-being of the North West of England (Cheshire, Cumbria, Greater Manchester, Lancashire and Merseyside).

  The Assembly is the Regional Planning Body (RPB) for the North West and has been responsible for review of Regional Planning Guidance and Regional Transport Strategy. The Assembly has also been responsible for taking a lead in the preparation, promotion and implementation of the Regional Sustainable Development Framework "Action for Sustainability". The Assembly has been designated as the regional chamber for the North West Development Agency. Affordable housing was recognised as an important issue in the preparation of Draft Regional Planning Guidance for the North West.

  The contents of this response are focused on the:

    —  scale of the location and demand for affordable housing;

    —  difficulties in assessing the scale of regional need;

    —  how Regional Planning Guidance is trying to address the issue at a regional scale;

    —  defining and delivering affordable housing; and

    —  the need to promote and maintain sustainable patterns of development through balanced mixed communities.

  As such this response complements the separate response of the North West Housing Forum.


  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. While there may be a perception that low property values and a surplus of housing make affordability a non-issue in the North West, this is far removed from the true picture. The North West Regional Housing Statement[1] points to the need to meet "the continuing need for affordable housing", backed up by the conclusions of Draft Regional Planning Guidance[2]. Studies of housing markets in the region have drawn attention to the existence of failed or failing housing markets in some areas—those same studies also point to healthy, high value housing markets operating in much the greater part of the region. It is clear that affordable housing is a key concern.

  The needs for affordable housing in the region were identified as part of the DETR published research[3] on regional housing need and demand, which was used to inform the current ongoing review of Regional Planning Guidance for the North West. This research found:

    —  the low house prices in the North West, as well as the relatively high level of home ownership across different social groups means that there is a lack of strong evidence to support the need to have affordable housing policies in most areas of the Region.

    —  however the need, nevertheless, will be more urgent in the more accessible and scenic rural areas in Cumbria, and in very affluent areas such as Stockport, Trafford and North Cheshire. These areas tend to face very strict planning controls over housing land supply and very high land values. They are also areas where local housing needs are in conflict with economic in-migrants (affluent commuters, second homeowners and the retired);

    —  excellent motorway access and closer proximity to external job opportunities make certain suburban areas and outer metropolitan areas far more attractive as residential locations. They have higher than average house prices, far greater proportions of homeowners, and fewer households renting from private or social landlords. Clearly, in these areas policies aimed at the procurement of affordable housing might open up new opportunities to the less well-off existing residents. In these areas, the local authority might seek the inclusion of policies in their local plans which aimed to procure a quota of "affordable homes" for local needs on new market housing schemes;

    —  the problem of providing sufficient affordable homes has been of particular concern in the Lake District and across Cumbria for a number of years. There was a smaller proportion of both professional and managerial households that were homeowners in Cumbria as a whole but especially in South Lakeland and Eden. This concern has stemmed from the number of non-local retirement migrants, commuters and second-homebuyers moving into these areas, attracted by the picturesque settings of the numerous small villages and market towns dotted across this part of the North West. In the early 1980s, a study of local attempts to increase the amount of housing available to local people[4] focused on the Lake District Special Planning Board's use of Section 52 planning agreements to control the occupancy of new housing in favour of local people. The study concluded that by placing restrictions on the purchase and occupancy of new dwellings, the Board was inadvertently increasing demand pressure within the second-hand market. Because non-local buyers were not able to compete for new housing, but still wished to move into the area, they refocused their attention on older properties. This caused a further elevation of prices in this sector. The net result was that local people were further disadvantaged in the market for core village housing, and became increasingly dependent on council or housing association dwellings at the edges of villages and on new Greenfield sites. For this reason, the use of planning agreements to control occupancy of new housing was deleted from the Cumbria and Lake District Joint Structure Plan in 1984;

    —  in 1998, the Lake District National Park Authority introduced policies into its local plan, which again only permit new housing development where units are to be sold to "local" people who live and work in the National Park. This move is intended, in particular, to address the persistent problem of second-home purchases in the Park. The second-home phenomenon in the Lake District has escalated in recent years and is now in numbers on a par with parts of North Wales. In fact, it has been suggested that 15 per cent of all dwellings in the Lake District are second homes and, in the villages of Skelwith Bridge and Patterdale, second homes comprise as much as 40 per cent of all housing. This reflects a degree of external housing demand that is seen as the root cause of affordability problems in the Lakes. Much of this demand is concentrated in the market for second or retirement homes. Yet because of the penetration of the M6 into this part of the region, it is also within relatively easy commuting distance of Liverpool and Manchester. Similarly, the north of the National Park is also within easy reach of the North East (ie the area around Newcastle). So whilst the Lake District and Cumbria looks set to continue to attract second and retirement home seekers, current trends suggest further increases in the number of people moving into the area but working elsewhere. Furthermore, increases in "teleworking" may only heighten external demand pressures and compound the current problems facing the different planning authorities in the area and, of course, the local population.


  The aforementioned DETR research made a number of policy and research recommendations relating to affordable housing. One difficulty identified was how to assess the scale of need at a regional level. There is a clear need for improved methodologies used to carry out local housing needs surveys.

  In reviewing the local housing needs reports, the research found that the quality of these reports varied widely, only a very few studies manage to provide a thorough review of their local housing issues and provide very fine-grained analysts to inform policy decisions. The sampling methodology used by most surveys was found to be ineffective and unreliable. The broad-brush approach of conducting a simple random sample of 10 per cent of households in the district is the commonly adopted method. Such a sampling approach is not suitable to elicit responses from households living in areas with very different socio-economic characteristics.

  The research found there was also a lack of comment on the patterns of non-response. Non-response is not evenly distributed across different areas within the district and ignorance of such a problem will lead to biased and unreliable overall findings. However, such health warnings were not given in most of these reports and the percentages derived from the surveys (without weighting the factor of different response rates in different local areas) are used as the overall figures for the district. Hence, the information produced by these reports is biased and cannot be used to inform meaningful policy decisions. This also makes more difficult the task of forming a regional picture from these local housing needs surveys.

  There is some concern over the very subjective, mechanistic approach used in some surveys to establish housing needs and affordable housing targets. This approach combines the use of very subjective attitudinal questionnaire items, together with a pseudo-objective scoring system to assess housing needs. The findings often come up with the conclusion that there is a need to have 25 to 30 per cent affordable housing. However, such targets are derived for areas which already have low social housing demand and plenty of cheap private sector housing.

  There is a need for the Government Office/DTLR to set up a code of practice to advise local authorities on how to choose a reliable and effective methodology to carry out local housing needs surveys. More importantly, after the survey is completed, the analyses tend only to provide a straightforward frequency distribution of the answers to each question, rather than presenting a more fine-grained understanding of the relationship between different types of households and their aspirations and needs for housing:

    —  the low house prices in the North West, as well as the relatively high level of home ownership across different social groups, means that there is a lack of strong evidence to support the need for affordable housing policies in most parts of the Region. For areas with low average house prices, more sensible solutions may not relate to the provision of new low-cost housing opportunities, but to better training for the local workforce. However, where there is a need to provide additional affordable homes to new employment opportunities, the authority might consider seeking the inclusion of quotas in market development proposal. In some areas, other authorities have sought "fixed" quotas (ranging from 10 to 50 per cent) of units on specific sites but the tend in recent years has been towards a looser form of negotiation with developers. However, the research did not recommend that a fixed proportion of affordable dwellings on all new development sites is sought;

    —  the need, nevertheless, is more urgent in the more accessible, and scenic, rural areas in Cumbria, and in very affluent areas such as Stockport, Trafford and North Cheshire. Quotas could perhaps be sought on sites of more than one hectare as outlined in Circular 6/98. However, such a policy might prove problematic for a number of reasons. For example, new housing for rent in these areas might further reduce the attraction of social housing units located elsewhere and accentuate the existing low demand problems. The suggestion that affordable units should be sought in commuter areas (and the occupants encouraged to travel by car and seek work opportunities outside the district) might not prove to be palatable. The whole strategy might be too simplistic, as the provision of new affordable housing opportunities in these areas will not necessarily increase the wider opportunities available to local households who may not have the means to commute or the skills to take up jobs in nearby employment "hot-spots". However, reduced cost home-ownership opportunities (secured in perpetuity through Section 106 agreements) might be beneficial in some of the higher priced areas where communities are becoming polarised towards higher-income commuters, and therefore are becoming imbalanced—some first time buyers in these areas might benefit from being in these locations;

    —  within the North West, the Lake District and Cumbria occupy a unique position. They form an area of incredible natural beauty, offering unrivalled leisure opportunities and (arguably) a quality of life that cannot be matched anywhere else in England. It is also a highly accessible location and one that can be quickly reached from adjacent employment centres. This means that external housing demand pressures are likely to remain high. There is certainly merit in the suggestion that a unique area requires unique solutions to its particular problems.


  In July 2000, the North West Regional Assembly published Draft Regional Planning Guidance (RPG) for the North West. After public consultation this was the subject of a Public Examination in February and March 2001. The Public Examination Panel Report[5] was published in July 2001. Currently the Secretary of States' Proposed Changes to Draft RPG are awaited.

  Within Draft RPG Policy UR9 set out a policy framework dealing with Affordable Housing. This policy complements national guidance in Circular 6.98. The policy had three elements:

    —  identification of greatest need in specific geographic parts of the North West;

    —  establishment of a regional indicative target of 30 per cent of new homes to provide a tool in monitoring and review; and

    —  regional specific policy approach based on explicitly providing advice and information on the factors that local authorities should take into account in preparing their development plans in the light of local needs assessments in order to ensure a consistent approach across the North West.

  The Public Examination Panel Report recognised that the approach in Draft RPG is not out of line with the advice in paragraph 12 of PPG3. It endorsed the majority of the content of the Draft policy when it stated:

    "We consider that in order to provide a balanced overview and to assist local planning authorities to meet the housing needs of all members of the community and redress problems of social exclusion, RPG should contain direction about the provision of affordable housing in the region."

  With regard to the inclusion of the regional target in the policy, the Panel Report concludes that:

    "Whilst it may broadly demonstrate the scale of the problem, because of the range of local circumstances it is difficult to see how it can be of much benefit. Primarily, there is little reassurance provided to suggest that the 30 per cent figure would be remotely consistent with the sum total of estimates of affordable housing requirements from local assessments nor is its value as a monitoring tool convincing. Therefore, the Panel Report considered there to be no persuasive case for the inclusion of the figure within Policy UR9 of Draft RPG".


  Affordable housing can be rented (both social and private sector), owner-occupied or based on the various models of shared ownership which have evolved—tenure per se is not the key factor. What is crucial is the relationship between housing costs and household incomes. This is recognised in the Government's rent restructuring framework, which is based partly upon a measure of income, albeit an imperfect one. However, the costs of some new developments, although subsidised from the public purse to reduce the housing costs of the residents, are sufficiently high that they can no longer be described as "affordable".

  This points to the fundamental need for affordable housing to be defined in relation to the income levels of the households most likely to need it—those on lower incomes in each locality. This will vary in line with the labour markets in each area, but to a much lesser degree than property values/house prices. Strategies for central and local government, registered social landlords and other agencies, should be aimed at ensuring a range of housing which is affordable to all parts of the community—including increased investment in provision of social housing in parts of the region where it is required.

  There are a number of barriers to the provision of sufficient and appropriate affordable housing. Some relate directly to the costs of developing affordable housing schemes where demand is the highest—high costs of land (or existing buildings for conversion), high construction costs (especially where traditional local materials are required to meet heritage/conservation objectives), and the inadequacy of grant rates/Total Cost Indicators. Grant rates in particular must relate back to the achievement of an affordable rent/price as the starting point for funding a scheme, rather than the rents reflecting the "residual" amount required to fill the funding gap. These issues are, in the final analysis, down to the amount of funding available.

  We also need to look at improving the partnerships working toward the delivery of affordable housing—working for example with private landlords, with other local government functions such as economic development, or health services, linking with broader regeneration strategies. The role of other public agencies with significant landholdings (eg Ministry of Defence) can be extremely significant in particular localities, and they should be obliged to respond positively wherever possible.

  The impact of Right to Buy sales on the availability of affordable housing is significant in some parts of the North West. In rural areas such as Cumbria, parts of Lancashire and Cheshire this impact can be multiplied by the small numbers involved—if in a village there are only half a dozen council houses to begin with, the loss of two or three (or more) has a huge impact on the chances of local people being able to remain within their local community. This points to the need to re-evaluate the impact of Right to Buy—one suggestion is that a suspension of the scheme in settlements below a certain size is needed.

  By contrast, in the lower value areas, such as parts of Merseyside, Greater Manchester and East Lancashire, there may be a need to develop new models to allow the development of affordable new homes for owner occupation, for example as part of a managed programme of neighbourhood renewal. Here the issue is one of dealing with the costs of site assembly and construction being higher than the final market value of the new property—while the new homes are needed, the local housing market is too weak to make a scheme "stack up" using existing models—a way is needed of filling that gap.

  The North West Regional Assembly welcomes the recent publication of the Government's White Paper on regional governance[6] and the opportunities for elected Regional Assemblies to take a strategic lead on housing issues including the strategic and resource allocation roles of the Government Office and regional offices of the Housing Corporation. When put in place, this will enable an elected Regional Assembly to work in partnership with the North West's Unitary Authorities and other housing providers, to effectively deliver affordable housing to meet the regions needs.


  The plight of "key workers", much reported recently, is one aspect of this, and applies in parts of the North West. "Key workers", of course, are in the eye of the beholder—there is strong anecdotal evidence of workers in the health, social care, tourism and other sectors in the heart of the Lake District being "bussed" or commuting long distances from the Wet Coast of Cumbria, because they are unable to afford to live closer to their work places. This is promoting unsustainable patterns of living and has important knock effects to the long term sustainability of the local economy and services in areas such as the Lake District. No funding from the Starter Home Initiative has found its way north of Beford thus far, but the problem does exist in the North West.

  More broadly, lack of affordable housing makes the achievement or maintenance of balanced, mixed communities ever more difficult. If there are no local services and poor transport facilities then people, particularly young adults, are likely to move away. This has had the effect in some rural areas of creating new "suburbia". Some rural villages have become places to live, rather than to work, and house mainly better off households. Where jobs do exist they are mainly low paid service industries where employers struggle to fill vacancies. This major social change may now be irreversible in some areas. In urban areas, there is a form of ghetto-isation, where only the better off can afford to live in particular areas—social exclusion has increasingly clear geographical boundaries, based largely upon income, with some ethnic dimensions too. This runs contrary to the Government's stated objectives around the creation of mixed communities and urban renaissance. So, while the greatest needs of the North West relate to the socially excluded, economically disadvantaged urban communities which require comprehensive housing market renewal, there does need to be a balanced approach. Social inclusion is not aided by the inevitable economic exclusion of lower income households from large parts of the North West which follows from the inadequate provision of truly affordable housing.

1   North West Regional Housing Statement 2001 Update, Government Office for the North West, Housing Corporation, North West Housing Forum and North West Regional Assembly, 2001. Back

2   People, Places and Prosperity. Draft Regional Planning Guidance for the North West, North West Regional Assembly, 2000. Back

3   North West Regional housing Need and Demand Research, DETR, 2000. Back

4   Non Homes for Locals? M Schucksmith, Avebury, 1981. Back

5   Draft Regional Planning Guidance for the North West-Public Examination-Report of the Panel, 2001. Back

6   Your Region, Your Choice-Revitalising the English Regions, (Cabinet Office/DTLR, 2002). Back

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