Select Committee on Transport, Local Government and the Regions Memoranda

Memorandum by South East England Regional Assembly (AFH 67)


  1.1  The Regional Assembly only became the Regional Planning Body for the South East region of England in April 2001. It quickly identified that affordable housing was a priority issue for the region. Since that time, Assembly officers and Assembly partners have been establishing monitoring systems, undertaking research and identifying the actions the Assembly and others need to take to move obstacles to an increased supply of affordable housing in the region. A special Affordable Housing Sub-Group of the Assembly's Housing Advisory Group, chaired by the Director of one of the region's major Registered Social Landlords, has been established in order to provide the focus and momentum for this work.

  1.2  The Sub-Group is currently preparing a report to the Regional Assembly's next Planning Committee on 12 June, which will identify the key obstacles to improving supply and recommend specific actions by the Assembly and others. To test some of the ideas in this report and garner wider support, the Affordable Housing Sub-Group has also arranged two conferences on Affordable Housing within the region, which will take place in the last week of May. The conferences will be focused on tools of delivery for affordable housing.

  1.3  In order to improve the information base about affordable housing in the region, which had previously been poor, the Assembly has also instituted new surveys of supply and more effective monitoring arrangements. It has also encouraged the Regional Development Agency to take forward initiatives to provide more affordable housing on its own sites, and to initiate an innovative new scheme to assist the provision of affordable housing on small sites, the Brownfield Land Assembly Trust (BLAT). The Assembly is also joining the Development Agency in commissioning research to identify more precisely the impact on businesses in the South East of a continuing shortage of affordable housing.

  1.4  Affordable housing is, of course, an issue which affects other regions, and particularly the South East region's neighbours, quite severely. We have therefore joined with London and the East of England region to share knowledge and responses to these problems. Affordable housing is the subject of regular debates at the Inter-Regional Forum of elected members of the three regions. The three regions are shortly to meet Lord Falconer to discuss the affordable housing crisis and to press the case for additional Government resources and other measures to help improve supply.

  1.5  In responding to the specific questions raised by the Urban Affairs Sub-Committee, the Assembly has concentrated on those matters where it feels it can best contribute to the Sub-Committee's analysis from its own knowledge and understanding.


  2.1  The Government's definition of affordable housing is set out in Circular 6/98. This states that:

    "Planning policy should not be expressed in favour of any particular form of tenure. Therefore, the terms affordable housing or affordable homes ... encompass both low-cost market and subsidised housing (irrespective of tenure, ownership—whether exclusive or shared—or financial arrangements) that will be available to people who cannot afford to rent or buy houses generally available on the open market".

  2.2  Such a definition poses two problems. Firstly, it leaves ambiguous whether this includes market housing, and, if so, the type of market housing which can be included within the affordable supply contribution. How is "available" to be defined and monitored, and at what point in the development process can it be clearly identified and recorded? Secondly, and as a consequence of this ambiguity, it makes effective monitoring difficult.

  2.3  Recent correspondence (October 2001) with our Government Office (GOSE) has been helpful in clarifying the position, at least in the context of regional monitoring. The letter has been widely circulated (and is an Appendix to this submission). The significant points it makes are that "low-cost market housing is an element of affordable housing delivered at an agreed discount below full market value and in response to an identified need" and, that "this does not imply that the provision of smaller dwellings by the private sector can be claimed to be low-cost market housing merely because they are cheaper than larger dwellings".

  2.4  This being the case the Assembly's officers are using the following definition:

    "Housing provided with a subsidy to enable the asking price or rent to be substantially lower than the prevailing market prices or rent in the locality".

  2.5  We believe that this is simpler and clearer than the official definition. Certainly, there is an urgent need to iron out ambiguities in the "official" definition as soon as possible.


  3.1  On even a fleeting analysis, it is clear that the South East region has substantial need for affordable housing, running across the region. This need was recognised in the latest Regional Planning Guidance for the South East (RPG9), approved in March 2001. Affordable housing was specifically referred to in the Guidance as an important issue and a "provisional" affordable housing indicator for the whole of the South East was put forward in the Guidance. The growth of employment in the region, coupled with high house prices, means the need for more affordable housing has been growing more acute, on our analysis, over the last few years. This need runs right across the region, but is particularly acute on the western side, where house prices are highest and job growth is strongest. We comment further on the scale of the estimated shortfall and its implications later in the submission.


  4.1  Monitoring the supply of new affordable housing is difficult. In part this is due to problems with the definition. However, it also reflects the complexities surrounding the funding of affordable housing and the negotiation of schemes through the development process.

  4.2  The Assembly is monitoring on the basis of two sources of information. One is the Housing Corporation data on completions funded through the Approved Development Programme (ADP) or through Local Authorities' Social Housing Grant (LASHG). This shows that completions were 5,800 in 1999-2000, 5,600 in 2000-01 and 6,900 in 2001-02. The Starter Homes initiative will boost this in the current financial year, but completions are not expected to exceed 8,000. This data is not ideal: it includes refurbishment and obviously excludes any units provided without either of these subsidies. The Regional Assembly is therefore now collecting its own information based on local authority planning records. Preliminary findings suggest a lower level of provision than previously thought: around 15 per cent of total completions in 1999-2000, ie only around 4,000 per annum.

  4.3  It is alarming to compare these figures with recent DTLR data on Right-to-Buy Sales: in 1999-2000, 6,000 dwellings were sold in the South East region, and in 2000-01 a further 4,300. In other words, present supply is at best keeping up with the erosion of stock for "Right to Buy". On the basis of our latest survey, it may not even be doing that.


  4.4  Although some affordable housing is provided without recourse to public funds the majority is provided through Social Housing Grant (SHG) to Registered Social Landlords (RSLs), either through ADP or LASHG.

  4.5  In relation to the identified need for affordable housing in the South East, the level of available funding is low. The average HC ADP allocation results in only a limited number of properties for most local authorities and the ability of local authorities to supplement this to any substantial effect through use of LASHG is largely dependent upon them being debt-free. There is a constant struggle to provide sufficient resources for the development opportunities that occur on Section 106 sites.

  4.6  In the South East the total amount of SHG was approximately £230 million in 2001-02. This is set to rise to some £250 million in 2002/2003 and £290 million in 2003-04 primarily due to increases in the ADP and assuming a constant £140 million LASHG programme (as per 2001-02). Whilst these sums are an increase on funding from the years immediately preceding, they are still lower than the levels of funding available in the early to mid-1990s. In addition, there is a question mark against the long-term sustainability of such a large LASHG programme in the South East in the future. The programme in the South East is significant due primarily to the large amount of LSVT activity that has occurred in the last 10 years or so. However, the amount of LASHG available from the receipts of such transfers is not never-ending.

  4.7  As well as the ADP and LASHG programmes, the South East has benefited from the Starter Homes Initiative (SHI) to the tune of £65.6 million over the three year period to 2003-04. This is to provide housing to key, identified public sector employees and is expected to provide 2,550 homes over this three year period. At present there are no indications as to what will happen post-2003-04 but it is assumed that this is a one-off programme.

  4.8  Despite the increase in SHG funding in the South East up to 2003-04 this will not translate into a corresponding increase in the number of affordable homes to be provided. This is due to the increasing costs of land, property and works in the South East in combination with the increase in grant rates for RSL development of affordable housing. The latter is to enable RSLs to meet the Government's requirements in terms of rent restructuring. It is therefore unlikely that additional units will arise from the increased ADP in 2002-03, with only a small increase in 2003-04. An assumed constant £140 million LASHG will result in fewer units being provided which is likely to negate any increase in units provided through the ADP.


  5.1  We have commented on the results of our provisional monitoring in respect of affordable housing supply in the previous section. That survey confirms that the contribution of planning gain to the current provision of affordable housing supply is certainly not adequate to meet the scale of demand in the South East region. The present system is clumsy and too slow. The Assembly therefore supported, in its comments on the Planning Green Paper, the Minister's proposals for a new tariff system of planning gain, which could provide more support for affordable housing. We did so, however, on the basis that the new system should be kept as simple as possible, to avoid confusion among both developers and the public, and to ensure that the problems of the existing system were not replicated. It also seems likely that the new system will take some time to bring into play, and to build momentum.

  5.2  In the interim, the best possible use should be made of the existing system, and the Assembly is encouraging local planning authorities in the region to adopt clear and streamlined negotiation procedures, together with a clear set of targets and approximate percentages of affordable housing contribution, in their Development Plans. The authorities are being further encouraged to ensure that those targets and percentages are robustly pursued in development negotiations.

  5.3  Nevertheless, even with a more effective system of planning gain, that alone will not provide for sufficient resources to meet the affordable housing problem in the region. In part, this is because of the scale of the potential shortfall, and because provision through the present planning gain system is uneven and uncertain. More especially, however, it is because, even when Section 106 agreements have been reached, RSLs still need a degree of financial support to actually provide the necessary accommodation and manage and maintain it. This aspect of the funding problem is inadequately understood, but is of crucial importance if overall supply is to be improved. Additional resources therefore need to be channelled to the Housing Corporation and RSLs, in order to ensure that effective housing provision is actually achieved as a result of all planning obligation/new tariff site agreements. Additional public funds are therefore a necessary part of the affordable housing solution, not an alternative to the planning gain system.


  6.1  In regions such as the South East, for which affordable housing provision is an issue of such clear regional significance, the answer to this question must be in the affirmative. This need has indeed already been partly recognised in the current Regional Planning Guidance (RPG9). This refers on pages 50-52 to the importance of affordable housing provision and puts forward a "provisional" indicator of affordable housing need of some 18,000-19,000 homes a year in the whole ROSE area. No equivalent figure for the present South East region is put forward in RPG, but we estimate that its equivalence for our region is 11,500-12,000 dwellings per annum.

  6.2  The tentative nature of this "target", and the fact that it relates to the former ROSE area, rather than the current region, are unhelpful. We have, nevertheless, already found the statements in RPG very useful in supporting our work on affordable housing. Perhaps most valuably, they have provided a response to those who (still) sometimes argue that affordable housing provision should not be an issue for regional engagement.

  6.3  We consider that targets are needed at the regional level for four principle reasons. Firstly, they provide a benchmark of the scale of provision, in the same way as the overall housing provision target for the region. This framework provides the context for resource allocations by Government, reflected at the regional level by the Government Office and the Housing Corporation, which assists provision. It also fulfils the same function of providing a framework for Development Plan allocations by local authorities.

  6.4  Secondly, it reinforces the importance of the issue and the commitment required of local authorities and other players, to actively pursue the issue of provision. Despite the evident need for more affordable housing in the region, we are still finding current examples where local authorities are making scant reference to this topic in their draft Development Plans. Using the policy references to target in RPG9, we have been able to press them to do more.

  6.5  Thirdly, the presence of the target helps active and creative local authorities in their negotiations with developers and other providers. They can point to Regional Guidance as a requirement and therefore a reinforcement.

  6.6  The regional target provides a potential basis for targets at a sub-regional level. The scale and nature of affordable housing need do vary across the region. Some parts of the region have particularly acute affordable housing needs. It is helpful, therefore, for the regional target to be broken down to focus on these priority sub-regions, giving further guidance and support to targeted effort and the case for further financial resources. Although this sub-regional dimension has not yet been adequately developed in the South East, it is a dimension we wish to pursue, once the Government has decided how to proceed with the Planning Green Paper proposals. We believe better sub-regional guidance would help heighten priorities and assist affordable housing provision, but it cannot happen if we do not have a regional target to work from.

  6.7  We therefore do need regional targets, and we need them to be less provisional than in the current Regional Planning Guidance for the South East.


  7.1  On the basis of current performance and the analysis referred to earlier in this submission, it is clear that that the "provisional" target for affordable housing in the South East region will not be met. At best, we are currently achieving little more than half that target, and our latest survey returns suggest even this may be an exaggeration.

  7.2  As previously indicated, the target on which we are currently working in the South East region is, itself, somewhat provisional, and is a derivation from a larger figure covering the whole of the remainder of the South East (ROSE). A more precise target is needed and needs to be justified by further study. The Assembly has already begun to undertake surveys and other work which will lead to this end, working with the Government Office, RSLs and local authorities through its Affordable Housing Sub-Group.

  7.3  Even allowing for adjustments in the eventual target, however, a substantial increase in the rate of supply is likely to be necessary. Although the planning gain system and other factors could contribute to such an increase, in our view the principal requirement is a substantial increase in the public resources made available for affordable housing provision.


  8.1  An inadequate supply of affordable housing has both social and economic costs. In social terms, the Regional Planning Guidance for the South East and the region's new Social Inclusion Statement, shortly to be published, both place a strong emphasis on improved affordable housing provision to meet social needs. Registered Social Landlords and Housing Associations in the region regularly draw attention to the social costs of inadequate provision, as does RAISE, the regional voluntary sector grouping. Previous research has shown that inadequate housing with resulting overcrowding and other tensions, exacerbates the problems of health, transport and sometimes crime problems.

  8.2  Of equal concern are the economic consequences. A lack of affordable housing means that employers face recruitment difficulties and are obliged to draw their labour force from further afield. This leads to increased costs and inefficiencies for them. For their workforce, there are also social and economic costs, with many workers being obliged to commute substantial distances to work, with the resultant direct and indirect costs to their lifestyle, and increased pressures on an already-congested transport system.

  8.3  These problems are often cited and individual examples quoted, but the Assembly believes that the evidence to date has been too anecdotal. It has therefore asked the Regional Development Agency, SEEDA, to undertake joint research so as to establish more precisely the cost to business and the economy resulting from the shortfall in the provision of affordable housing in the region. This research is expected to be available in the autumn.


  9.1  The Regional Assembly is acutely aware of the problem of affordable housing in the South East region and the need for further action to improve the provision of such accommodation. It has only recently taken on the role of Regional Planning Body, but has focused on this issue as a priority topic for action. It is working with the Government Office, the Development Agency, local authorities and RSLs to identify the key obstacles to change, and to promote action and remedy. It will be considering further reports on this topic over the next two months, and we intend to be in a position to advise the Committee further on the precise issues and actions which the Assembly believes should be taken.

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