Structural Integrity: The firmer foundations required for long-term housing policy

3^rd March 2015

Duncan Sim responds to the Prime Minister’s speech on housing

Even amidst noisier debates around immigration or the economy, housing remains a major political issue. David Cameron’s promise on Monday that the Conservatives would build 200,000 new ‘starter homes’ by 2020 was met by Ed Miliband’s assertion that a future Labour government would have “no greater priority” than housing. The “quiet crisis” of housing affordability identified by the Prime Minister has finally made a bang.

And none too soon: on average, first time buyers now face house prices five times their annual earnings, while new build levels are only halfway towards the estimated 250,000 homes required annually to meet rising demand and make up previous shortfalls. The 20% discount on the market price of a house offered by the starter home initiative will be welcomed by those than can afford a deposit, while the exemption it provides from Section 106 and Community Infrastructure Levy charges will please housebuilders.

Yet the Prime Minister’s announcement, though politically understandable in light of the forthcoming election, constitutes a fatally short-term vision and again fails to deliver the comprehensive supply-side reform needed to accelerate housebuilding. By contrast, the reviews of Natalie Elphicke and Keith House and Sir Michael Lyons, commissioned by the Government and the Labour Party respectively, acknowledge the need for a government-backed, long-term plan.

Both reports see the local authority as the best-placed institution to raise housebuilding levels, with Elphicke and House focusing on culture and mindset while Lyons advocates greater devolution of powers.  This big-picture thinking, centred on local government, is the right approach; but to achieve it requires culture change at the local level.

Central government has failed to establish housing as a national priority, and authorities seeking to increase housing supply have been starved of political support until recently. The local leadership gap, diagnosed in both reports, must be countered. Yet culture change may be slow to take hold given the prolonged drop in local authority housebuilding, completing around 2,000 of the 138,000 homes in 2013. It must therefore be complemented by an institutional revamp in order to deliver visible results.

To support local authorities, ResPublica advocates the creation of new institutions called ‘Local Place Partnerships’ (LPPs), delivery vehicles bringing together local authorities, developers, and citizens. These would serve as forums within which the competing interests of conflicting parties in the housebuilding process could be resolved, engineering the political will to expand supply not currently available due to the disjunction of the factions involved.

Such bodies would have a number of advantages over local authorities in the acceleration of housebuilding. Firstly, institutional change can encourage the cultural change advocated above, inspiring innovation as a new system emerges. More specifically, LPPs could reduce the current ‘postcode lottery’ in local leadership: while many councils have exceptional strategic housing and infrastructure ambition, not all are so assiduous. LPPs would draw in a wide range of actors beyond just local political leaders, mitigating this agency problem.

Secondly, LPPs can allow for more direct citizen participation in the housing delivery process, for instance by including community representatives on executive boards. This would represent a policy progression in line with the neighbourhood planning provisions of the Localism Act, and offer currently under-represented sections of the community (particularly young people) a better chance of having their opinions heard on prospective developments.

Better community feed-in would also mean more emphasis on ‘placemaking’. The creation of areas where people wish to live represents an inherently bottom-up process, and the failure to deliver developments consistent with local opinions has long aggravated tensions in the planning process.

The exemption from Section 106 and CIL charges for developers building ‘starter homes’ is therefore particularly concerning as these provide essential funds for infrastructure and affordable homes. Housebuilding on any significant scale without such development in parallel produces longer-term difficulties, not to mention community animosity towards new housing. LPPs would offer community-led strategic regional oversight, ensuring infrastructure is supported alongside new homes.

Thirdly, it is widely recognised that effective partnership between local authorities and developers, housing associations and others is critical to delivering more homes. Yet the current absence of a shared local vision or central decision-making node among these partners produces friction as differences of opinion are revealed late in the planning or development process.

What is needed is reconciliation between the competing interests of these parties, but at present communication is ad hoc and haphazard. Simply empowering local authorities does not address this specific problem. Instead, an institutional setting must be created to facilitate dialogue; LPPs seek to bring together all relevant factions for exactly this purpose.

Central government currently lacks the coherent vision of how the UK can provide for future generations needed to legitimise locally-led planning and building and inspire confidence within the housebuilding sector. Recent announcements, despite returning housing to the political agenda, offer neither such a vision nor the political narrative necessary to stimulate a new era of mass housebuilding.

LPPs, by contrast, offer the institutional change needed to signal a long-term commitment to housebuilding while providing the community-led framework which can stimulate development. As devolution takes hold in the public imagination and gathers momentum among policymakers, this initiative is not only necessary, but also timely.

To learn more about ResPublica’s Local Place Partnerships project, please contact David Fagleman, Project Manager – Prosperity Programme, ResPublica at david.fagleman@respublica.org.uk or on 0203 542 8148.