Local authority direct provision of housing: round table Janice Morphet j.morphet@ucl.ac.uk Twitter: @janicemorphet NPF/RTPI Housing research project
overview 1. Context 2. Back to the future? 3. What powers can local authorities use to build housing? 4. What funding can be used to build local authority housing? 5. Some local authority initiatives 6. What difference could this make to housing and planning? 7. What needs to be done to encourage more local authority housing provision? 8. What next? 9. Takeaways
1. Context Challenge of housing provision always with governments Assumed by Treasury to be a planning issue Not enough land released Not enough consents Too much regulation Not enough certainty though adopted local plan Numerous government initiatives which never seem to add significantly to supply Dominates planning to the detriment of all other land uses
However Since 1979, regardless of volume of planning consents, developers have been producing similar supply Developers operate rationally they have a duty to provide a profit/dividend to their shareholders Developers have no duty to build houses No requirement on developers to build out planning consents main concern of Treasury at the moment is the quantity of unimplemented consents Increasing supply may reduce value of their land stocks and profit levels No evidence that increasing land supply increases number of private sector dwellings built
and Barker 2004 Assumed that public sector provision for housing would be made for social and affordable housing alongside freeing up planning and increasing housing supply
And public stock? Eroded though right to buy now extended to Housing Associations Much right to buy housing stock now transferred into buy to let market Reduced provision from s106 renegotiations on viability Not being provided for those needed extra support eg older people and those with disabilities
Is this a UK or English issue? In 2016 right to buy extended in England and stopped in Scotland In England, housing no longer seen as part of a dwindling welfare state unlike the rest of the Uk and Europe Is this likely to change?
Voices for public sector housing provision growing The HoL Select Committee Report January 2016 House of Commons Select Committee Report June 2016 Prime Minister s emerging post-liberal stance on state intervention?
2. Back to the future? Between 1900-1989 local authorities built and provided housing Real pressure for reduced housing provision came after the UK s1976 IMF crisis World Trade Organization agreement to open up public sector to private competition UK agreed this in Labour cabinet meeting in 1976 Election of Mrs Thatcher 1979
What has prevented local authorities returning to provide housing again? Government levy on capital receipts Assumptions that housing can only be provided though the Housing Revenue Account Use of financial balances to keep services running Uncertainty about powers
What is making some local authorities actively engage in housing provision again? Cost of funding Bed and Breakfast for homeless people Needs of specific groups including older people Failure of the market to provide housing unimplemented consents Policy objectives to change housing mix Regeneration and place making Requirement to generate income stream for other services Policy objective to build housing again Wish to support local economy including small builders, apprentices, growth sectors
3. What powers can local authorities use to build housing? 2011 Localism Act s1-7 provides local authorities with powers to act as a company Implementation of International Financial Reporting Standards (IFRS) in local government means public and private sector have same financial reporting methods affects use of funds for capital investment allows public and private sector partnerships to operate more easily Allows the use of the whole of the LA asset base to secure funds for development
4. What funding can be used to build local authority housing? Local authorities can raise bonds secured on their assets to develop housing; Take and make loans Set up housing companies using assets Use asset backed vehicles for development Enter into public/public or public private partnerships Use pension funds Use land, finance or reputation as partnership assets Create housing associations Use funds raised to act as developers or patient investors
5. Some local authority initiatives Local authorities are increasingly engaging in housing supply initiatives In 2015 nearly 50% of local authorities stated that it was their intention to create a housing company
Initiative type 1: using the housing revenue account to develop housing Specific funds provided by government and used by local authorities including: Stroud Luton Ealing
Initiative type 2/3: Establish a council owned housing company/local housing company Ashford Enfield Hammersmith and Fulham Camden Sheffield Croydon Slough Bournemouth Ealing Bracknell Forest Sutton South Cambridgeshire Southwark Mansfield Thurrock Wandsworth Westminster Salford
Initiative type 4: create a special purpose vehicle Barking and Dagenham
Initiative type 5: create local asset backed vehicle Gateshead Croydon Bournemouth
Initiative type 6: joint venture with developer Wakefield Westminster Manchester
Initiative type 7: use PFI to build housing Kirklees Islington Ashford Derby Kent CC Leeds Manchester Wiltshire
Initiative type 8: Develop housing with a housing association Hastings South Oxfordshire
Initiative type 9: use pension funds for housing development Manchester Islington Multi local authority pooled pension fund to create British wealth fund for infrastructure and housing
Initiative type 10: use planning obligations Wandsworth Wiltshire Lewisham
Initiative type 11: provide mortgages Essex CC Herts CC Northumberland Newcastle-under-Lyme Peterbroigh Broxbourne Trafford Blaby Leics CC
Initiative type 12: act as a housing broker Redbridge
Initiative type 13: take on HRA debt Cambridge
Initiative type 14: use New Homes Bonus to provide housing Over 50% of local authorities including: Leicester (direct) South Norfolk (with HA)
Initiative type 15: use hedge fund Luton
Initiative type 16: use bond scheme Pan London group
Initiative type 17: use own assets differently Bath and NE Somerset Cambridgeshire CC
Initiative type 18: regeneration Gateshead Lewisham
Initiative type 19: using existing housing estate land Wandsworth Lambeth
Initiative type 20: establish partnership with a builder Kent CC Sandwell
Initiative type 21: incentivize the use of unimplemented consents Greater Birmingham and Solihull Partnership; Lichfield
Initiative type 22: loan from European Investment Bank Barking and Dagenham Enfield
Initiative type 23: establish housing association Islington
Initiative type 24: use City Deals Preston, South Ribble and Lancashire CC Greater Manchester Leeds Greater Birmingham Newcastle Southend on Sea Greater Norwich Greater Cambridge Oxford and Oxfordshire Stoke on Trent and Staffs
Initiative type 25: use housing loan fund Combined authority agreement Greater Manchester Others under discussion
Initiative type 26: establish housing grant fund Combined authority for East Anglia
Initiative type 27: create a housing fund Plymouth
Initiative type 28: purchase housing land Cherwell
6. What difference could this make to housing Lots of initiatives that would make a big difference in housing supply if applied across more local authorities Could encourage more private sector developers to build? Local authorities could use powers and funds to purchase consented schemes from developers then use developers to build out schemes Could local authorities CPO consented schemes? Could local authorities establish schemes for small builders?
and planning Assist planners in demonstrating that housing implementation going ahead Might enable planners to give priority to housing where plans suggest would be most beneficial Enable plans to provide mixed tenure housing Make planners more proactive in housing delivery Enable placemaking rather than housing provision to dominate plan making and delivery
7. What needs to be done to encourage more local authority housing provision? Need to share examples between local authorities examples form all over England and from different types of authority Need to make planners aware of the way housing is now being delivered in some authorities Let local authorities appreciate that assets are worth more in generating income than being sold
8. What next? Report being published on 4 th December Will include: Findings Recommendations Table of all local authorities in England
9. Takeaways 1. Local Plan is now being focussed on delivery 2. Local authorities are into solving housing problems more directly homelessness, nondelivery 3. LAs need to generate income to replace Revenue Support Grant from 2010 (ie rents not capital) 4. LAs starting to act as patient investors 5. Planning skills will be needed for Council s own development including CPOs and funded