Buildig more affordable homes: Improvig the delivery of affordable housig i areas of high demad LONDON: The Statioery Office 11.25 Ordered by the House of Commos to be prited o 19 December 2005 REPORT BY THE COMPTROLLER AND AUDITOR GENERAL PREPARED JOINTLY BY THE NATIONAL AUDIT OFFICE AND THE AUDIT COMMISSION HC 459 Sessio 2005-2006 20 December 2005
aalysig delivery chais Aalysig delivery chais Improvig the quality ad provisio of public services has bee a key priority for Govermet i recet years. As more moey has bee provided ad public expectatios have rise, there has bee a eed to offer better services, ivolvig greater diversity ad icreased choice, ofte focussed o local delivery, through a rage of differet service providers. Had i had with these developmets has bee the eed to better maage the delivery of those services. As part of the Spedig Review 2004 Sir Peter Gersho idetified scope to achieve efficiecy savigs across public expediture of at least 20 billio by 2007-08. This has caused departmets to look closely at how they operate ad provide services, with each havig to specify how they will secure the savigs for which they will be accoutable. More geerally, there has bee a rage of performace maagemet tools itroduced across cetral Govermet ad the wider public sector i recet years. I particular, i 1998, the Govermet itroduced Public Service Agreemet (PSA) targets, likig, for the first time, fudig with the performace expected from departmets ad their parters at atioal, regioal ad local level. The Spedig Reviews i 2000, 2002 ad 2004 have gradually refied this target-settig process. The umber of PSA targets has reduced from 600 i 1998 to 110 for 2004. Ad targets have icreasigly focused o outcomes for example reducig crime istead of o iputs, processes or outputs such as more police o the street, better utilisatio of court time etc. These developmets are welcome. There is cosesus i govermet ad more widely that fewer outcomefocussed targets reduce the risk of the uiteded cosequeces which come from measurig iputs or processes. This combied with a sustaied drive for improved efficiecy, provides a fresh opportuity for departmets to review their PSA targets ad the meas by which they ca best be delivered. I particular, more sophisticated outcome-focussed services, better tailored to the diverse ad local eeds of the public, ofte caot be achieved by oe orgaisatio aloe; istead they require close partership workig betwee differet orgaisatios at atioal, regioal ad local levels. These relatioships, ultimately likig Miisters to the frotlie health worker, school teacher or police officer, have become kow as the delivery chai, echoig the busiess cocept which refers to the etwork of systems, processes ad orgaisatios through which strategic objectives are achieved. Such complex delivery arragemets, if ot well maaged, create sigificat risk that resources, far from beig more effectively targeted at citizes eeds are lost i cofusig ad wasteful admiistrative activities. Thus as delivery chais have become more sophisticated, ivolvig a wider rage of orgaisatios of differet kids, the eed to uderstad them better, ad to make them more efficiet ad effective, has become icreasigly evidet. Some log-stadig delivery chais are strog ad clear ad more likely to succeed. Others, less developed, have struggled to meet the requiremets asked of them. 2 Buildig more affordable homes: Improvig the delivery of affordable housig i areas of high demad
aalysig delivery chais This the forms the backdrop to three joit studies examiig the delivery chais associated with particular PSA targets. Here the Audit Commissio ad Natioal Audit Office, through their differet perspectives at atioal ad local level, ad by combiig their kowledge ad expertise, have examied the delivery chai associated with a PSA target o the delivery of affordable housig; 1 from the challeges faced by the ower of the target the Office of the Deputy Prime Miister through to the actios beig take by or ow required at regioal ad local level by those orgaisatios that have to deliver the large umbers of ew affordable homes required. There is a separate similar report o icreasig the use of buses ad a third, prepared i cojuctio with the Healthcare Commissio, o child obesity. Our aim i producig the three reports is to examie the characteristics of the specific delivery chais, ad their capacity to deliver the PSA target for which they were desiged. I so doig we idetify ways i which the various parties ivolved i the chais might work more closely together, as well as suggestig ways i which the target might be achieved i a more cost-effective maer. We also ited to produce a fourth report to be published i 2006 i which we brig out issues of more geeral relevace to the ways that public sector delivery chais are costructed ad how they ca best operate. 1 To achieve a better balace betwee housig availability ad the demad for housig, icludig improvig affordability, i all Eglish regios while protectig valuable coutryside aroud our tows, cities ad i the gree belt ad the sustaiability of tows ad cities. Buildig more affordable homes: Improvig the delivery of affordable housig i areas of high demad
abstract abstract A shortage of housig ad high house prices i recet years has made it icreasigly hard for may people to obtai a home that they ca afford either to ow or to ret, particularly i the South of Eglad. This shortage has a umber of importat cosequeces, creatig difficulties ad hardship for may people, who may fid themselves livig i iappropriate accommodatio. It also has implicatios for public ad private services as key workers are priced out of the market i some parts of the coutry. To tackle this situatio, the Office of the Deputy Prime Miister has bee set the followig Public Service Agreemet target: Achieve a better balace betwee housig availability ad the demad for housig, icludig improvig affordability, i all Eglish regios while protectig valuable coutryside aroud our tows, cities ad i the gree belt ad the sustaiability of tows ad cities. This joit study by the Audit Commissio ad Natioal Audit Office has take as its focus oe strad of the target improvig the availability of affordable housig i high demad areas. Fudig for ew affordable housig some 3.3 billio betwee 2004 ad 2006 is allocated by the Office of the Deputy Prime Miister (ODPM) to the Housig Corporatio which i tur provides grats ad subsidies to housig associatios ad developers to deliver ew housig. Agaist a target i 2004-05 to provide a additioal 27,000 homes for ret or low-cost home owership, icludig those for key workers, the Housig Corporatio achieved 28,756 completios. A complex delivery chai has developed aroud this fudig flow, ivolvig Govermet Offices for the Regios, Regioal Housig Boards ad Regioal Plaig Bodies, local authorities, housig associatios ad property developers. While addressig PSA 5 ODPM is also tasked to secure aual efficiecy gais i social housig of 835 millio by 2007-08, of which 355 millio will come from housig associatios. The report sets out te areas where such efficiecies are likely to be achieved. More geerally the study makes various recommedatios for atioal, regioal ad local bodies to improve both efficiecy ad effectiveess of the delivery chai highlightig i particular the eed to icrease the speed of delivery ad to reduce the uit cost of housig. 4 Buildig more affordable homes: Improvig the delivery of affordable housig i areas of high demad
abstract Fidigs The Departmet has itroduced sigificat chages to the delivery chai i recet years, but there has bee a lack of certaity at regioal ad local levels about roles ad relatioships uder the ew arragemets. ODPM has chaged the delivery chai by itroducig more decisio makig at the regioal level, removig Local Authority Social Housig Grat ad chagig the plaig system. ODPM has ot always followed through o these chages with clear, practical ad timely advice. Despite large amouts of fudig, a atioal target, ad affordable housig becomig a key corporate priority for local authorities i recet years, few authorities believe that they ca yet meet the challege to deliver large icreases i affordable housig. Recet statistics from ODPM 2 idicate that for Eglad as a whole, the umber of ew cases of homelessess has bee fallig sice the begiig of 2004, with the umber of ew households i temporary accommodatio remaiig steady sice September that year. The Departmet attribute this to additioal measures i recet years to tackle homelessess. I areas of high housig demad i the south of Eglad, however, the umber of households livig i temporary accommodatio has rise steadily over recet years. This has resulted i a backlog for local authorities ad very few, (oly 2 per cet of those surveyed for this study) 3, cosider that they will be able to meet the eed for social reted housig over the ext three years due largely to isufficiet fudig ad a shortage of lad available for developmet. I respose to such circumstaces ODPM plas to icrease the supply of ew social reted housig by 50 per cet by 2007-08 compared with 2004-05. It is also icreasig its ivestmet i homelessess prevetio (from 60 millio i 2005-06 to 74 millio i 2007-08). This, combied with a icreased supply of social reted housig will, i ODPM s view, cotribute to the Govermet s aim to halve the umber of households i temporary accommodatio by 2010. Iitiatives by the Housig Corporatio have started to focus developmet fudig ito the hads of those best able to sped it effectively. Fudig for affordable housig is ow allocated to fewer housig associatios i 2004-05, 70 housig associatio parterships received 80 per cet of the fudig; whereas 400 housig associatios received fudig i 2003-04. Fudig is ow allocated o a two year fudig cycle. This gives more certaity to housig associatios which ecourages developers to ivest more ito affordable housig. 2 ODPM Quarterly statistical release o homelessess. 3 MORI survey of 50 local authorities i the South East, the South West ad Lodo. Buildig more affordable homes: Improvig the delivery of affordable housig i areas of high demad 5
abstract While there has bee a move towards more regioally based decisio makig about housig eed ad provisio, this has ot always led to a chage i workig practices at a local level. There is some ambiguity aroud the emphasis by ODPM for local authorities to work sub regioally creatig room for cofusio amogst developers who are usure about the status of sub regioal documets ad processes. Govermet Offices could play a ehaced role i providig guidace to local authorities. Govermet Offices are uiquely placed to help local authorities to improve their performace but their role has evolved i differet ways ad at differet rates across the regios. This meas that their role is ot always clear to local authorities. Sectio 106 has proved a effective lever for icreasig the supply of affordable housig, but there is a eed for clearer ad more cosistet messages from local authorities so that developers do ot waste time ad effort i puttig forward uacceptable proposals for ew schemes. Forty per cet of the Housig Corporatio s Approved Developmet Programme is ow chaelled to Sectio 106 sites. This importat lever is a complex part of the delivery chai ad oe that causes most delays. Local authorities have implemeted ODPM guidace icosistetly ad ofte lack the ecessary skills i egotiatio ad techical fiacial tools. Most local authorities ow have affordable housig as their corporate priority, but for this to be achieved it eeds the support of the commuity. Local authorities eed to work with housig associatios ad developers i providig a clear message to local commuities about the eed for affordable housig ad ivolve people i how developmets might be desiged. Some local authorities are achievig this very successfully but may local authorities are yet to fully take up this commuity leadership role. The release of surplus lad for housig by departmets could be aided by more coordiatio at a atioal level. The itroductio of the Register of Public Sector Lad ad chages to Govermet Accoutig are improvig the way i which Govermet Departmets release lad that is suitable for affordable housig. But more eeds to be doe to esure that surplus public sector lad is trasferred effectively to other agecies. 6 Buildig more affordable homes: Improvig the delivery of affordable housig i areas of high demad
executive summary Buildig more affordable homes: Improvig the delivery of affordable housig i areas of high demad
1 Sustaied iflatio i the housig sector i recet years has made it icreasigly hard for may people to obtai a home that they ca afford either to ow or to ret. The umber of households livig i temporary accommodatio has more tha doubled sice 1996 from 43,000 to 94,000, 4 while i 2003 costructio of ew houses i the Uited Kigdom fell to its lowest level sice the Secod World War. 2 This shortage of housig has a umber of importat ecoomic ad social cosequeces, creatig difficulties ad hardship for may people who may fid themselves livig i iappropriate accommodatio. There is also a problem for key workers, such as urses ad teachers, who are beig priced out of the market i the South of Eglad, resultig i staff shortages, riskig poorer public ad private services. Affordable housig There are two mai types of affordable housig; social reted housig (housig that is provided by either local authorities or housig associatios to those i most eed at a subsidised ret) ad itermediate housig (housig desiged to help people eter home owership through itermediate schemes such as shared owership or right to buy). 3 I other regios of the coutry such as i the North ad the Midlads there are, however, areas that have suffered a collapse i their housig markets. Such market failure ca result i a cycle of declie, with people trapped i poor housig i areas associated with high crime ad uemploymet. To tackle these issues of both excessive high ad low demad, i 2002 the Office of the Deputy Prime Miister (ODPM) itroduced a ew Public Service Agreemet target target 5 o housig markets. I the 2004 Spedig Review, the scope of the target was exteded to iclude improvig the affordability of housig: Achieve a better balace betwee housig availability ad the demad for housig, icludig improvig affordability, i all Eglish regios while protectig valuable coutryside aroud our tows, cities ad i the gree belt ad the sustaiability of tows ad cities. Delivery chai Busiess cocept, used icreasigly i the public sector, which refers to the systems, processes ad orgaisatios through which govermet seeks to achieve its strategic ad policy objectives. 4 The Public Service Agreemet target covers a wide scope of activity aimed at improvig housig i areas of both high ad low demad. Our study focuses o oe strad of the target improvig the availability of affordable housig i high demad areas where the pressure for housig is outstrippig supply. Growth Areas, such as the Thames Gateway, have ot bee icluded i the study because they are subject to separate additioal fudig ad are the subject of forthcomig work by the Natioal Audit Office. Focussig o three regios across souther Eglad where there is high demad for affordable housig the South East, Lodo ad the South West the study ivestigates the efficiecy ad effectiveess of the delivery chai for affordable housig, cosiderig ways i which it ca be stregtheed, ad tracks activity across the delivery chai at the atioal, regioal ad local level. 4 Review of Housig Supply, Deliverig Stability; Securig our Future Housig Needs. Kate Barker, 2004. Buildig more affordable homes: Improvig the delivery of affordable housig i areas of high demad 9
5 Ulike may other delivery chais, direct Govermet fudig for ew affordable housig is relatively straightforward, with the majority of the moey beig allocated from the ODPM to the Housig Corporatio, which i tur makes paymets to housig associatios ad other bodies o the stregth of busiess pla proposals ad a rage of performace criteria. They, i tur, traslate the fudig ito ew housig through a system of grats ad subsidies. Agaist the backgroud of eedig to deliver the right housig i the right areas, a complex delivery chai has developed aroud this fudig flow, ivolvig Govermet Offices for the Regios, Regioal Housig Boards ad Regioal Plaig Bodies, local authorities, housig associatios ad property developers (Figure 1). 6 Resources allocated to the delivery chai to provide more affordable housig are sigificat, amoutig i 2004-06 to some 3.3 billio from the Housig Corporatio s Approved Developmet Programme. 7 I additio to direct fudig for affordable housig, there are four other mechaisms that have a ifluece over the supply of affordable housig. Firstly, by esurig sufficiet lad is allocated for housig through the plaig system (with priority give to buildig o previously developed lad ad i urba areas). Secodly, usig Sectio 106 agreemets to secure commitmets from private developers to iclude affordable housig o otherwise market-price developmets. Thirdly, by releasig surplus public sector lad for affordable housig, ofte through Eglish Parterships (the Govermet s regeeratio agecy). Fially, by developig ew affordable housig products to drive dow costructio costs so that housig ca be sold for less. Sectio 106 The Tow ad Coutry Plaig Act 1990 (as substituted by the 1991 Plaig ad Compesatio Act): Gave local authorities powers to egotiate commuity beefits as part of the plaig process (Sectio 106 agreemets). I the last five years this provisio has bee icreasigly used to provide affordable housig as part of private sector housig developmets. 1 How fudig for affordable housig flows from atioal to local levels of the delivery chai ODPM Govermet Offices Commuicate atioal policy Provide likage with other govermet bodies withi the regio Housig Corporatio Housig Corporatio (Regioal) Regioal Housig Boards Liaise with Regioal Plaig Boards Advise ODPM o housig allocatios Determie regioal housig eeds Regioal Assemblies Prepare Regioal Spatial Strategies Source: Natioal Audit Office examiatio Developers & Housig Associatios Local Authorities Approve schemes for ew housig developmet Prepare Local Developmet Frameworks Prepare Local Housig Needs Assessmets 10 Buildig more affordable homes: Improvig the delivery of affordable housig i areas of high demad
8 The affordable housig delivery chai, like other delivery chais for the delivery of atioal Public Service Agreemet targets, is uder pressure to become more efficiet as part of the Govermet s wider programme to secure 21.5 billio of aual efficiecy savigs i the three years 2005-06 to 2007-08 across all public expediture. For the Office of the Deputy Prime Miister, this target traslates ito a efficiecy gai for social housig of 835 millio by 2007-08 of which 355 millio will come from housig associatios. What we did 9 We iterviewed ad coducted workshops with over 200 directors, maagers ad frot-lie staff ivolved i the mai delivery chai for affordable housig; from ODPM, HM Treasury, the Prime Miister s Delivery Uit, Eglish Parterships, the Housig Corporatio, the Home Builders Federatio, the Local Govermet Associatio, the Natioal Housig Federatio, Regioal Govermet Offices, Regioal Housig Boards, sub regioal groups of housig strategy ad eablig officers i Hampshire ad Devo, 50 local authorities i the South East, South West ad Lodo, a further six local authorities i Lodo, the South West ad the South East chose as case studies (Hammersmith ad Fulham, Merto, Aru, Chichester, Plymouth ad South Hams) developers, cosultats ad volutary ad commuity housig advice bodies. 10 The joit approach by the Natioal Audit Office ad Audit Commissio, through their differet perspectives ad by combiig kowledge ad expertise, has allowed a uique look at the delivery chai throughout its legth; from the challeges faced by the ODPM through to the actios beig take by or ow required at regioal ad local level by those orgaisatios that have to deliver the large umbers of ew affordable homes required. Fidigs The Departmet has itroduced sigificat chages to the delivery chai i recet years, but there has bee a lack of certaity at regioal ad local levels about roles ad relatioships uder the ew arragemets 11 While the flow of fudig from ODPM to the Housig Corporatio ad the to housig associatios is relatively straightforward, the iter-relatioships betwee orgaisatios ad processes at a local ad regioal level results i a complicated delivery chai. This complexity meas that i practice there are may iflueces o how it is spet. I part this is due to the eed to ivolve regios i local fudig decisios. I additio, ODPM has chaged the delivery chai substatially over the past two years, focussig more decisio makig at a regioal rather tha at a local level. This has icluded the establishmet of Regioal Housig Boards, to determie housig priorities ad advise Miisters o the overall allocatio of fudig across the regio, the removal of Local Authority Social Housig Grat from local authorities, chages to plaig guidace, ad a ew way of fudig housig associatios, icludig two year fudig cycles. 12 ODPM has ot always followed through o these chages by givig clear practical advice to those affected about how they should ow act ad operate. The productio of guidace has ofte lagged behid the aoucemet of policy chages ad chages to market coditios. This meas that parts of the delivery chai have ot bee clear about their ew roles ad resposibilities. The delay i updatig Plaig Policy Guidace ote 3 has caused cofusio ad meat that agecies were operatig withi a outdated plaig framework. For example sigificat icosistecies i approach have developed betwee authorities with regards to the scale of housig developmets that ca trigger the iclusio of a affordable elemet through a Sectio 106 agreemet. Some authorities have bee workig to lower thresholds to secure more affordable housig. Where this has happeed, the practice has ofte bee supported by the Audit Commissio, but has sometimes bee challeged by developers who have o occasio had their challeges upheld by the Plaig Ispectorate. This lack of joied-up Govermet has led to challeges ad appeals by developers ad costly delays which udermie progress o PSA 5. Despite large amouts of fudig, a atioal target, ad affordable housig becomig a key corporate priority for local authorities i recet years, few believe that they ca yet meet the challege to deliver large icreases i affordable housig 13 All tiers of the delivery chai share the view that the shortage of affordable housig is a serious problem. Alogside the atioal Public Service Agreemet Target, 92 per cet of the 50 local authorities we surveyed for this study ow have affordable housig as oe of their key corporate priorities. Recet statistics from ODPM 5 5 ODPM Quarterly statistical release o homelessess. Buildig more affordable homes: Improvig the delivery of affordable housig i areas of high demad 11
idicate that for Eglad as a whole, the umber of ew cases of homelessess has bee fallig sice the begiig of 2004, with the umber of ew households i temporary accommodatio remaiig steady sice September that year. The Departmet attribute this to additioal measures i recet years to tackle homelessess. I areas of high housig demad i the south of Eglad, however, the umber of households livig i temporary accommodatio has rise steadily over recet years. This has resulted i a backlog for local authorities ad very few, (oly 2 per cet of those surveyed for this study) 6, cosider that they will be able to meet the eed for social reted housig over the ext three years due largely to isufficiet fudig ad a shortage of lad available for developmet. I respose to such circumstaces ODPM plas to icrease the supply of ew social reted housig by 50 per cet by 2007-08 compared with 2004-05. It is also icreasig its ivestmet i homelessess prevetio (from 60 millio i 2005-06 to 74 millio i 2007-08). This, combied with a icreased supply of social reted housig will, i ODPM s view, cotribute to the Govermet s aim to halve the umber of households i temporary accommodatio by 2010. A target was set by ODPM for the Housig Corporatio to provide ad additioal 27, 000 additioal homes for ret or low-cost home owership, icludig those for key workers. The Housig Corporatio achieved 28,756 completios i 2004-05. Iitiatives by the Housig Corporatio have started to focus developmet fudig ito the hads of those best able to sped it effectively 14 Over the period 2004-06, large amouts of public moey amoutig to aroud 3.3 billio is beig spet by the Housig Corporatio o deliverig affordable housig. This fudig is allocated to housig associatios o the stregth of busiess cases for developig ad deliverig affordable housig ad, i recet years, the Corporatio has itroduced a umber of iitiatives desiged to improve the efficiecy of performace of the sector. These have icluded: two year fudig cycles givig more certaity to housig associatios, ecouragig developers to pla better ad to ivest i capacity for the future; focussig resources o fewer housig associatios over 80 per cet of the 2004 2006 programme was allocated to 70 parter housig associatios through the Corporatio s pilot Ivestmet Parterig programme; ad the implemetatio of a framework for assessig the performace of housig associatios i receipt of developmet grats. 15 These chages have brought efficiecy savigs, with the fudig programme i 2004-05 beig o average 9 per cet cheaper tha the programme i 2003-04. 7 This has resulted i a average of 28 additioal homes for every 10 millio of public fudig. Evidece from our fieldwork idicates that a extesio to three to five year fudig cycles could beefit developers ad housig associatios further, although this would require committig to ivestmet ad could reduce flexibility to chagig priorities. 16 The Ivestmet Parterig programme is ecouragig more housig associatios to cosider mergig or to form group structures creatig potetial for improvig cost-effectiveess through the availability of cheaper loa fiace or the opportuity to improve procuremet. Recet research by AT Kearey o back office fuctios geerally 8 idicates that potetial savigs averagig about 14 per cet, ca be achievable. There is scope for housig associatios to realise potetial savigs i sharig back office fuctios. 9 17 A further measure itroduced by the Housig Corporatio to ecourage efficiecy i the housig associatio sector is the Operatig Cost Idex. This sets out the operatig costs for those associatios with over 250 uits, allowig the Housig Corporatio to cosider what drives such costs. I additio, how associatios overall ad idividual service costs compare with other similar orgaisatios is looked at i Audit Commissio housig ispectios which also examie how well associatios maage ad improve value for moey. 6 MORI survey of 50 local authorities i the South East, the South West ad Lodo. 7 Ivestmet Parterig. A Evaluatio of the Pilot Programme. Chartered Istitute of Housig ad Tribal HCH Jue 2005. 8 A.T. Kearey (2005) Success Through Shared Services: From Back-Office Fuctio to Strategic Drivers. Chicago, Ill.: A.T. Kearey Marketig ad Commuicatios, Ic. 9 The savigs so idetified will be specified i housig associatios aual efficiecy statemets. 12 Buildig more affordable homes: Improvig the delivery of affordable housig i areas of high demad
While there has bee a move towards more regioally based decisio makig about housig eed ad provisio, this has ot always led to a chage i workig practices at a local level 18 The establishmet of Regioal Housig Boards ad the forthcomig trasfer of their resposibilities to Regioal Plaig Bodies should potetially allow for more coordiated decisio makig about whe ad where affordable housig should be built takig better ito accout issues aroud the ecoomic ad social eeds of the regio rather tha, as i the past, focussig o the immediate housig eeds of a local authority. 19 I additio, local authorities are icreasigly workig joitly with their eighbours at a sub regioal level to develop a more accurate uderstadig of ad better strategies to address wider housig markets rather tha focussig withi local authority boudaries. Expectatios of sub regioal workig have icreased with recet ODPM policy proposals but there is ot as yet clarity about the boudaries or the mechaisms for such workig. This has created room for cofusio amogst developers who are usure about the status of sub regioal documets ad processes. 20 There is some lack of clarity aroud the status of sub regioal housig strategies. Despite ODPM advisig that there is o eed for local authorities to produce local housig strategies where they have produced a sub regioal strategy with eighbourig local authorities (so log as they have demostrated a clear commitmet to the sub regioal strategy) some local authorities cotiue to do so resultig i duplicated effort. Nor is there cotrol over the timig, quality ad frequecy with which idividual local authorities prepare Housig Needs Surveys. This leads to a rage of differet surveys beig produced at differet times. ODPM is addressig the eed to create more cosistecy by developig a ew approach to local housig assessmets which will focus more o assessig housig demad ad by requirig the preparatio of coordiated Surveys ad Housig Market Assessmets. Govermet Offices could play a ehaced role i providig guidace to local authorities 21 Actig as a key lik betwee cetral govermet, local areas ad the regios, Govermet Offices are uiquely placed to help local authorities to improve their performace i deliverig affordable housig, but their role has evolved i differet ways ad at differet rates across the regios. This meas that their role is ot clear to local authorities resultig i some local authorities ot makig as much use of the advice ad guidace that Govermet Offices are well placed to provide. To deliver cosistecy o guidace ad good practice, requires a more proactive approach by Govermet Offices icludig: ecouragig local authorities to share good practice ad, where appropriate, resources, such as housig ad plaig staff, particularly where smaller authorities are faced with large housig schemes which they do ot have the i-house capacity to deal with; ad to better coordiate the activities of govermet departmets i the regios icludig esurig, i partership with Eglish Parterships, that opportuities to use surplus lad for affordable homes are explored ad where possible exploited. Sectio 106 has proved a effective lever for icreasig the supply of affordable housig, but there is a eed for clearer ad more cosistet messages from local authorities so that developers do ot waste time ad effort i puttig forward uacceptable proposals for ew schemes. 22 Forty per cet of the Housig Corporatio s Approved Developmet Programme is ow chaelled to Sectio 106 sites, where developers are buildig affordable housig as part of a private developmet. However, to esure value from the available resources the Housig Corporatio s preferece is that affordable housig o such sites should, wherever possible, be built without grat. This icreasigly importat lever is a complex part of the delivery chai ad oe that causes most delays to the delivery of more affordable housig. Audit Commissio data show that the time take to egotiate Sectio 106 agreemets ca vary from 6 to 67 weeks. The process is legtheed because: local authorities have implemeted ODPM guidace icosistetly, causig delays i reachig agreemets betwee developers ad local authorities because of cofusio ad disagreemets aroud what a appropriate cotributio of affordable housig should be for a give site; ad reachig agreemets aroud plaig obligatios uder Sectio 106 ivolves complex egotiatios betwee developers ad local authorities. Local authorities ofte lack the ecessary skills i Buildig more affordable homes: Improvig the delivery of affordable housig i areas of high demad 13
egotiatio ad i the use of techical fiacial tools, which meas that these egotiatios ofte take loger tha they should, addig extra costs to delivery. 23 However there is some progress, with some local authorities developig good practice that is reducig the time take to process agreemets to weeks rather tha moths. The Housig Corporatio also eeds to improve its egotiatio capacity o Sectio 106 work ad has put i place steps to achieve this by, for example, itroducig the Ecoomic Developmet Tool. This helps Housig Corporatio Regioal Teams to make idepedet assessmets over the amout of affordable housig that a housig developmet ca fiacially bear. Most local authorities ow have affordable housig as their corporate priority, but for this to be achieved it eeds the support of the commuity 24 Where local authorities have established affordable housig as a key corporate priority, they eed to work alogside housig associatios ad developers to provide a clear message about housig eed ad to ivolve people i how developmets might be desiged ad delivered. This is already happeig very effectively i some areas, where local authorities are actively cosultig the commuity about ew developmets; holdig evets where the commuity ca see plas, models ad artists impressios of future housig schemes. Cocept statemets, for example, supported by the Improvemet ad Developmet Agecy, 10 provide diagrams ad a statemet of the future layout; visual images showig the desig of the ew housig; ad what the teure of the developmet will be. But this good practice is ot widespread. May local authorities have ot take o the leadership role eeded to covice their commuities of the eed for developig more affordable housig ad have doe little to allay fears aroud developig more affordable housig. The release of surplus lad for housig by departmets could be aided by more coordiatio at the atioal, regioal ad local level 25 Shortages of lad for housig developmet are a major costrait i icreasig the supply of affordable housig, particularly i South East Eglad. The public sector is i a positio to ifluece the delivery of affordable housig through the disposal of lad ad buildigs that are suitable for housig. This would also help to alleviate recruitmet problems i the bodies they are resposible for, such as the Natioal Health Service. Departmets ofte sell lad, however, at best cosideratio the highest obtaiable market price o the basis that this represets the best value i accoutig terms. 26 ODPM ad HM Treasury have i part addressed this tesio by askig Eglish Parterships to establish the Register of Surplus Public Sector Lad followig the publicatio of the Sustaiable Commuities Pla i 2003. The requiremet o cetral govermet bodies to place surplus sites o the register has ow bee icorporated ito Govermet Accoutig. Govermet departmets are also ow required to give 40 days otice to other cetral departmets prior to disposig of surplus lad. I their recet aoucemet o extedig home owership, ODPM ad HM Treasury said that Eglish Parterships would be reviewig the 700 surplus public sector sites curretly o the register to assess their potetial to deliver more affordable housig. Eglish Parterships is curretly explorig ways to expad the Register to iclude local authorities, the Housig Corporatio ad the Regioal Developmet Agecies. More could be doe, however, to esure that surplus public sector lad that has value for other public sector objectives is trasferred effectively to other agecies. Makig the delivery chai more efficiet 27 The challege for the delivery chai is how to gear up delivery of ew dwelligs to meet the eed for social reted housig ad the demad for home owership. 28 This ca be achieved through two ways: by icreasig the speed of delivery by removig blockages, simplifyig processes ad makig sure that roles ad resposibilities are clear; ad by reducig the uit cost of housig by ratioalisig the delivery chai. There has bee good progress i improvig efficiecy i recet years with, for example, the itroductio of ew fudig arragemets for housig associatios that has ecouraged greater parterig ad reforms to the plaig service that are likely to speed up the processig of plaig applicatios. 29 I Figure 2, we set out five key areas where te efficiecies ca be realised. 10 The Improvemet ad Developmet Agecy works to improve performace of local authorities through promotig ad dissemiatig good practice. It is part of the Local Govermet Associatio. 14 Buildig more affordable homes: Improvig the delivery of affordable housig i areas of high demad
2 Icreasig efficiecy i the affordable housig delivery chai Key area for efficiecy 1 Reducig uit costs Parterig with housig associatios ad groups of housig associatios i the South East reduced total average public subsidy for ew dwelligs by 22.3 per cet, from 33,609 a uit for 2003-04 to 26,109 for 2004 06. 11 Where the efficiecy ca be realised The establishmet of the two year fudig cycle for the Housig Corporatio s 3.3 billio Approved Developmet Programme has icreased partership workig amogst housig associatios ad is helpig to provide more homes more quickly. 12 A extesio of three to five years would create a better basis for busiess plaig, providig further potetial for housig associatios ad developers to build capacity, to realise efficiecy savigs i their procuremet, to achieve ecoomies of scale ad to provide more homes more quickly. 13 The Housig Corporatio s recet itroductio of direct fudig to other bodies such as developers will icrease competitio i the sector ad provide a direct comparator to measure the performace of those housig associatios already udertakig developmets. The Corporatio s lead parter approach meas that it is dealig with a sigle lead housig associatio, makig it resposible for the performace of its parters, creatig a efficiecy driver ad savig the Housig Corporatio s ow staff time. 2 Speedig up the delivery chai Time take to egotiate Sectio 106 agreemets varies betwee local authorities from 6 to 67 weeks. Legthy egotiatios o Sectio 106 agreemets icreases developers costs, which ultimately fall o the public purse i the form of a higher uit price to be paid for the ew housig tha would otherwise have bee the case. By settig a clear ageda, however, ad establishig from the outset with delivery parters what they expect Sectio 106 sites to deliver i terms of teure mix (through the productio, for example, of clear Supplemetary Plaig Documets), local authorities ca reduce the time take to egotiate agreemets from moths to days. Better skilled staff i local authorities, who ca readily uderstad the commercial propositios behid developers proposals also help to accelerate the process. 3 Sharig services Sharig back office services ca reduce housig associatios overheads. Such savigs could be reivested i buildig more affordable homes or improvig services. The Housig Corporatio s promotio of cosortia workig by housig associatios offers the opportuity for parter associatios to realise further efficiecy savigs by sharig back office fuctios. Icreased ad more effective collaboratio betwee local authorities plaig ad housig fuctios ad sub regioal cooperatio betwee eighbourig authorities would make for more efficiet use of scarce housig ad plaig staff. 4 Removig duplicatio Local housig eeds surveys ca cost up to 120 000. Commissioig joit research betwee local authorities ad, thereby, ot havig to udertake a local housig eeds survey achieves sigificat savigs. Focusig housig eeds research o sub regios would reduce the umber of Housig Needs Surveys commissioed ad reduce duplicatio of work betwee local authorities. The clear ad more timely issuace of guidace aroud, for example, the productio of the Regioal Housig Strategies ad Housig Market Assessmets would avoid the eed for additioal work beig required by Regioal Housig Boards. 5 Makig better use of assets The Miistry of Defece, for example, has disposed of lad worth 1.2 billio sice 1999, much of it cotributig to affordable housig. Makig surplus govermet lad suitable for housig available to Eglish Parterships through the Register of Surplus Public Sector Lad rather tha sellig it o the ope market eables more housig to be developed more quickly. 11 Housig Corporatio, South East Allocatio Statemet for 2004-06. 12 Ivestmet Parterig. A Evaluatio of the Pilot Programme. Chartered Istitute of Housig ad Tribal HCH Jue 2005. 13 Ivestmet Parterig. A Evaluatio of the Pilot Programme. Chartered Istitute of Housig ad Tribal HCH Jue 2005. Buildig more affordable homes: Improvig the delivery of affordable housig i areas of high demad 15
recommedatios For Govermet Departmets ad atioal agecies We recommed that: ODPM develops guidace settig out a clear defiitio of local authorities strategic eablig role i relatio to housig, draw from evidece about how the best performig authorities are behavig. ODPM clarifies the role of Govermet Offices to improve liks betwee the atioal, regioal ad local levels so that guidace ad decisios are made cosistetly ad local authorities make more use of their expertise ad advice. Public sector lad that is beig sold by a Govermet departmet that may be used for aother public sector objective (such as affordable housig) should be trasferred effectively. To help esure that this is the case, whe ew lad is etered o the Register of Surplus Public Sector Lad this should trigger a process of otificatio, by Eglish Parterships, to the relevat regioal ad local offices such as the Housig Corporatio, the Regioal Developmet Agecy, local authorities ad other relevat bodies. ODPM, HM Treasury ad the Housig Corporatio should exted fudig to a three to five year fudig cycle as a icetive for those bodies i receipt of social housig grat that demostrate good fiacial stewardship ad performace i developig ew housig. Such fudig should be allocated o a reducig scale to ecourage sustaied efficiecy gais throughout the supply chai. The Housig Corporatio should build upo its recet iitiatives to chael resources ito the best performig housig associatios by requirig them to demostrate efficiecy savigs through the icreased sharig of services by developmet cosortia. For Regioal bodies We recommed that: Govermet Offices ecourage local authorities to eter ito Local Public Service Agreemets whereby fiacial icetives are available for iitiatives that brig about co-ordiated actio ad sharig of staff betwee local authorities, such as aroud the preparatio of Local Developmet Frameworks ad Local Housig Need Assessmets. I helpig to establish sub regioal workig arragemets, the Govermet Offices are explicit about which matters should be dealt with i sub regioal housig strategies ad which i local housig strategies. 16 Buildig more affordable homes: Improvig the delivery of affordable housig i areas of high demad
Where effective sub regioal parterships ad strategies do exist, Govermet Offices, i cojuctio with ODPM, should clarify that there is o eed to produce a local housig strategy so log as the relevat local authorities demostrate their commitmet to the sub regioal housig strategy. Govermet Offices should act as champios for the good practice o Sectio 106 set out i Circular 05/2005, Plaig Obligatios to improve local authorities performace ad build a greater degree of cosistecy. For local bodies We recommed that: Where local authorities have already established affordable housig as a key corporate priority, they should work with their local commuities to uderstad their cocers about ew housig ad to ivolve them i the desig ad plaig of ew developmets. This will build o the commuity ivolvemet objectives i the ew plaig system. To overcome cofusio ad delay aroud egotiatio of plaig approval local authorities should, as a first step, put i place frameworks or cocordats with local housig associatios ad developers, settig out clearly their expectatios of them ad usig approaches such as cocept statemets to facilitate good forward thikig. Local authorities should devise ways to better itegrate plaig ad housig fuctios i order to make more effective use of existig staff, set cosistet policy o affordable housig across the authority ad provide a sigle poit of cotact with plaig applicats. Some authorities, particularly smaller districts, should explore the scope for icreased joit workig betwee local authorities to pursue further sharig of resources, such as the joit commissioig of research to determie housig eed, ad the productio of joit Supplemetary Plaig Documets, ad support services such as traiig i housig ad plaig. For particularly large applicatios (over 500 uits) local authorities i the South East, Lodo ad the East should also make use of the Advisory Team for Large Applicatios based withi Eglish Parterships. ODPM ca support this activity i ay future guidace that is issued to local authorities. Buildig more affordable homes: Improvig the delivery of affordable housig i areas of high demad 17